株式のEuphoriaがゴールドを抑える by Zeal
最後の二段落だけ訳しておきます。
Stock Euphoria Stunts Gold
Adam Hamilton April 19, 2019 3257 Words
But
once these lofty stock markets inevitably roll over decisively
again, gold demand will come roaring back just like in Q4.
Investors will remember the wisdom of prudently diversifying their
stock-dominated portfolios with counter-moving gold, and start
shifting capital back in. That will push gold prices much higher,
with real potential for a major bull-market breakout. The gold
stocks will amplify those gains like usual.
しかし一旦このそびえ立つ株高がまたもや転落することは確実で、Q4と同様にまたゴールド投資需要が大きく戻ってこよう。投資家は株式過剰のポートフォリを規律良く分散する知恵をまた思い起こすだろう、そして資金をまたシフトするだろう。こうなるとゴールド価格を押し上げ、実際に大きなブル相場ブレークアウトを引き起こす。いつものとおり金鉱株はこの上昇を増幅するだろう。
Adam Hamilton, CPA April 19, 2019 Subscribe
Stock Euphoria Stunts Gold
Adam Hamilton April 19, 2019 3257 Words
The
great euphoria emanating from these near-record-high stock markets
is breathtaking. Traders are again convinced stocks do nothing but
rally indefinitely. That everything-is-awesome mindset has stunted
gold’s latest upleg, since there’s no perceived need for prudently
diversifying stock-heavy portfolios. But that psychology can change
fast, as we saw a half-year ago. Gold investment roars back as
stocks roll over.
The
word “euphoria” is widely misunderstood, often confused with
“mania”. The latter is when stocks rocket vertically in blowoff
tops, and is defined as “an excessively intense enthusiasm,
interest, or desire”. The US stock markets certainly aren’t in a
mania. At its latest high last Friday, the flagship US S&P 500
broad-market stock index (SPX) had only edged up 1.2% over the past
14.5 months. That’s not parabolic.
The
closest thing to a mania seen in recent years was the SPX’s 18.4%
surge over just 5.3 months that led into its initial January 2018
peak. Traders were ecstatic about Republicans’ coming major
corporate tax cuts, and aggressively piled into stocks. While
euphoria accompanies manias, it is entirely different. It is simply
“a strong feeling of happiness, confidence, or well-being”. That
psychology is universal today.
Traders have fully persuaded themselves that these stock markets
have virtually no material downside risks. Like all sentiment,
that’s the direct result of recent price action. These beliefs were
last seen in late September and early October. The SPX had just hit
a dazzling all-time record high, extending its
monster bull
market to 333.2% gains over 9.5 years. That was the
second-biggest and first-longest in US history!
Gold
was deeply out of favor near that last SPX topping too. As a rare
counter-moving asset that tends to rally when stock markets weaken,
gold investment demand wanes when stock euphoria grows extreme. The
whole discipline of portfolio diversification is based on
acknowledging that stock markets rise and fall. Since
investors can’t know when the next major stock-market selloff will
erupt, they keep some non-stock holdings.
But
euphoria blinds traders to long centuries of financial wisdom. They
tend to extrapolate present conditions out into infinity, assuming
they will last indefinitely. But betting any trend will run forever
is just plain foolish, as markets are forever cyclical.
“Complacency” always accompanies euphoria, “a feeling of contentment
or self-satisfaction, especially when coupled with an unawareness of
danger or trouble”.
Soon
after traders overwhelmingly believe major selloffs are extinct, the
next one pummels them. The endless stock-market cycles reassert
themselves with a vengeance, punishing the scoffers. The severe
correction after late-September’s peak is a textbook example. Over
the next 3.1 months into Christmas Eve, the SPX plunged 19.8%! That
was right on the verge of confirming a new bear at its -20%
threshold.
Traders were confronted with the painful truth that stock markets
don’t rally forever, that major selloffs are inevitable. So gold
investment demand surged as investors rushed to start diversifying
their bleeding stock-dominated portfolios. Major stock-market
plunges are always followed by big and sharp rebound rallies. Just
5 weeks after those deep near-bear lows, the SPX had blasted 15.0%
higher by the end of January.
