Gold’s Swoon is a Bargoon

140522_gold_scoreboard

Since this week ended one year ago (on 14 May 2021), we’ve had:

  • A +9.2% debasive increase to the StateSide “M2” money supply from $20.42 trillion to $22.29 trillion, driven largely over COVID liquidity accommodations, the proceeds thereto ending up in the stock market, (oops…);
  • A dysfunction of supply chains, energy sourcing, and currencies elicited from an appallingly inhumane war;
  • A stagflationary shrinkage in deflator-adjusted Gross Domestic Product for three consecutive quarters in the U.S per REAL economic erosion;
  • An increase in interest rates which when starting from 0.00% we’ve demonstrated ad nauseam is beneficial for hard assets;
  • Plus your etc, et alia, ad infinitum…

Thus, we’ve just had both Gold’s fourth consecutive weekly drop and fourth consecutive weekly “lower low”, price this past week not having just re-tested the 1854-1779 critical support zone, but having bored well down therein as shown here in our updated year-to-date graphic:

140522_gold_daily_ytd

Technical analysis aside, Gold’s swoon is incredulously beyond any and all fundamentally analytical common sense, even as today mention is made of a “five-figure” price. We’re content to stay with the Scoreboard’s valuation of 4137, and moreover maintain our forecast high for this year of 2254, (the “M Word” crowd notwithstanding)

Well, belief in Bitcoin is growing at the expense of Gold…

Well, let’s see: priced today at 1810, Gold is -13.4% below its All-Time High of 2089; bits**t’s settle for the week at 29,785 is -57.1% below its all-time high of 69,355. “Bit” of a difference there.

But Squire is making an interesting point. We seem to read more lately of Gold becoming a “has-been” whilst bits**t is what to “be-in”. And ’tis curiously in line with how Leonardo Bonacci (aka “Fibonacci”) may well put it today: a “herd mentality” naturally induced through nature is in force. One pro-bits**t person will “dis” Gold, and then a second; then two more, then another three, then five, eight, 13, 21, 34 and suddenly ’tis “Holy Golden Ratio, Batman!” for one can now predict 55 more will be next to jump on the “dis” Gold bandwagon. And so on. Herd mentality driven by emotion and copying whatever everyone else is doing is extraordinarily fascinating until one ends up with nothing. (Pssst: Got Gold?) Something that endures millennia is not nothing.

Nothing however has been gained from Gold of late other than to be able to purchase it at less than half what ’tis worth. So rationalizing price’s coming off as we here see by the weekly bars is in fact “a good thing”, even as the red-dotted parabolic Short trend completes its seventh week in duration. For Gold’s swoon is a bargoon:

140522_gold_weekly

All that said, ’tis best that Gold not penetrate the bottom of the 1854-1779 critical support zone, toward which it gave a scare via this past week’s (indeed yesterday’s) low of 1797. To be sure, further downside cases can be for 1753, 1721, 1678, and so on; but let’s not go there. Rather, the “The Herd” need be made more aware. (Or as a long-time Gold colleague says: “There will come the day to sell your Gold: the day that everybody else wants it.”)

What nobody really wants is an economy suffering the ravages of stagflation which continue to mount, in turn furthering the Economic Barometer’s dismount. Again assuming that neither do you take nourishment nor consume energy, your April cost of living rose +0.6% as measured by the Core Consumer Price Index: just in case you’re scoring at home — or perhaps sweating at home given your perfected day-trading methodology has stopped working — that is double the inflation increase for March.

But wait, there’s more: the venerable University of Michigan “Go Blue!” Sentiment Survey preliminary reading for May just came in at its lowest level of those finalized since August back in 2011. As we’ve on occasion quipped about the Conference Board’s reading on Consumer Confidence: “Are you confident?” The Baro sure ain’t:

140522_econbaro

As for the last place you’d wanna be working these days, FedHead Jerome “Jumpin’ Jay” Powell has secured another four-year stint overseeing it all, within which New York FedPrez John “It’s All Good” Williams is confident the Federal Reserve has the “right tools” to lower inflation, whereas FedGov Christopher “Up The” Waller says: “We have to cool off demand and try to get inflation pressures down.” Which for you WestPalmBeachers down there there means your variable rate funding sources are going to further squeeze you.

And speaking of squeezing, what is supposed to be a record-setting year for travel is instead finding costs too dear to manage and (in the words of Dow Jones Newswires) “spoiling summer plans.” (One bright spot: here in wee MC, indoor masking requirements were just lifted yesterday, should you be headed this way; just add €uros).

Either way, the precious metals’ ways obviously remain down as we see across their respective three months of daily bars for Gold on the left and for Silver on the right. The “Baby Blues” of trend consistency in both cases need curl back above the -80% axes to become indicatively leading of higher price levels:

140522_gold_silver_dots

And upon prices inevitably turning higher, by the 10-day Market Profiles for Gold (below left) and Silver (below right) it clearly looks to be an arduous climb near-term, (barring the “buying light bulb” suddenly going on for “The Herd”):

140522_gold_silver_profiles

As to where Gold sits in its broadest sense, here we’ve:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4137
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • 2022’s High: 2079 (08 March)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • The Weekly Parabolic Price to flip Long: 2027
  • The Gateway to 2000: 1900+
  • 10-Session “volume-weighted” average price magnet: 1859
  • The 300-Day Moving Average: 1824 and rising
  • Trading Resistance, (notable Profile apices): 1822 / 1837 / 1863

Gold Currently: 1810, (expected daily trading range [“EDTR”]: 32 points)

  • Trading Support: 1808
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • 10-Session directional range: down to 1797 (from 1911) = -114 points or -6.0%
  • 2022’s Low: 1779 (28 January)
  • On Maneuvers: 1750-1579
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Peeking ahead to next week, 10 of the Econ Baro’s 13 incoming metrics are “by consensus” expected to be worse than their prior readings. To that end, we’ll part for this week with these few observations:

  • U.S. Secretary of the Treasury Janet “Old Yeller” Yellen sees the financial system carrying on in an orderly fashion (now stop laughing out there) in spite of “volatility”. Orderly or otherwise, with respect to “volatility” we see it continuing to clobber the stock market; (have a glance at the website’s S&P Moneyflow page: scary!). Given the S&P’s high (4819 vs. 4024 today) being in for the year (see our 23 April missive), ’tis quite a way to go for the low, our 3587-3198 band still at hand.
  • Speaking of the Treasury, everyone’s favourite segment therein — the delightful Internal Revenue Service — has apparently (due to COVID ’tis said) fallen significantly behind such that delayed refunds now pay an interest rate of 4%. That’s better than the bank, and moreover, ’tis perfectly OK to overpay. So don’t delay, file today!
  • Finally, per the NYFed, those responding to a survey on inflation expectations put prices up by +3.9% three years from now! (Yes, you’re laughing again). Query: shouldn’t that decimal point be moved a bit to the right?

Regardless, don’t you miss out on what’s right: whilst ’tis in a swoon, grab the Gold bargoon!

www.deMeadville.com

Gold Still Can’t See Its Way Clear, but the S&P High Looks in Place for the Year

230422_gold_scoreboard

But now a week hence, Gold has been reamed, recording its third-worst weekly change year-to-date in settling yesterday (Friday) at 1933. To be sure, we’re maintaining our forecast high for this year of 2254; but for the present — in spite of all things as Gold-positive as for which one could ever wish — the evil, nasty, belligerent Short trend (as is its wont) seems pressing on price. Here are the weekly bars, the parabolic Short trend depicted by the four rightmost declining red dots:

230422_gold_weekly

The bad news is RUS state television’s promoting this past Thursday that the RS-28 Sarmat missile can level New York City; but the price of Gold, struggling to see its way clear, dropped anyway. The good news by the above graphic is that such Short trend really looks short-lived, for Gold’s broader bent across the chart clearly is to the upside.

