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MOOSPEAK: NOV9.2025
Anatomy of a Golden Goose
It is no secret: the big winner this year has been gold. Our equity index models have been respectable, up over 15% year-to-date. Normally that’s a solid year, but when gold (up 4 times as much) gets thrown into the mix, stocks, especially US stocks, begin to look a little lame in comparison.
The Index Model has returned close to 50% this year. It has only made five switches all year, the last one into gold on August 28th. Before that, the model exited US stocks in January and waffled between gold and developed international equities. The two switches to gold (1/8 and 8/28) goosed the model big time, adding 19% and 18% respectively. The two switches to EAFE equities only added 8% total. One switch to gold (-3%) was a false signal.
The outsized gains and inordinate market stability we’ve seen in 2025 are uncommon. It is, however, estimated that 65%-75% of trading volume in the US, Europe, and Asia these days is now algorithmic. Depending on who you talk to, computers are now making three-fourths of equity trading decisions. The algorithms, like Decision Moose, work off tried and true analytical methodologies popular among investment analysts well before computers were in every home.
Gap analysis, price channels, RSI, and Fibonacci retracement are four favorite technical methodologies that can tell us where we are in our investment and where we might be headed. The September switch to gold, and its recent correction are very instructive. Technically, it is behaving in textbook fashion (so far).
(The pdf version of this Moospeak includes a chart illustrating what follows, if you’re interested. I was unable to include it in this space by my deadline.)
The most recent switch to gold occurred when GLD triggered a buy-stop on August 28 as previous hold EFA slid lower. The next day GLD confirmed the switch by breaking out above its 4-month range. The following Monday (9/2) GLD posted a Breakout gap on higher volume, which became the first day of GLD’s 7-week overbought condition per RSI.
Seven weeks later GLD peaked on October 20. After a quick 9% retreat, GLD bottomed (10/28) 10.7% off its top. The price has wandered between GLD’s 38% (370), and its 50% (361) Fibonacci retracement levels ever since.
Conclusion: There appears to be strong support at the 50% reversal level (360), which is also the 20-day stop-loss. The 50-day SMA @ 357 offers fall-back support just below that. The next (down 62%) Fibonacci level is 350. An 11%-to-13% correction looks most likely at this point then. Worst case, however, GLD drops 21% from its top and fills the breakout gap at 318. Thing is, there has been no hurry to buy or sell this dip. After correcting, GLD has spent two weeks between 360 and 368.
One headwind stifling a recovery in GLD is the US Dollar, which has been headed higher since October 17 propelled by rising bond yields. The Fed’s more hawkish stance since the 10/29 FOMC meeting is one reason for that. Another reason is that the US government is no longer spreading Dollars around to its abnormal extent, limiting supply. A third reason is the Trump tax cut which is causing a surge in cap spending and upping the demand for money.
Finally, uncertainty over tariffs’ constitutionality also added to economic uncertainty this week. Tariffs are a tax and as such they weaken the dollar. If the Supreme Court strikes them down, even in part, the Dollar could benefit, at least until the administration finds a work around.
This week, alternatives to gold (equities and bonds) are in a corrective swoon too. The difference is that gold’s correction appears to have stabilized above its 20-day stop-loss at this point. Equities and bonds may still have potential downside. That said, US equities are playing catch up with their international cousins as the Fed bring US interest rates more into line with the rest of the world.