That’s when euphoria and complacency started to return. These
perilous herd emotions strengthened with every daily SPX rally over
the past several months or so. The higher the stock markets
bounced, the more selloff fears faded. That left portfolio
diversification and gold investment increasingly out of favor
again. The result is today’s extreme euphoria resembles late
September’s, traders don’t have a care in the world.
While euphoria and complacency are ethereal and unmeasurable, they
can be inferred. The classic VIX fear gauge is the most-popular
way. It quantifies the implied volatility options traders
expect in the SPX over the next month, as expressed through their
collective trades. While a high VIX reveals fear, a low one shows
the direct opposite which is complacency. Last Friday the VIX
slumped under 12.0 on close.
The
SPX’s massive rebound rally had extended to 23.7% over 3.6 months,
recovering over 19/20ths of the preceding severe-correction losses.
The SPX had soared back to within just 0.8% of its record peak of
6.7 months earlier! The stocks-to-the-moon zeitgeist had returned
in an extreme way. The VIX hadn’t been lower since early October,
when the SPX still lingered merely 0.2% under its unprecedented
crest.
So
per the leading approximation, traders’ current euphoria and fear
have reverted right back to their very same high and low
levels just before the last major SPX selloff! That’s why gold has
slumped in recent weeks. Investors forget about it when they come
to believe stock markets’ downside risks have vanished. When they
buy into that peaking delusion that stocks can rally indefinitely,
there’s no perceived need for gold.
This
psychology creates an inverse relationship between stock-market
levels and gold. It becomes most-pronounced when stock markets are
near record highs generating great euphoria. This chart shows how
the SPX and gold have traded over the past several years or so.
Ever since that mania-like SPX surge into late January 2018 on
corporate-tax-cut hopes, gold has generally meandered in opposition
to stock markets.
The
greater stock-market euphoria, for the most part the weaker gold
investment demand and thus gold prices. And of course euphoria is a
direct function of how high the stock markets are. The SPX has
surged to record and near-record levels 3 times over the past 15
months or so. It peaked at 2872.9 in late January 2018, 2930.8 in
late September 2018, and has shot as high as 2907.4 so far in
mid-April 2019.
These two confirmed major toppings along with today’s likely third
averaged 2903.7, so call it 2900. The SPX is now trading just
slightly above January 2018 levels, despite last year being one of
the greatest in history for corporate-profits growth. The
underlying earnings of the 500 elite SPX companies soared well over
20% in 2018! The SPX should’ve surged proportionally on such strong
underlying fundamentals.
But
it didn’t, mostly grinding sideways to lower. The US stock markets
were already wildly overvalued, spending most of last year trading
literally in bubble territory. That’s 28x+ in
trailing-twelve-month price-to-earnings-ratio terms, twice
historical fair value at 14x. Stocks were already far too expensive
to bid to major new highs, a dangerous problem which persists in
their latest
quarterly results. And 2018 was one-off.
Its
four quarters were the only ones comparing pre-tax-cut and
post-tax-cut results. That unprecedented discontinuity is the only
reason earnings growth was so enormous last year. Profits are
expected to stall out this year at best, and likely shrink.
All quarterly comparisons going forward already include those big
corporate tax cuts. So if the SPX couldn’t materially rally even in
2018, it’s in a world of trouble this year.
In
December 2017 just before the corporate tax cuts kicked in, the 500
SPX stocks traded at a simple-average TTM P/E ratio of 30.7x. At
the end of March 2019, that had merely retreated modestly to 26.3x
which is still just under perilous bubble territory. Without strong
double-digit earnings growth, such rich stock valuation levels won’t
be sustainable for long. That’s great news for gold’s investment
demand and prices.
The
first time the SPX topped in January 2018, gold’s powerful upleg
stalled just shy of breaking out to new bull-market highs. Gold
held those strong levels until the SPX started powering higher
again, which quickly rekindled euphoria dousing portfolio
diversification. Gold suffered a major correction as the SPX
challenged and exceeded new records into September 2018. Gold
languished near lows as the SPX peaked.