Moreover, with the StateSide Money Supply (“M2”) having just now topped the $22 trillion level, our forecast for Gold 2254 seems modest given the yellow metal’s value of 4088 as shown in the opening Scoreboard. But one year at a time. Further, we deem Gold’s gleam as the buy of a lifetime. To reprise the late, great Richard Russell: “There’s never a bad time to buy Gold” … especially with present price at but 47% of present value. Now as to the overvalued end of the spectrum…

Second the S&P 500: The mighty Index’s high for this year (4819 on 04 January) is it from our perspective. Just as everything possible is positive for Gold, we find absolutely everything as negative for the stock market:

  • The recession-indicative yield curve is as flat as a pancake, be it 5-, 10-, or 30-year dough all yielding 2.9%, essentially double the S&P’s yield (per Friday’s 4272 settle) of 1.433%;
  • The Economic Barometer is a gyrating, recessive mess as we’ll later show;
  • Q1 Earnings Season is very poor on the notion reports were supposed to be better post-COVID but clearly are not: only 54% of S&P constituents’ earnings (thus far reported) bettered Q1 of 2021; post-COVID, shouldn’t that be 100%? Oops;
  • The “live” price/earnings ratio of the S&P is at present 35.7x whereas its lifetime mean (to which the p/e historically always reverts) is 38% lower at 22.3x;
  • And then technically there’s this daunting negative MACD (moving average convergence divergence) crossover on the S&P monthly chart for the past five years… Ouch! And sayonara 2022. Get ready to get ugly:

230422_sp_5yrs_macd

“But, you can’t will people out of the stock market…”

Oh that is one of your most salient comments there, Squire. This past week’s last two trading days netted the S&P 500 a combined loss of -4.2%. But the S&P’s MoneyFlow regressed into S&P points recorded a comparable loss of just half that at -2.1%. The interpretation? The “We won’t sell because it always comes back!” crowd is alive and well, until they, too, begin to sell. So much for conventional wisdom, unless one has significant patience —> Per the “Friendly Reminder Dept.”, from October 2007 to April 2013 the S&P 500 did not make a new high, (just in case yer scorin’ at home).

“So how low is low.”

Rather than assign a subjective percentage drop, whether measured from here (S&P 4272) or from the high (S&P 4819), ’tis our preference to assess price structure. And as we shared via text this past week: “Broadly we can see S&P 3587-3198”. In turn, that’s in perfectly reasonable — indeed long overdue — order for an overall correction from 26% to 34%. ‘Course, regardless of our pose, nobody knows.

Still, in recent years we’ve mentioned the notion of the “Look Ma! No Earnings!” crash. So in that vein we today give a tip of the cap to Bloomy reportage in actually acknowledging this poor Earnings Season. And yet, Dow Jones Newswires continues to make reference to an (albeit all inflationary) StateSide “Hot Economy”. Does this look “hot” to you?

230422_econbaro

The only “hot” metrics of this past week were marginal improvements in March’s Housing Starts and Building Permits. The balance was a “cold” wind that blew for the month’s Leading Indicators and Existing Home Sales, along with April’s lower Index readings from the National Association of Home Builders and the Philly Fed. As for the broader graphic, ’tis a “gyrating, recessive mess” indeed. Cue Jerry Reed from ’71: “When you’re hot, you’re hot. When you’re not, you’re not.”

As for the FinMedia folks at large, our commendation to them for discovering the FedFundsFutures having already priced in a 50-basis-points rise per the Federal Open Market Committee come 04 May. We noted same three weeks ago in the 02 April missive, but ’tis better the news at least play ketchup than remain pickled, (sorry).

As to “The Now” for Gold, here next is the two-panel graphic of price’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Therein you can see the near-term negativity as Gold’s “Baby Blues” of regression trend consistency turn downward whilst price is pinned down near the bottom of the Profile:

230422_gold_dots_profile

And ’tis the same for Sister Silver, say no more:

230422_silver_dots_profile

Ahead of a critical week for incoming economic metrics, we’ll wrap it here with these three notes:

  • “Researchers” report that millions of ably-eligible folks are choosing “indefinitely” to remain out of the workforce. We find it curiously coincident with such choice that — going by S&P/Experian’s data on consumer credit defaults — they’ve just increased for the fourth consecutive month. Live by the credit card; die by the credit card.
  • One Tobias Adrian — The International Monetary Fund’s Director for Monetary and Capital Markets — expressed concern this past week over the risk for further selling in the markets such that we may “…see a certain amount of readjustment of asset valuations going forward…” That’s a quaint way of putting it, one has to say.
  • Ready for the Mother of all Metrics? Again with reference to it being a critical upcoming week for data from the “hot” economy, therein we’ll get the first StateSide reading of Q1 Gross Domestic Product. The consensus is for a vastly reduced annualized pace of only +1.1%. But here’s the killer: the consensus for the associated Chain Deflator is +7.3%. That is stagflation in spades, right there!

And Gold toward seeing its way clear remains so cheap through here!

www.TheGoldUpdate.com

Gold’s Upstream Gleam

160422_gold_scoreboard

Better indeed, as it occurred within Gold’s weekly parabolic trend being Short, but defied by price now for two weeks running. Yes, as we’ve oft quipped over these many years, “Shorting Gold is a bad idea” especially when price gaps up over Smart Alec’s Short stop as periodically happens toward wrecking his account, (see 19.Mar.2009, 16.Mar.2020, 28.Feb.2022, et alia).

“Jeepers, mmb, that’s 118 points of opening up gaps for those three days alone…”

That’s why ’tis a bad idea, Squire. And we can wax far more eloquently thereto (like 631 points of up gaps from just 37 days this century … but we digress). Instead, let us process to Gold’s weekly bars from one year ago-to-date. And like salmon spawning upstream against onrushing water, we see Gold rising toward the descending red dots of parabolic Short trend. Fairly gleaming stuff, one has to say:

160422_gold_weekly

To be sure, ‘twould be imprudent not to acknowledge said trend as Short. However, to see it proved wrong– such that we can get on toward attaining our forecast high for this year of 2254 per the dashed top line — is the far better and broader story.

Geo-politically anew, musings of a “NucWpn”, loss of a “towed” warship (by either a “stormy sea” else a “missile spree”) can be rationale for Gold again getting a boost, and in turn, the S&P 500 being given the boot; (yet, we reprise the infamous headline: “World Ends, Dow +2”). Either way, we’d prefer to see “Gold is on the move” due instead to the debased StateSide money supply, its “M2” measure of which in the new week ought surpass the $22 trillion level to have doubled in eight years.

And yet: Gold’s price is only 1977? The market is never wrong, but the irrationality of price today not trading ’round the 4000s is off the far end of Gaussian’s bell curve.

All that noted, a favourite measure of ours for detecting if a market is “in play” is the directional change of its “expected daily trading range”. Here below ’tis for Gold from one year ago-to-date, clearly of late in “El Plungo” form as range (rather than staying geo-politically hyped) returns toward “normal” levels from well before events related RUS/UKR 2022. Thus we’ve the nauseating interpretation that Gold at present is not “in play” despite ours (and everyone’s) common sense thinking that both range and price ought be “up, up and away”:

160422_gold_edtr

“Still, price has been up almost as much as 14% so far this year, mmb…”

True enough, Squire. And at 1977 today, Gold at present is +8% net in 2022. Should that be maintained, Gold shall record its seventh-best “year-through-April” percentage gain from 2001-to-date: not really that great given the war, inflation/stagflation, debasement and thus massive undervaluation. Comparably in 2006, Gold’s Jan-Apr gain was a net +26%, and ’twas +22% for the like four months in 2016. Yet as just itemized, there are far more “dire” events afoot now than there were back then.

But again, in the words of charter Gold Update reader JGS: “One day we’ll wake up and Gold’ll be 1,000 points higher than the day before.” For the sake of humanity, ’tis probably better we never see that. Rather, to get Gold’s gains realigned with StateSide currency debasement as we witnessed throughout this century’s first decade would be perfectly acceptable, per this magnified 10-year snippet from our opening Gold Scoreboard graphic:

160422_gold_M2_snippet

Meanwhile economically off the Dow Jones Newswires this past week came “After Rapid Recovery, Watch for Sudden Slowdown…” Per the Economic Barometer, the lads are having difficulty parsing it all out:

160422_econbaro

Our best guess is in reference to Q4 Gross Domestic Product annualized growth having been recently finalized at 6.9% (with a blind eye to the 7.1% Chain Deflator, i.e. “real” economic shrinkage). That said, the Baro did put in a good week: April’s University of Michigan Sentiment Survey and New York State Empire Index posted improvements, as did March’s Retail Sales (save for cars) and Capacity Utilization.

However, this all came amidst further inflation in both Export and Import Prices, Wholesale and Retail Inflation, (albeit the Core reading of the Consumer Price Index actually slowed). As well, the U.S. Treasury reduced some of its budget deficit. But February’s Business Inventories became more bloated.

