🗞 If You Own Gold - I'm Sorry

WHILE YOU POUR THE JOE… ☕️
On All Cylinders

This is probably what it feels like to be trading the S&P 500 this week, with wicks of 50-100 points each day to tease traders into all sort of feelings lately. 🥴 

However, we are now at a major inflection point of $5750-$5800, where the low volume nodes should start to kick in and bring us some sort of recovery (if everything else stacks up). 📈 

That being said, here are a couple of things I’m watching for that to happen:

• Trump delaying tariffs

• Ukraine finally signing a peace deal after US threatened to withdraw

• Equity risk premiums acting like a rebound is coming

If we do hold $5750, I’d expect it to go back to $5900-$6065 before we really see the cards flowing. Otherwise it’s a flush down to $4900 or less.

Speaking of a flush down, let’s get on with today’s email 📧…

SHINY OBJECT SYNDROME
Have We Gone Too Far?

If you’ve been with us for a while, then you know that we advocate for professional-level trading, which excludes looking at charts on an individual basis 90% of the time.

The pros view markets as a function of the entire system. In this case, we want to examine gold not by itself but in relation to other commodities, like oil. 🛢️ 

The chart above shows the ratio of gold to oil, which shows that we are past a five-year high. Therefore, it is safe to say there is now a massive disconnect between the two assets.

But, just how disconnected are they now? ⬇️ 

Well, when we look at correlation regimes, it is obvious that we are about to swing into the negative again as part of a normal historical swing.

I’ll tell you what that means:

• Gold keeps rallying while oil keeps selling

• Gold sells off while oil rallies to catch up

That’s it, no other real conclusion to this.

Now the question becomes which one of the two will it be?

This is the level of inventory for gold in comex vaults since 2018. Notice something?

We are entering the same level of gold inventory as the panic of 2020 during COVID-19. Apparently, the world is entering into a similarly dangerous and chaotic time here.

Which would make sense considering all that is happening right now:

• Russia / Urkaine heating up to either peace signing or obliteration

• Trump tariffs escalating tensions with NAM, EMEA

• China being awfully quiet about chip war and embargoes

Either way, I think that all of this is pretty much priced in, and you can see it in the way the dollar has sold off recently. 📉 

As we said at the beginning of this post, the S&P 500 is also preparing for a rebound in risk-on appetites, which would cancel out today's gold premium.

Now here’s why we’re willing to consider oil a potential hedge in this short bet:

This is the United States manufacturing PMI index, and it just had its second consecutive month of expansion.

By the way, this is one of the reports that is responsible for 85% of our trade ideas, this YouTube video shows you how to break it down like the pros do:

With other industries (even services) expanding their production and inventory levels, it’s clear that Trump’s tariffs are having their intended effects.

Which is to boost domestic business activity and production. 🔥 

That would obviously be good for oil, especially when you consider that China’s PMI is also beginning to expand here.

TRADE OF THE WEEK
Finance Bros & Pilates Moms

That’s right ladies and gentlemen, we’re going even heavier on Celsius stock.

The market is obviously in a short-term risk-on build-up, but it’s very delicate, as we explained at the S&P 500 levels in the beginning, and Bitcoin just won’t reclaim $100,000. 🪙 

Now what that means for Celisus stock depends on how you look at the company. Some say it’s a defensive name, others think of it as a discretionary product.

I say it’s a little bit of both, let me explain:

• 50% gross margin (leading peers and retail industry).

• 1.89x beta

• All-time low forward P/E ratio

One of these is defensive, the other two are cyclical, I’ll let you decide which one is which.

But the one thing that matters is that the stock is too cheap for its own good, and some people have caught onto that fact.

This is the market/volume profile for Celsius stock over 2024 and so far into 2025.

What you can see right away is that the volume point of control (VPOC) hasn’t really changed over the year, meaning most of the period’s volume took place in this level.

Here’s why that’s important. ⬇️ 

Low volatility recently in the stock, ranging within the same fixed channel, encourages systematic fund managers and long-only funds to buy into this statistical safety, and that’s exactly what we’ve seen here.

In fact, those from AllianceBernstein decided to boost their holdings in Celisus by 11.2% as of February 2025, bringing their net position to a high of $376.5 million today.

If we were to compare Celsius to its peers in the beverage group, it’s obvious there’s a tremendous discount here, but how much upside can be expected?

Call me crazy, but based on the profile and just how high-quality this business is, I’d be willing to say we can get to the $90s again. 📈 

As always, it looks like our friends on Wall Street agree with this valuation once again. 🫰 

GO AND MAKE IT HAPPEN
No Role Models

I wish there was a book that really covered everything I learned at Goldman Sachs.

Sadly, there isn’t one.

But what I can give you is one of my favorite documentaries of all time, so today's book recommendation 📖 will come in video form for a change.

You’ll learn the importance of keeping track of all markets at all times, and see why global macro traders are so good at what they do.

To your success,

G. 🥃