Gold
investment demand didn’t flare again to force gold higher until the
SPX decisively rolled over from those all-time record highs.
Once the stock markets started falling long enough and far enough to
scare traders into remembering stocks can fall too, gold investment
demand surged pushing this metal’s prices much higher. Gold was
nearing another breakout before stock-market euphoria grew extreme
again.
That’s why gold’s latest upleg stalled in recent weeks, why its
price has slumped after nearing another
major bull-market
breakout. Gold has actually shown remarkable resiliency
considering stock euphoria soaring right back up to early-October
extremes. Last Friday when the VIX fell under 12.0 on close, gold
was trading near $1291. That was way better than early October’s
$1198 the last time the VIX traded that low.
Stock-market psychology’s primary impact on gold is sentimental.
The higher stocks and the greater the herd belief they will keep
rallying, the more gold interest and investment demand fade. But
there’s also a way to measure capital flows into and out of
gold from American stock investors. That is through the
gold-bullion holdings of the world’s leading and dominant gold
exchange-traded fund, the GLD SPDR Gold Shares.
GLD
is a behemoth, holding 752.9 metric tons of physical gold bullion in
trust for its shareholders this week. According to the World Gold
Council, GLD is the world’s biggest gold ETF by far. At the end of
Q4’18 its gold holdings were 2.8x larger than its next-biggest
competitor’s. GLD commanded nearly 3/7ths of the total gold
bullion held by the world’s top-10-largest physical-gold-backed
ETFs, a vast amount!
GLD’s mission is to track the gold price, to give stock traders easy
access to gold exposure. This is only possible if GLD can vent
excess supply and demand for its shares directly into the global
gold market, as the supply and demand for GLD shares is independent
of gold’s own. GLD prices can’t mirror gold prices unless this ETF
is able to buy and sell physical gold bullion to equalize supply
and demand, which it does daily.
It
also reports its total gold holdings daily, allowing traders to see
whether American stock-market capital is flowing into or out of
gold. When GLD’s holdings are rising, investors are buying gold.
When they are falling, investors are selling gold. The capital
flows into and out of GLD are heavily influenced by stock-market
fortunes, stunted when euphoria grows extreme. Gold investment has
suffered with the SPX so high.
Understanding how these capital flows work is important. When
traders buy GLD shares faster than gold itself is being bought,
GLD’s price threatens to decouple from gold to the upside. GLD’s
managers avert this by shunting that excess GLD-share demand
directly into gold itself. They issue enough new GLD shares to
offset that differential demand, and use the proceeds to buy more
physical gold bullion to hold in trust.
Conversely when GLD shares are being sold faster than gold, GLD’s
price will soon break away from gold on the downside. GLD’s
managers stave that off by buying back its shares to sop up that
excess supply. The capital necessary to finance those repurchases
is obtained by selling some of GLD’s physical-gold-bullion
holdings. So rising and falling GLD holdings show stock-market
capital migrating into and out of gold.
This
chart superimposes GLD’s daily gold holdings in metric tons over the
closing gold price. They are well-correlated with gold, showing
American stock traders’ GLD trading heavily influences how gold is
faring. Each calendar quarter’s gold-price percentage change, and
both the percentage and absolute changes in GLD’s holdings, are
noted. Over the past year in extreme SPX euphoria, GLD has driven
gold.
Incredibly GLD’s and thus American stock traders’ huge impact on the
gold price is often not understood. Overlooking it is a grave
error, greatly hobbling chances of multiplying wealth in gold. To
show how dominant GLD is, consider some of the larger quarterly gold
moves of this young bull born from deep 6.1-year secular lows in
mid-December 2015. GLD’s holdings languished near 7.3-year lows at
that same time.