Then there’s the Federal Reserve with just 13 trading days left until they again raise. And as noted a week ago, the FedFundsFutures already have “priced-in” a 50-basis-point increase come 04 May. Indeed St. Louis FedPrez James “Bullish” Bullard, NY FedPrez John “It’s All Good” Williams, and FedGov Christopher “Up The” Waller all see a 50-bps hike in the cards. Besides, they gotta keep up with The Reserve Bank of New Zealand and The Bank of Canada, both having already so moved.

Upwardly mobile as well are the precious metals’ “Baby Blues”, the dots that depict linear regression trend consistency. Below on the left we’ve Gold’s daily bars from three months ago-to-date, the blue dots clearly in ascent, as they are on the right for Silver. As noted of late, the two charts being ever so similar is indicative of Sister Silver adorned not in her industrial metal jacket, but rather in her precious metal pinstripes:

160422_gold_silver_dots

To the 10-day Market Profiles we go for Gold (below left) and Silver (below right). And for both cases respectively, should their congestion areas of 1967-1982 and 25.50-25.95 become support, then for the yellow metal ’tis “Hello 2000” and “Hello 27” for the white metal, (barring the evil parabolic Short trend having its way):

160422_gold_silver_profiles

All of which leads us to:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4084
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • 2022’s High: 2079 (08 March)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • The Weekly Parabolic Price to flip Long: 2071
  • 10-Session directional range: up to 1986 (from 1916) = +70 points or +3.7%
  • Trading Resistance: 1982

Gold Currently: 1977, (expected daily trading range [“EDTR”]: 26 points)

  • Trading Support: 1976 / 1967 / 1946 / 1934
  • 10-Session “volume-weighted” average price magnet: 1949
  • The Gateway to 2000: 1900+
  • The 300-Day Moving Average: 1816 and rising
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • 2022’s Low: 1779 (28 January)
  • On Maneuvers: 1750-1579
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

To finish, there are (depending upon one’s inclusion criteria) between 193 and 197 countries in the world, of which — since 1980 — 63 (32%) have at one or more times formally defaulted on their debt. As has been expected, Russia just did so for the fourth time since 1991, such default this time ’round being defined as “selective”, by payment being made in Rubles rather than in Dollars, (apparently in breach of the designated requirement).

‘Course, the obvious problem is the worthless Rubles cannot be converted by the bondholders into the same amount of Dollars originally lent. Arguably however, the Dollar too essentially is “worthless”. So ‘twould seem some levels of worthlessness are valued differently than others. Thus, here’s a thought: one might get some Gold in its upstream before unaffordable becomes its gleam!

www.TheGoldUpdate.com

Gold Takes a Snooze as Volume Cools

090422_gold_scoreboard

‘Tis been quite some time since we commenced with a quiz, so here ’tis:

090422_quiz

Obviously, the gold line is Gold, the anticipated geopolitical spike n fade starkly giving it away. But you WestPalmBeachers down there may be stuck as to the other line, the color of which is green (hint hint, wink wink, nudge nudge…)

And, ahhhhh, we have a winner! That’s right, Bunky (from Boynton): ’tis the world’s “reserve currency”, the Almighty Buck, as measured by the “Dixie” Dollar Index. Across these past 36 trading days, both Gold and the Dollar are up a net +4.2%, which for the conventional wisdom crowd is an impossibility. ‘Course, you regular readers of The Gold Update fully comprehend that Gold plays no currency favorites. Et encore, voilà! As for Dixie itself, it traded above 100 on Friday for the first time (ex-2020’s brief COVID spike) in five years.

Dollar attractiveness, indeed. Why maintain one’s dough in an account of the Euro paying zero when StateSide money — be it by the flat-curved Five-year Note, 10-year Note, or 30-year Bond — presently yields 2.7%. Moreover, all three of those “risk-free” debt instruments now yield essentially double that of the “risk-full” S&P 500’s 1.4%.

Specific to this week’s title, “Gold Takes a Snooze as Volume Cools”, that untowardly seems 180° out-of-phase given these five fundamental realities:

  • War: humanely unconscionable and economically jarring;
  • Inflation: been to the grocery store this past week?
  • Recessive Stagflation: Q4 “real” GDP finalized as negative and the aforementioned yield curve flat;
  • Currency Debasement: the entirety of “M2” can cover only a -50% S&P 500 correction;
  • Gold Valuation: 4080, yet price settled yesterday (Friday) at 1950.

Gold positives, one and all. Therefore, price ought to be rockin’ to the upside, right? But “ought” ain’t “is”. Rather, these past five days saw sleepy old Gold record — be it by points or percentage — its second-narrowest trading week of the year, a range of just 36 points within an “expected” trading range pegged for last week of 68 points; further the week’s total contract trading volume was fourth-least year-to-date. “…zzzzzzzzz…”

Thus by that technical reality, ’tis fair to say there must be nothing goin’ on out there.

Such nothing is reflected below in Gold’s rightmost comparatively wee weekly bar as we view the lot from one year ago to date. ‘Twas Gold’s fourth consecutive week of recording a “lower high”; thus perhaps a bit of a bounce is nigh, albeit beneath the lid of the fresh parabolic Short trend per the two red dots:

090422_gold_weekly

Speaking of bounce, so did the Economic Barometer in a week of just six incoming metrics. To be sure, there were the ugly bits, February’s Factory Orders shrinking for just the third time since the COVID sweeping shut down two years ago, and Wholesale Inventories bloating by the second-largest amount in the 24-year history of the Econ Baro.

But on the flip side, Initial Jobless Claims plummeted to a modern-day low, evidenced by the fact that everybody must be working as of February’s Consumer Credit sky-rocketed to levels we’ve never before recorded: “Lock in a rate before it’s too late!” Too, the Institute for Supply Management’s Services Index rose in March for the first month since its November reading. Thus, on balance, the Baro got that bit of a bounce as we below see. “Hello Lael…”:

090422_econbaro

As for a potential hike of 50 basis points in the Federal Reserve’s Funds Rate, the FedFundsFutures already have “priced-in” such increment for the 04 May Federal Open Market Committee Policy Statement, i.e. the current 0.25%-0.50% target range becoming increased to a 0.75%-1.00% target range; (the futures thereto settled yesterday at an equivalent rate of 1.045%). And as you no doubt heard this past Tuesday from Fed Governor and Vice-Chair Nominee Lael “The Brain” Brainard, the punch bowl is also to be emptied by some 90 billion ladles per month. “What? No refills?” (Now settle down there, Bunky…)

Settling down from their descent — and then ascending since Tuesday — are Gold’s “Baby Blues”, the dots of regression trend consistency that we next see on the left across price’s daily bars from three months ago to date. The rightmost grouping does herald a nice basing pattern, although we caution that the foreshown weekly parabolic trend obviously is Short, with price not immune to the oft-noted 1854-1779 underlying support zone. Then on the right is emphasized 1934 as clearly the most dominantly-traded price in Gold’s 10-day Market Profile:

090422_gold_dots_profile

Silver’s graphic remains similar, her Baby Blues (below left) just now beginning an upward curl, with the mid-24s in her Profile (below right) as near-term trading support:

090422_silver_dots_profile

Finally, we have this from the “Ever Get a Job from a Poor Guy? Dept.” Purportedly per data from the ever-feisty Forbes, globally combined billionaire wealth has slipped to the $12.7 trillion level. Such an amount — and again that’s a global total — would run the U.S. government alone for not quite two years. Then, who’d be next on the list? You perhaps?

With that in mind, we may still be near-term technically (not fundamentally) cautious on Gold; but for price to get off its bum and start flying toward our forecast high this year of 2254 would be most welcome!

Cheers!

…m…

www.deMeadville.com

Gold Up, Volatility Down

260322_gold_scoreboard

The expected daily trading range (EDTR) is swiftly dropping from a war-high of nearly 50 points now to sub-40, and shall further shrink into the new week. Here graphically is Gold’s EDTR from one year ago-to-date, now 37 and still above average, however sinking like a stone:

260322_gold_range

Indeed, the yellow metal’s actual trading ranges this past week exceeded 30 points on just one day (Wednesday).

And more broadly, with the war sadly having morphed into a daily absorbed event, volatility extremes at large are rapidly waning, the revered, oft-feared Chicago Board Options Exchange’s Volatility Index “VIX” actually settling the week below its 200-day moving average for the first time since 09 February.

