Agio Gold Sector Fund Market Update: November 2023

Stock Markets

The expression of a “soft landing” for the S&P 500 and other risk assets worked out in October.  There was a typical capitulation near the end of the month with a commensurate seasonal rebound into November.  So without an extreme, washout decline risk markets can be expected to be choppy into the first quarter of 2024.  The singular pattern based on monetary factors is to see a series of lower highs and lower lows along the way.  In other words, a gradual downtrend.

 

Macro Economy

With so many distractions in the news it is best to keep in mind that the yield curve – the U.S. Treasury Curve – the benchmark curve for global credit – was and remains inverted (short rates higher than long rates).  Historically, inversions of this nature and scale always lead to recessions.  Nascent weakness in employment numbers, global trade and weaker emerging market currencies confirm this view.  The next step will be declining T-bill rates contributing to lower rates at the front end of the U.S. Treasury Curve – it’s just a matter of time.

 

Markets

Risk assets are attempting to rebound out of corrective phase from October:

YTD 2023

S&P 500                                                                                           +16%

NASDAQ 100                                                                                +42%

Dow                                                                                                       +4%

Bitcoin                                                                                            +120%

Commodities (CRB)                                                                      +0%

Gold                                                                                                        +7%

 

Gold Sector and Tactical Trades

The  price of December Gold has retraced about 38% of the rally from the October low,  which Is similar to what happened in November 2022 and March 2023.  Additionally, it has a technical buy signal based on pattern.  In rising trends, gold bottoms usually take one to three days to form after this particular pattern.

We still need to see a move above Tuesday’s high of $1,985 to confirm  an upside reversal – this based on pattern and momentum.

Again, as stated in the previous month’s note:  Gold stocks should now be accumulated gradually on weakness.

 

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