In
Q1’16 gold surged 16.1% after the first SPX corrections in 3.6 years
made traders remember gold’s crucial role in portfolio
diversification. They flooded into GLD shares at dizzying rates,
catapulting its holdings 27.5% or 176.9t higher that quarter! Per
the latest comprehensive fundamental data from the World Gold
Council, GLD’s build accounted for 84% of the year-over-year growth
in total global gold demand!
In
Q2’16 that massive gold upleg continued, pushing gold another 7.4%
higher. GLD’s holdings surged another 16.0% or 130.8t higher on
heavy differential buying by American traders. That GLD build alone
ran 106% of gold’s total YoY worldwide demand growth! Had US
stock-market capital not been flowing into gold via GLD, this gold
bull never would’ve existed. Q4’16’s gold plunge drove home
that critical point.
After Trump won the presidency that quarter, stock markets surged on
hopes for big tax cuts soon with Republicans controlling the US
government. Euphoria soared with the SPX, leading investors to
jettison gold and chase stocks. Gold plunged 12.7% that quarter,
driven by a huge 13.3% or 125.8t draw in GLD’s holdings. That
selling was a whopping 112% of the total YoY decline in global gold
demand that quarter!
While American stock traders certainly aren’t the only gold
investors, they command vast capital that has really moved gold in
recent years. Gold’s price behavior in each quarter of this bull
has generally been quite proportional with capital flows into and
out of GLD. That’s certainly proven true in this past year as well,
when SPX euphoria ran rampant other than deep in Q4’18’s severe
near-bear correction in the SPX.
After that initial SPX peak in January 2018 and the subsequent
sharp-yet-shallow-and-short correction, gold investment demand grew
as euphoria wavered. Between mid-January to late April that year,
GLD enjoyed a 5.1% holdings build. That wasn’t enough to push gold
much higher, it only climbed 0.4%. Differential GLD-share trading
isn’t gold’s only driver,
gold-futures
trading also plays a major role for different reasons.
But
as the SPX powered higher out of that initial post-topping selloff,
so did investors’ stock euphoria. So they again started to pull
capital out of GLD faster than gold was falling, forcing a major
holdings draw. Between late April to early October soon after the
SPX’s second topping and new all-time record highs, GLD’s holdings
plunged 16.2%. That gold-investment exodus pushed gold prices 9.0%
lower in that span.
The
relentless slump in GLD’s holdings reversed sharply on a very
telling day. American stock traders finally started aggressively
buying GLD again on October 10th, forcing a major 1.2% daily
holdings build. What happened? That was the first day the SPX
sold off hard after its recent record high, plunging 3.3% to
shatter complacency. That budding sentiment shift was evident in
the VIX, which soared 39.7% to 22.6.
The
more that serious Q4’18 SPX selloff intensified, the greater gold
investment demand grew. This was most evident in December, when the
stock markets plunged a brutal 9.2% alone! That pain really helped
investors remember the wisdom of having gold allocations in their
stock-heavy portfolios. Gold surged 4.9% that month on a 3.4%
GLD-holdings build. Gold investment was strong with stock euphoria
gone.
Investors’ interest in gold continued well after the SPX started
rebounding, as GLD’s holdings peaked in late January 2019 about 5
weeks after the SPX had bottomed. But with the SPX already soaring
15.0% off its lows, euphoria was mushrooming rapidly. Between early
October to late January, GLD’s holdings surged 12.8% driving a
parallel 9.7% gold rally with stock euphoria not stunting gold
investment demand.
Though gold’s latest interim high of $1341 came a couple weeks later
in mid-February, American stock traders’ capital outflows from gold
were well underway. As the SPX powered ever higher that month, GLD
suffered draws on fully 13 of its 19 trading days! That
differential GLD-share selling on resurgent stock euphoria continued
to this week. Since late January, GLD’s holdings have shrunk
another 8.7%.
Though gold has been fairly resilient considering the lofty
stock-market levels, it still slid 3.3% in that span. Gold’s upleg
was stunted by stock markets’ powerful rebound rally. It rekindled
the same levels of extreme euphoria and complacency seen near the
SPX’s late-September record peak. With everyone once again
convinced stocks can rally indefinitely with no material selloffs,
gold investment demand withered.