In fact, within the buzz at a large gathering this past week, we overheard it callously questioned: “Is there a war going on?” Irrespective, the markets have to a degree “moved on”, the S&P 500 itself having netted seven gains in the last nine sessions. Regardless of war, stagflation, increased interest rates, and an S&P price/earnings ratio today 68% above its lifetime median, life apparently is good.

‘Tis good as well for Gold — it recording its 11th up week of the past 15 — in settling yesterday (Friday) at 1958. Price again avoided by mere pips tripping its weekly parabolic Long trend to Short per the rising blue dots next shown here. Now 21 weeks in duration, the Long trend ties for sixth most extensive this century. Yet should 1910 trade in the new week, it all flips to Short; and should you be scoring at home, Gold’s expected weekly trading range is now 66 points:

260322_gold_weekly

Meanwhile from the “Back in Harmony Dept.” we again present the website’s graphic of Gold vis-à-vis its smooth valuation line, (borne of price’s changes relative to those of the other four primary components which comprise the BEGOS Markets: Bond / Euro / Gold / Oil / S&P 500). Here below, the lower panel oscillator (Price less Valuation) is the key: at its recent closing spike, (Gold 2058 on 03 March), price was nearly 200 points above the smooth line; today combined with the duly rising line and price fade, the two returned to harmony this past week at the oscillator level of 0 (zero).

But obviously by the opening Scoreboard’s debasement value of 4071, Gold remains wildly underpriced, just as ’tis by our forecast high for this year of 2254. For the present, here’s the in-harmony graphic:

260322_gold_value

That mouthful said, given Gold in the technical vacuum is quite stretched to the upside, our near-term sense is price trading between, say, 2000 and the underlying support zone (as last week shown) spanning 1854-1779. However: with Gold “awareness” being renewed, our 2254 target remains well in view.

Gold-optimistic as ever, eh mmb?

Squire mon vieux, were we not, we wouldn’t be writing.

As for the “They’re Just Figuring This Out Now Dept.” (aka the “Federal Reserve”), Chair Powell went on record this past week saying that interest rates need be quickly raised. And as you regular readers know, we’ve not ruled out a Volckeresque “Saturday Night Massacre” akin to 06 October 1979. (Yes, ’tis a bit of a stretch perhaps). But in peering ahead at next week’s incoming stream of 15 metrics for the Economic Barometer, Thursday (31 March) brings the Fed’s favoured inflation gauge: Core Personal Consumption Expenditures.

For four consecutive months, the reading has been at a steady annualized pace of +6.0%. But ’tis “expected” this time ’round to have “cooled” a tad to +4.8%. Nonetheless comparatively: the “riskless” US 30-Year Bond yield is only 2.603%; the 10-Year Note only 2.492%; and the three-month Bill only 0.520%. Then there’s the “riskfull” S&P 500 yield which settled the week at only 1.406%.

“But people don’t buy stocks anymore for yield, mmb, ’cause they only go up and up and up, right?”

To Squire’s point, the S&P 500 from 1970-to-date (with its regression channel):

260322_sp_de_1970

Further in support thereto, Dow Jones Newswires reported this past week that older Americans are “flush with housing and stock portfolio wealth”. Living the marked-to-market illusion is a beautiful thing. Living the reality of the falling Econ Baro is another thing:

260322_econbaro

And notable (or perhaps better stated notorious) amongst last week’s brief set of stagflating metrics was shrinkage in February for both Pending Home Sales (-4.1%) and Durable Orders (-2.2%). But thankfully, the straight-up S&P is oblivious to it all… “Whew!”

Not so oblivious to price’s recent spike and fade are Gold’s daily bars below on the left from three months ago-to-date. The baby blue dots of 21-day linear regression consistency are smack on their 0% axis, meaning that measure is now trendless, (which for you WestPalmBeachers down there means ’tis El Flato). Below on the right is Gold’s 10-day Market Profile, its 1935-1924 area bellying-out as near-term trading support:

260322_gold_dots_profile

Silver continues her precious (rather than industrial) metal stance as her like two-panel presentation is spot on with that for Gold, the neutral “Baby Blues” at left and Profile at right, wherein we see 25.15 as near-term trading support:

260322_silver_dots_profile

So with just under a week to run until March is done here we’ve the present state of the Stack:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4071
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • 2022’s High: 2079 (08 March)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • Trading Resistance: 1963 / 1980

Gold Currently: 1958, (expected daily trading range [“EDTR”]: 37 points)

  • 10-Session “volume-weighted” average price magnet: 1937
  • Trading Support: 1935-1924
  • The Weekly Parabolic Price to flip Short: 1910
  • The Gateway to 2000: 1900+
  • 10-Session directional range: down to 1895 (from 1995) = -100 points or -5.0%
  • The 300-Day Moving Average: 1811 and rising
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • 2022’s Low: 1779 (28 January)
  • On Maneuvers: 1750-1579
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Finally, to wrap, we have this:

The iconic Carl Icahn — who by our reckoning has got to be some 120 years old by now — remarked this past Tuesday to the FinMedia that there “…very well could be a recession or even worse…” Clearly Carl keeps an eye on the Econ Baro. And eye, too, Gold: range is tightening, but the future worth sighting!

260322_oeil_sur_or

Cheers!

www.TheGoldUpdate.com

Gold’s Spike and Fade has Played

Geopolitical tensions and gold

Near-term negatives notwithstanding, ’tis fair to finally say that Gold’s geo-political spike and anticipated fade have played. Courtesy of the “Turn off the TV and Look at the Data Dept.” we’ll start with the below year-to-date chart.

RUS’ invasion of UKR commenced on 24 February, Gold opening that day at 1912 per the labeled line. Price rightly spiked onward to 2079 — just 10 points shy of its 2089 All-Time High (07 August 2020) — and then faded as anticipated to a pre-war low per this past Wednesday at 1895, irrespective of the incursion continuing to rage. ‘Tis what Gold does:

In settling out the week yesterday (Friday) at 1922, we’ve highlighted in the above chart an “underlying support zone” should price reach lower still into the 1854-1779 region.

“Lower still, mmb?”

Ahhh, Squire. We missed you popping in during our recent peregrinations. First let us say that fundamentally Gold’s “awareness” has expanded — albeit sadly — given the war, but in stride as well with inflation’s glide. Moreover: the BIG PICTURE view remains price achieving our forecast 2254 this year (per the very analysis laid out in the 01 January missive “Gold 2254 in Year 2022”), not to mention Gold’s currency debasement value today being 4058 by the opening Scoreboard. Second though, technically let’s point to two near-term Gold negatives via the following dual-panel chart.

Below on the left is one of the most visibly-followed technical studies in the history of, well, technical analysis. ‘Tis the mouthful “moving average convergence divergence” (“MACD”, thank you G.A.) for the daily closing price of Gold, shown here from 2021-to-date.

The rightmost negative MACD crossover signal (blue below red) was confirmed per Wednesday’s open at 1920: the average downside follow-through of the 11 prior such negative signals is -67 points. Thus in that vacuum: 1920 – 67 = 1853, which is just barely into Gold’s aforeshown 1854-1779 “underlying support zone”. Then on the right are our very familiar “Baby Blues” of the grey trendline’s consistency now in full plunge for Gold’s daily bars from one month ago-to-date.

All that despite the Gold hype button being hammered hard — and honestly with good fundamental reason — across these past several weeks. Regardless, the market is never wrong, Gold again succumbing as it “always does” following geo-political spikes:

So with the war spike and fade duly laid, let’s next look to Gold’s weekly bars from a year ago-to-date. The rising blue dots of parabolic Long trend have just completed their 20th week on this run, ranking such stint in a tie for seventh by duration century-to-date.

The ensuing week’s “flip-to-Short” level of 1889 obviously is well within the reach of above two near-term negative technicals playing out, especially given Gold’s “expected weekly trading range” is coincidentally now 67 points. So unless price gets off its derrière, it can be down there when we again meet next week:

S

Stagflation, Gold, and Silver

As for stagflation, clearly ’twas exemplified by the Economic Barometer’s fall for the week, the S&P 500 ironically (or better put, blindly) rising in concert:

Therein for March, the Philly Fed Index did improve, but the New York State Empire Index went negative and the National Association of Home Builders Index slipped below 80 for the first time in six months. February’s Housing Starts improved, but Building Permits slowed; Export/Import pricing favoured the U.S., and Capacity Utilization clicked up a few ticks … but Industrial Production slowed, wholesale inflation rose, and both Existing Home Sales and Retail Sales came down off January’s rails.

Returning to Gold, here below left we’ve the three-month version of the daily bars with the falling Baby Blues seen earlier, plus below right the 10-day Market Profile with present price (the white bar at 1922) having faded as much -184 points post-spike:

And in sporting her precious metal pinstripes, poor ole Sister Silver hasn’t fared much better, at left her Baby Blues slipping too, whilst at right her -10.7% Profile price plunge in just seven days the worst for such stint since 01 December 2021:

Week Ahead

To wrap ahead of a quiet week for incoming data:

  • The StateSide Senate Banking Committee this past Wednesday saddled up Jerome “Jumpin’ Jay” Powell for renomination to continue chairing the Federal Reserve along with trusty sidekick Lael “The Brian” Brainard for Vice-Chair; (no word on positioning for Trigger nor Buttermilk).
  • Exacerbating its crumbling credibility, RUS “warned” of defaulting on $150 billion (P16 trillion) in debt service come Wednesday (23 March) as 20 years of democracy continues to swiftly eviscerate toward a renewed 20 years of darkness. As penned just two weeks back, “RUS is now essentially done.” (Recall 1998?)
  • And save for a brief “safe haven” (hilarious) bid at the commencement of COVID, the Dollar Index has not traded above its 100 level with any consistency since its Nov 2016 through April 2017 run. But it nearly so did (at 99.425 on 07 March) even as Gold was completing its spike (at 2079 on 08 March). Gold and the Dollar soaring together? “Yikes!” But it does happen.

Despite Gold’s spike and fade — even should near-term negativity stay in the way — at the end of the day we obviously look for Gold to win far and away!

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold Does The Bop and Drop

However, the timing of RUS’ waging war on UKR being coincident with increasingly-visible inflation – indeed stagflation – has served to ramp up Gold “awareness”: a “wokey” word to be sure, but worth its weight in this case.

And specific to our missive’s title, Gold bopped up this past week to as high as 2079 — just 10 points from its All-Time High of 2089 (07 August 2020) — and then summarily dropped to 1961 toward settling out the week yesterday (Friday) at 1992.

The plunge from high-to-low of -117 points was Gold’s worst intra-week throttling (by points) since that ending 18 June of last year; by percentage (-5.7%), it was in the 14th percentile of Gold’s worst high-to-low weeks this century; (and for those of you scoring at home wherein you trade Gold by points rather than a percentage, the post-bop drop was the tenth worst points loss since that ending 21 June 2013 during a stint of the Gold Era we’d rather forget).

Still by comparative geopolitical price fade, this time ’round Gold “thus far” is much firmer (thank you stagflation) than during RUS’ seizing of UKR’s the Crimean Peninsula back in 2014; again we update these two percentage Gold price tracks:

But even though we opine “firmer” so must we acknowledge “fragile”. For the instant, ’tis perceived there is a glimmer of hope for some RUS/UKR resolvement, the price of Gold drops like a stone: this past Wednesday alone, aware of diplomacy in the air, Gold intra-day fell better than 2% twice within two mutually-exclusive three-hour periods. Thus our Gold — even as stagflation-boosted — is firmly fragile, or fragically firm, depending on your choice of term.

What would be the price of Gold today had the RUS/UKR incursion not occurred?

Recall that through the entirety of 2021, Gold traded just on either side of 1780 forever. But to date in 2022, the price has been up as much as +13.6% and is at present +12.4%; moreover, Silver’s maximum rise thus far is +17.7% and ’tis at present +15.1%. So no complaints there, even as both precious metals are trading at essentially one-half their currency debasement valuations. But should “awareness” further build, our 2022 forecast high of 2254 still can be filled.

Yet Gold’s “bop ‘n drop” stands stark per the rightmost weekly bar as we next show here from one-year ago-to-date. The price for the ensuing week to flip the present blue-dotted parabolic Long trend to Short is -129 points below 1992 at 1863: given Gold’s “expected weekly trading range” is now 63 points, reaching down so extremely (in that vacuum) is at least two weeks away, but…

Indeed speaking of “extreme” — and as fundamentally undervalued as remains Gold — one cannot ignore the heights to which price has climbed vis-à-vis its smooth valuation line (borne of how price is changing relative to changes by the other four primary markets which comprise BEGOS, i.e. the Bond, Euro, Gold, Oil and S&P 500).

The following graphic per the website depicts from one-year ago-to-date the closing price of Gold relative to its smooth line, from which too much deviation results in returning thereto; the difference between the two lines, which emphasizes such extreme, is the oscillator in the lower panel, presently suggesting that at 1992, Gold right now is still 100 points “high”. Again this is a purely flexing read specific to how Gold is being traded relative to its four BEGOS peers, without regard for fundamental undervaluation:

That noted, from the “We Love Symmetry! Dept.” here is the percentage change comparison of the price for Gold across the last 21 trading days (one month) versus that of the S&P 500. That is near perfection for mirrored negative correlation:

Economically, ’twas not a great week with stagflation running ahead. February saw U.S. retail inflation increase another +0.8%: such recent levels haven’t been seen since just prior to the FinCrisis starting in 2008. And although Wholesale Inventories were worked off, the following metrics all were worse month-over-month: Consumer Credit, the Treasury Deficit, the Trade Deficit, and the University of Michigan’s Sentiment Survey. Stagflation + Invasion = Unhappy S&P:

That noted, the S&P’s Moneyflow lacks fear, and the Index itself is near-term oversold; thus should it bounce and the negative correlation with Gold hold, watch for the yellow metal to work lower still.

Meanwhile, the European Central Bank after postulating they shan’t raise rates in 2022 is now preparing to so do, President Lagarde pointing to inflationary pressures arising given the RUS/UKR war. ‘Course StateSide where we just were, not drilling for Oil combined with banning imports from RUS means not driving anymore, short of getting an electric vehicle. (“Got Coal?”)

Gold Vs Silver

What we’ve got here are at least momentary price toppings for both Gold and Silver. In turning to their daily bars from three months ago to date for the yellow metal on the left and for the white metal on the right, the two panels are fairly identical as are their “Baby Blues” patterns reflective of trend consistency. And typically when those blue dots are “crawling across the ceiling” like this, the uptrend has been firm, but may turn fragile as profit taking ensues, especially should “The M Word” crowd rear its manipulative short-sided head:

As for their 10-day Market Profiles, both Gold (below left) and Silver (below right) are fairly centered therein with overhead trading resistance and underlying trading support as labeled:

All of which summarily brings us to:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4053
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • 2022’s High: 2079 (08 March)
  • 10-Session directional range: up to 2079 (from 1892) = +187 points or +9.9%
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • Trading Resistance: 2021 / 2053

Gold Currently: 1992, (expected daily trading range [“EDTR”]: 48 points)

  • Trading Support: 1991 / 1965 / 1931 / 1910
  • 10-Session “volume-weighted” average price magnet: 1974
  • The Gateway to 2000: 1900+
  • The Weekly Parabolic Price to flip Short: 1863
  • The 300-Day Moving Average: 1809 and rising
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • 2022’s Low: 1779 (28 January)
  • On Maneuvers: 1750-1579
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Here are three quick quips to wrap:

  • On Wednesday (16 March) the Federal Open Market Committee shall vote unanimously to raise their Bank’s Funds Rate — and well too its Discount Rate — for the first time since 19 December 2018. But given the current geo-political crisis, we were considering titling this week’s missive as “Is The Fed About To Balk?” Just a thought.
  • This just in from the laughable “Where’ve They Been? Dept.”: according to Bloomy, “Morgan Stanley and Citi Strategists See Equities Storm Forming”. Just sweep around them, they’ll catch up; obviously by our “live” S&P price/earnings ratio of 33.6x — 50% above the historical mean — earnings still aren’t there to support current price.
  • We read that the price of Nickel gained +227% in less than three weeks, indeed reaching $100k/tonne on the London Metals Exchange. So search around under those old sofa cushions and you too might come up with a tonne of nickels. Just sayin’.

‘Course, a tonne of Gold ($70M) shall get you farther up the stagflation road!

Cheers!

www.deMeadville.com

Gold Gaining Awareness Or Just Further Geo-Political Bid? Maybe Both?

Now 24 trading days into this year’s intimidation and physical offensive by Russia, Gold has yet to commence its typical geopolitical fade as had occurred 16 days into the Crimean Peninsula assault.