While wearying for long-suffering contrarian investors, this is
actually quite bullish for gold. Back in early October GLD’s
holdings slumped to 730.2t in extreme stock-bull-peaking euphoria.
Gold fell as low as $1188 as GLD’s holdings bottomed before the SPX
started dropping again. Forced way back down to 752.3t this week,
GLD’s holdings are only 3.0% above those deep early-October lows.
Yet gold was way higher.
At
$1276, gold was fully 7.4% above its own early-October low! This is
a much-higher base from which to launch its next surge higher, with
gold-investment buying potential via GLD shares almost fully
reset! When these dangerously-overvalued stock markets
inevitably roll over again, American stock traders will again
remember prudently diversifying with gold. Their big capital
inflows will again drive gold much higher.
That
has real potential to fuel a
major bull-market
breakout for gold above its $1365 bull-to-date peak seen way
back in July 2016. This is even more likely because gold-futures
speculators aren’t very long as I discussed in last week’s
essay. Just like American stock traders, they have lots of room to
buy gold aggressively as it resumes marching higher. Gold
investment demand only grows as gold prices climb.
Realize gold’s big problem right now is universal stock-market
euphoria at extreme stock-bull-peaking levels. But that won’t last,
it never does. Once the SPX inescapably starts sliding again in its
next material selloff, gold demand will surge back. These lofty
overvalued and overbought stock markets near record highs look
exhausted. They are likely to turn back south any day, bleeding
away euphoria and rekindling gold.
The
biggest beneficiaries of gold uplegs are the gold miners’ stocks,
which tend to leverage gold’s gains by 2x to 3x. Back in
essentially the first half of 2016 when gold surged 29.9% higher in
response to back-to-back SPX corrections, the leading
GDX and
GDXJ
gold-stock ETFs soared 151.2% and 202.5% higher in roughly that same
span! When gold starts powering higher again, the coming gold-stock
gains will be big.
One
of my core missions at Zeal is relentlessly studying the gold-stock
world to uncover the stocks with superior fundamentals and upside
potential. The trading books in both our popular
weekly and
monthly
newsletters are currently full of these better gold and silver
miners. Mostly added in recent months as gold stocks
recovered from
deep lows, our unrealized gains are still running as high as 59%
this week!
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The
bottom line is stock-market euphoria has stunted gold’s upleg. With
US stock markets once again back up challenging all-time-record
highs, traders have forgotten the hard lessons from late September’s
peak. They’ve deluded themselves into believing stocks can rally
indefinitely, that near-bubble valuations don’t matter. Thus gold
investment demand has withered, which is normal when stock markets
are topping.
要約すると、株式市場のeuphoriaがゴールド上昇を抑えている。米国株式はまたもや過去最高に挑戦するなかで、トレーダーは9月の天井で学んだ貴重な経験を忘れてしまった。彼らは株式が永久に上昇するものと思い込んでいる、バブルバリュエーションに近いことなど気にしない。しかるにゴールド投資需要は弱まっている、これは株式市場が天井形成するときにいつもおきることだ。
要約すると、株式市場のeuphoriaがゴールド上昇を抑えている。米国株式はまたもや過去最高に挑戦するなかで、トレーダーは9月の天井で学んだ貴重な経験を忘れてしまった。彼らは株式が永久に上昇するものと思い込んでいる、バブルバリュエーションに近いことなど気にしない。しかるにゴールド投資需要は弱まっている、これは株式市場が天井形成するときにいつもおきることだ。
しかし一旦このそびえ立つ株高がまたもや転落することは確実で、Q4と同様にまたゴールド投資需要が大きく戻ってこよう。投資家は株式過剰のポートフォリを規律良く分散する知恵をまた思い起こすだろう、そして資金をまたシフトするだろう。こうなるとゴールド価格を押し上げ、実際に大きなブル相場ブレークアウトを引き起こす。いつものとおり金鉱株はこの上昇を増幅するだろう。
Adam Hamilton, CPA April 19, 2019 Subscribe