Here’s the updated comparative graphic of the two Gold percentage price tracks from then and now. Obviously this time ’round ’tis all far more barbaric, wantonly destructive and deadly. Better than 20 years of post-Soviet democracy and credibility-building with the West has vanished in less than 20 days, in turn putting Gold on full-alert as it continues to ascend rather than fade:

A threat to the free world notwithstanding, for all intents and purposes, Russia is now essentially done and financially isolated for the foreseeable future. Whether the world’s largest country (By land) can civilly reinvent itself from within remains to be seen for what realistically may be years.

Now 24 trading days into this year’s intimidation and physical offensive by Russia, Gold has yet to commence its typical geopolitical fade as had occurred 16 days into the Crimean Peninsula assault.

Here’s the updated comparative graphic of the two Gold percentage price tracks from then and now. Obviously this time ’round ’tis all far more barbaric, wantonly destructive and deadly. Better than 20 years of post-Soviet democracy and credibility-building with the West has vanished in less than 20 days, in turn putting Gold on full-alert as it continues to ascend rather than fade:

A threat to the free world notwithstanding, for all intents and purposes, Russia is now essentially done and financially isolated for the foreseeable future. Whether the world’s largest country (By land) can civilly reinvent itself from within remains to be seen for what realistically may be years.

The Ruble

As for “The Now”, the country’s currency (RUB) is essentially worthless, it having inflated (vis-à-vis the USD) +42% just year-to-date, and +72% since the start of 2020. And as you likely now know, its Central Bank just doubled its interest rate from 10% to 20%. Moreover, when Switzerland allies with the West in sequestering RUS’ securities, this is serious.

We oft put forth that geo-political underpinning is not the Gold positive by which we seek price to rise. Rather, the debasement of currency is the right and lasting fuel by which Gold prospers in maintaining real wealth for its holders. To be sure, with Gold having settled yesterday (Friday) at 1975, ’tis but 114 points (or 5%) below its All-Time High of 2089 as traded on 07 August 2020.

Further with nearly 10 months still to run this year, Gold is now “only” 279 points (or 12%) below our forecast high for 2254 in 2022. Indeed year-to-date, price already is +8%. As well from the “And Beyond Dept.”, Gold remains a fair piece from its present-day debasement value of 4049 per the Scoreboard: but one “leap” at a time.

Our still being “in motion” has us leaping about, so let’s straightaway get to the graphics. Crude Oil with the “Leap of the Week” per its +25.1% lurch. Still Gold leaped +4.5% since this time a week ago, the high being the stated settle at 1975, just two points below the prior week’s high of 1977. Here are the weekly bars from one year ago-to-date, the parabolic Long trend still intact, and at 18 weeks now ninth in duration of the 44 Long trends this century:

Longer perspective

More broadly in looking back across these past 12 years, here we’ve Gold by the day, the 2089 All-Time High not too far away. The rightmost price acceleration is visually substantive:

With that as fact, should Gold fold as the geo-political story gets old, we sense enough renewed “awareness” that structural support (as cited a week ago) from 1854-to-1779 ought hold.

Hardly can one deem the RUS/UKR conflict as “old”, but it is getting competition from other FinMedia musings. In opening this past Thursday’s Prescient Commentary, we penned: “…Of note as the RUS/UKR invasion intensifies, it is slipping from the lead FinMedia headlines as oft occurs with geo-political events upon their assessed as being part of the norm…” ‘Tis a “norm” nobody wants, but nonetheless RUS has sadly down-shifted The World a gear.

Within the mélange of: RUS/UKR; inflation jitters; Federal Reserve executives unanimously on the threshold of raising their Funds Rate; and US/PRC trade policy coming to loggerheads, Dow Jones Newswires notes in spite of it all that “…the economic expansion appears to be on solid ground…” And the Economic Barometer did have a sound week; however year-over-year, you be the judge:

Too, whilst February’s job creation and January’s upside revisions were robust, Hourly Earnings were flat: “Ya ain’t gettin’ a raise, but life costs more; have a great day.”

Perhaps that was a function of the Institute for Supply Management’s Services Index having its third-worst slip of the past 12 months; or by the Chicago Purchasing Managers’ Index, its third-worst slip in nearly two years; or both and then some, (i.e. stagflation).

Which in turn allows us to exemplify “awareness” of Gold as stated in this week’s title. Here we’ve the two-panel graphic featuring Gold’s daily bars from three months ago-to-date on the left and its 10-day Market Profile on the right.

And you know the drill: when the baby blue dots of linear regression trend consistency rise above their +80% axis, that is uptrend confirmation, be it by stagflationary/debasement awareness, geo-political conflict, or both. And by the Profile, welcome to the trading support of the 1900s.

‘Course, that doesn’t preclude the aforementioned 1854-to-1779 support structure being revisited should the geo-political fade trade be played. But for the present, “Be Gold-aware, or be square!”:

And doesn’t Silver look well across the same graphical set, fully bedecked in her precious metal pinstripes. No industrial metal jacket these days for Sister Silver, albeit credit, too, Cousin Copper having just reached an all-time high at 4.949/pound. All-in-all, a sterling view for Silver:

We’ll wrap it up here StateSide with this inflation observation: it is absolutely rampant in California, be it up at Squaw (oops, sorry, “Palisades Tahoe”) or down here in San Frans**thole:

  • Across the pond, two cafés crème with two croissants costs €7.60 ($8.36); here ’tis $16.87;
  • A box of cereal EuroSide is €3.65 ($4.02); here, the same brand in a smaller box is $6.95;
  • A grocery store salad-for-one in a plastic container over there is €4.50 ($4.95); here, try $13.49;
  • And the cost of gasoline, whilst cheaper here, is of a greater percentage of the European price than we can remember.

As a bank colleague once remarked: “If you don’t make at least $120,000/year, you’ll die here.” Now we can believe it. So be it by awareness, geo-politics, or both, don’t see your wealth die, rather, live well with Gold!

www.deMeadville.com

As for “The Now”, the country’s currency (RUB) is essentially worthless, it having inflated (vis-à-vis the USD) +42% just year-to-date, and +72% since the start of 2020. And as you likely now know, its Central Bank just doubled its interest rate from 10% to 20%. Moreover, when Switzerland allies with the West in sequestering RUS’ securities, this is serious.

We oft put forth that geo-political underpinning is not the Gold positive by which we seek price to rise. Rather, the debasement of currency is the right and lasting fuel by which Gold prospers in maintaining real wealth for its holders. To be sure, with Gold having settled yesterday (Friday) at 1975, ’tis but 114 points (or 5%) below its All-Time High of 2089 as traded on 07 August 2020.

Further with nearly 10 months still to run this year, Gold is now “only” 279 points (or 12%) below our forecast high for 2254 in 2022. Indeed year-to-date, price already is +8%. As well from the “And Beyond Dept.”, Gold remains a fair piece from its present-day debasement value of 4049 per the Scoreboard: but one “leap” at a time.

Our still being “in motion” has us leaping about, so let’s straightaway get to the graphics. Crude Oil with the “Leap of the Week” per its +25.1% lurch. Still Gold leaped +4.5% since this time a week ago, the high being the stated settle at 1975, just two points below the prior week’s high of 1977. Here are the weekly bars from one year ago-to-date, the parabolic Long trend still intact, and at 18 weeks now ninth in duration of the 44 Long trends this century:

More broadly in looking back across these past 12 years, here we’ve Gold by the day, the 2089 All-Time High not too far away. The rightmost price acceleration is visually substantive:

With that as fact, should Gold fold as the geo-political story gets old, we sense enough renewed “awareness” that structural support (as cited a week ago) from 1854-to-1779 ought hold.

Hardly can one deem the RUS/UKR conflict as “old”, but it is getting competition from other FinMedia musings. In opening this past Thursday’s Prescient Commentary, we penned: “…Of note as the RUS/UKR invasion intensifies, it is slipping from the lead FinMedia headlines as oft occurs with geo-political events upon their assessed as being part of the norm…” ‘Tis a “norm” nobody wants, but nonetheless RUS has sadly down-shifted The World a gear.

Within the mélange of: RUS/UKR; inflation jitters; Federal Reserve executives unanimously on the threshold of raising their Funds Rate; and US/PRC trade policy coming to loggerheads, Dow Jones Newswires notes in spite of it all that “…the economic expansion appears to be on solid ground…” And the Economic Barometer did have a sound week; however year-over-year, you be the judge:

Too, whilst February’s job creation and January’s upside revisions were robust, Hourly Earnings were flat: “Ya ain’t gettin’ a raise, but life costs more; have a great day.”

Perhaps that was a function of the Institute for Supply Management’s Services Index having its third-worst slip of the past 12 months; or by the Chicago Purchasing Managers’ Index, its third-worst slip in nearly two years; or both and then some, (i.e. stagflation).

Which in turn allows us to exemplify “awareness” of Gold as stated in this week’s title. Here we’ve the two-panel graphic featuring Gold’s daily bars from three months ago-to-date on the left and its 10-day Market Profile on the right.

And you know the drill: when the baby blue dots of linear regression trend consistency rise above their +80% axis, that is uptrend confirmation, be it by stagflationary/debasement awareness, geo-political conflict, or both. And by the Profile, welcome to the trading support of the 1900s.

‘Course, that doesn’t preclude the aforementioned 1854-to-1779 support structure being revisited should the geo-political fade trade be played. But for the present, “Be Gold-aware, or be square!”:

And doesn’t Silver look well across the same graphical set, fully bedecked in her precious metal pinstripes. No industrial metal jacket these days for Sister Silver, albeit credit, too, Cousin Copper having just reached an all-time high at 4.949/pound. All-in-all, a sterling view for Silver:

We’ll wrap it up here StateSide with this inflation observation: it is absolutely rampant in California, be it up at Squaw (oops, sorry, “Palisades Tahoe”) or down here in San Frans**thole:

  • Across the pond, two cafés crème with two croissants costs €7.60 ($8.36); here ’tis $16.87;
  • A box of cereal EuroSide is €3.65 ($4.02); here, the same brand in a smaller box is $6.95;
  • A grocery store salad-for-one in a plastic container over there is €4.50 ($4.95); here, try $13.49;
  • And the cost of gasoline, whilst cheaper here, is of a greater percentage of the European price than we can remember.

As a bank colleague once remarked: “If you don’t make at least $120,000/year, you’ll die here.” Now we can believe it. So be it by awareness, geo-politics, or both, don’t see your wealth die, rather, live well with Gold!

www.deMeadville.com

Gold’s Geo-Political Run Looks Done

Since then, however, especially given this past week’s unconscionable state of affairs, the last several editions of The Gold Update have emphasized Gold’s chronicled nature at the onset of geopolitical turmoil for a price to rise, only to then fall back from whence it came as events further unfold.

And as horrifically senseless as is Russia’s waging war on Ukraine – wherein lives are comprehensively more important than the price of any market — we are sensitive to Gold perhaps now repeating such historical pattern of “Price spike and fade”.

Russia attacking Ukraine and Gold 2014 Vs. 2022

The following graphic depicts two Gold price percentage change tracks across a 28-trading day period.

  • The blue line represents Gold eight years ago from 21 February 2014 at the onset of Russia moving into then Ukraine’s Crimean Peninsula; not six weeks later with the incursion irreversible, Gold regardless was lower come 01 April of that year;
  • The red line represents Gold this year since 31 January upon the first serious stirrings for Russia again invading Ukraine. Note the directional similarity of the red line-to-date with the blue line back during the 2014 offensive:

No one knows how ’twill all go, but specific to Gold, the two performance tracks’ similarity is stunning, and moreover is suggestive that Gold’s geopolitical run is done, the red line now keeling over nearly in sync with the blue line of eight years ago. On verra…

In no way making light of the matter, Saturday morning greetings from culturally war-torn San Francisco, “a magnificent city that is dying” –[M.R.L.]. And with time at a premium given our being “in motion” — combined with it being month-end (save for one trading day) — let’s get straightaway to our cavalcade of graphics, beginning with Gold’s weekly bars from this time a year ago-to-date.

The rightmost bar really emphasizes price’s spike upon Russia materially moving into Ukraine, propelling Gold to as high as 1977, a level not traded since 16 September 2020. And yet come yesterday’s (Friday’s) settle at 1890, Gold not only recorded a net loss for the week but in fact its fourth-worst weekly high-to-low blow (-5.0%) since Thanksgiving Week back in 2020:

As well from a year ago-to-date, here we’ve the percentage tracks of Gold along with those of its high-level equities. And ’tis quite a spread of performance with Franco-Nevada (FNV) +37%, Newmont (NEM) +25%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +10%, Gold itself +9%, Agnico Eagle Mines (AEM) -7%, the Global X Silver Miners exchange-traded fund (SIL) -16%, and Pan American Silver (PAAS) -29%. Clearly, the Silvers have underperformed Gold, the Gold/Silver on this date a year ago at 64.9x, but today (as depicted at the foot of the above graphic) at 77.7x.

Poor ole Sister Silver! Here are the tracks:

Collectively for the BEGOS Markets, next we’ve their year-to-date percentage changes, the podium dominated by Oil, along with (to a much lesser degree) the precious metals. The cellar-dweller is the S&P 500, its -8% slip seemingly mild given that from here (4385 and a “live” price/earnings ratio of 35.3x), should earnings not grow, price “ought” fall to 2778 (an additional -37%) just to revert the P/E to its historical mean (now 22.3x, in case you’re scoring at home). And rising interest rates as the economy stagnates means the stock market deflates:

Let’s too go-’round the horn as we do each month-end for the BEGOS Markets, the daily bars being for the past 21 trading days, with their respective grey diagonal regression trendlines and baby blue dots denoting the consistency of those trends, of which notably for Gold and Silver have been our friends, albeit not for the preferred reason:

That stated, over the years we’ve put forth that Gold “ought” rise in tandem with currency debasement, which it did magnificently through the first decade of this 21st Century. And obviously by the opening Gold Scoreboard, Gold is priced today at but one half its valuation. We do not relish Gold rising on geo-political events, the worst of which is war. However, repulsive as that is, we’re detecting (to use a modern-day wokey word) a renewed Gold “awareness”.

To be sure, repugnant as ’tis, “everybody says” that the Russian invasion of Ukraine has kept Gold’s price aloft. But “everybody says” also now that ’tis not just the war boosting Gold. Well, “everybody” may be a bit of an exaggeration, but: the buzz today is that Gold ought be higher anyway because of … (wait for it) … “inflation and all the money that’s been printed.

“Did “everybody” just figure that out now? We’re not holding our breath, but: should price continue to beat a near-term retreat, 1854-1779 shows as structural support from which our 2254 forecast high for this year may indeed well appear.

In fact, to really push the envelope to the brink here, the “Trade of Trades” as we see it is to be Long Gold and Short the S&P; (but ’tis that darn “when” which perennially seems in the way).

Now for the StateSide economy, Dow Jones Newswires just ran with this headline “Why This Economic Boom Can’t Lift America’s Spirits”. To what “boom” do they refer? We don’t see one here:

Meanwhile, the Federal Reserve pie-fights continue, (except when it really counts given the Open Market Committee continues to vote unanimously). Either way, New York FedPrez John “It’s All Good” Williams (amongst others) inferred this past week that a +0.25% rate hike to kick off  The Great Rise ought be sufficient (as opposed to +0.50%). Counter to that, both FedGovs Michelle “Miki” Bowman and Christopher “Up The” Waller are in the +0.50% hike camp, the latter seeing inflation as “alarmingly high”.

And not to be left off the poker table, on the heels of calls for three rate hikes — and then seven — JPMorgan has now upped the ante to nine, (but not all in 2022). Still got stock? Good luck.

We’ll stick with Gold and Silver. For which next we’ve their 10-day Market Profiles, the yellow metal being on the left and the white metal on the right, both well off their geo-politically-induced highs:

To round it out for month-end (with Monday still in the balance), here is our broad-based structural chart for Gold by its monthly bars across these last dozen years. The rightmost months of generally “higher lows” is encouraging toward resuming mitigation of the rampant debasement of the Dollar. Might Gold tap the blue line high with 10 months remaining in 2022? As detailed a week ago, such Gold price-rise distances have been achieved within like time stints:

Next week brings us the StateSide President’s State of the Union Address, plus the Fed’s Tan Tome and February’s jobs data. The key unknown remains the state (or lack thereof) of sanity with respect to the war. Stay with your Gold as it all doth unfold, and take care.

www.TheGoldUpdate.com

Gold’s Gain on Russia/Ukraine

190222_gold_scoreboard

Query: Were we not having the “on again off again” RUS/UKR skirmish — (the StateSide President having just tactfully stated the invasion “will” occur) — where would Gold be priced today? To be sure, it settled both yesterday as well as on Thursday at 1901. Prior to that, the last time Gold settled above 1900 was on 10 June 2021, since when through this past Wednesday (174 trading days) the average daily closing price of Gold had been 1799.

Response: Based on Gold’s “terrible technicals” (see our 29 January missive) — combined with general price fallout typically in tandem during prior negative linear regression trend rotations that suggested a run down to 1754 (see our 05 February missive) — as further embellished in anticipating the usual post-geo-political price descent (see our 12 February missive), our best “guesstimate” is we’d instead find Gold priced today in the upper 1700s. (After all, as you’ll recall, price had been residing at 1780 in seemingly infinite perpetuity).

Regardless: the market is never wrong: thus Gold 1901 ’tis. Period. ‘Course, our rationale really is rather daft given the above Gold Scoreboard valuation today of 4134. Gold’s gain on Russia/Ukraine notwithstanding, price is miles below where it “ought” be.

Just this past 04 February, Gold printed at 1792 before reaching Friday’s high of 1905: that’s +6.3% in a mere 11 trading days. Like percentage gains have occurred (on a mutually-exclusive basis) three other times from a year ago-to-date; thus a +6.3% burst is not that unusual.

Further, we wonder who is buying Gold into said geo-political skirmish? Certainly no individual nor financial entity managed by anyone under the age of 50: you regular readers already know we’ve well-vetted that fact. The “born in the 70s and later” crowd don’t own Gold and never will, until (as we’ve previously written) the price one day exceeds $10,000/oz. Then we’ll being hearing: “Dude, it’s like totally the new bits**t!”

But for the present, that leaves the balance of the oldsters, hedgies and sovereigns, all of whom in magnificent herd style have suddenly been buying Gold because they’re “supposed to” when geo-politically it all goes wrong. Hopefully the StateSide President shall soon tactfully reverse 180° by stating the invasion “will not” occur, for which diplomatic success can be claimed a week Tuesday during the State of the Union snooze, (along with having cured COVID). Come then — should history repeat — we’ll expect to see Gold again bumbling about in the upper 1700s.

“So you’re routing for Gold to actually go down, mmb?”

Not routing, Squire, rather as noted “expecting” Gold to return from whence it came, simply because that’s what always happens when the geo-politics come off the boil.

And yet as we turn to Gold’s weekly bars, our forecast high for this year at 2254 (at upper right) remains intact:

190222_gold_weekly

To be sure, 2254 is still a long row from here to hoe. Yes, there are a good 218 trading days remaining in 2022. But to gain +18.6% (from today’s 1901 to 2254) in that time stint can be considered a challenge, especially given the broader sideways track of price.

Still, Gold increases of +18.6% within 218 days did occur in 2016, 2019 and 2020. And yet per the above graphic across the past year, the price of Gold has stayed diabolically stalled even in the face of rampant currency debasement. “Oh, all that debasement is already priced into Gold”, they say. “Oh, who really wants it if it’s not transactable”, they say. “Oh, it’s a digital world today and with crypto there’s nothing to weigh”, they say. “*Poof* … So where did it just go?” we say.

To maintain integrity in having posted for the past two missives what had been essentially negative near-term regression trends for both Gold (below left) and Silver (below right), here’s the updated view across the past 21 trading days (one month) for the two, their respective grey regression trendlines now in ascent, albeit the white metal hasn’t received as much interest as has the yellow metal:

190222_gold_silver_dots

Aiding Gold’s cause as well are the Federal Reserve Follies. “All the others except for Lagarde have already raised, so we’re gonna raise three times.” … “No wait, were gonna raise seven times!” … “Oooh! And let’s raise by 50s instead of 25s!!” This is really gonna play out great as we stagflate, eh?

190222_econbaro

Yet, the struggling Economic Barometer actually put in a positive week in accounting for 17 incoming metrics. Notable improvements were recorded for Retail Sales, Industrial Production and Capacity Utilization, Existing Home Sales and Building Permits for new ones, plus the New York State Empire Index. But inflation ramped up at the wholesale level per the Producer Price Index as well as for Import Prices.

Housing Starts slowed as did the National Association of Homebuilders Index, Business Inventories backed up, the Philly Fed Index fell, and (of no surprise to you Econ Baro followers) The Conference Board’s Leading [lagging] Economic Index for January shrank.

‘Course, in the midst of it all the S&P 500 is resuming its tank. Why even James “Bullish” Bullard is calling for rate hikes in double-time (which for you WestPalmBeachers down there means in leaps of +0.50 basis points versus the classic +0.25 basis point moves … are you still owing those variable rate loans and credit cards?) The St. Louis FedPrez went on to say in an interview this past Monday that “our credibility is on the line here”. Really? (Who knew…)

We know for the second week running the significant price increases made by the precious metals in their 10-day Market Profiles. Here is the fortnight’s volume per price point respectively for Gold on the left and for Silver on the right, the underlying supportive trade prices as labeled.

190222_gold_silver_profiles

As well, let’s examine the precious metals’ Market Magnets, (which we don’t often display in The Gold Update, but are a mainstay of the website). The Magnet is the volume weighted-average price compiled from the entirety of the Profile, and is updated daily. At present for Gold (lower left) ’tis 1855 and for Silver (lower right) ’tis 23.40.

The graphic’s key for each market is the underlying oscillator panel: that gives us the actual trading deviation from the magnet, to which per its namesake, price always “snaps back”. And as you clearly can see, Gold at present appears an extreme 46 points “high”; Silver’s distance of 0.53 is not nearly as dramatic given her not getting the bid as much as Gold during the RUS/UKR skirmish, (which we hope swiftly comes to a cooler-heads finish):

190222_gold_silver_magnets

We’ll wrap it here with this logistical heads-up: these next few weeks we’ll be writing “in motion” whilst attempting to survive a culturally war-torn region. Computer (but hopefully not brain) capacity shall be a bit less and the timing of the daily website updates and commentary shall differ from the norm. Nonetheless, The Gold Update ought maintain Saturday form!

www.deMeadville.com

Gold Gets Good-Old Geo-Political Go-Go

For the five primary BEGOS Markets: Friday by percentage change was the Bond’s second-best (+0.9%) trading session year-to-date, the Euro’s third-worst (-0.7%), Gold’s best (+1.8%), Oil’s best (+4.3%), and the S&P 500’s third-worst (-1.9%).

120222_gold_scoreboard

Regardless, (save for the loose-screw crowd), nobody wants things to “go crazy”, period.

And specific to Gold as you regular readers know: we broadly expect price to rise as it historically has (or at least used to) in tandem with currency debasement. For when Gold otherwise rises on geo-political concern: you know, and we know, and everyone from Bangor, Maine to Honolulu and right ’round the world knows that following such induced spike like yesterday, price then two-to-three days later reverts back from whence it came.

So with Gold having settled the week at 1861 — indeed in scoring its best percentage weekly gain (+2.9%) since that ending 07 May 2021 — should things not “go crazy”, might we see Gold return right ’round to 1800 within a week’s time? Even perhaps tease the 1754 level as analytically depicted a week ago? Again, nobody knows: we’ve only the data by which to go.

Either way, Gold — and Silver too — clearly gained given said geo-political stew. Notwithstanding: recall our having penned two weeks ago “Gold’s Technicals Look Terrible” and last week “Gold and Silver Key Trends Rotate to Negative”. And now a week hence, per Led Zeppelin’s “The Song Remains the Same” –[’73], neither precious metals’ regression trend has turned positive, despite the spike. Updated is this graphic from a week ago:

120222_gold_silver_dots

Those are the daily bars for Gold on the left and those for Silver on the right for the past 21 trading days (one trading month). The grey line in each panel is the respective linear regression trend: for Gold it has rotated from negative to flat; but for Silver it remains even more steeply negative than at this time last week. “Just the facts, ma’am” –[Sgt. Joe Friday, “Dragnet”, ’49-’70]:

As to Gold’s weekly bars from one year ago-to-date, the past week avoided the entrapment of the ascending blues dots of the parabolic Long trend, which on balance for price itself has not been much of an uptrend whatsoever: Friday’s settle at 1861 is a bit below the 1867 level reached just two weeks into said trend which commenced 14 weeks ago.

And of course it goes without saying (ad nausea) that today’s 1861 was first achieved on 19 August 2011 — nearly 11 years ago — when the U.S. money supply (“M2” basis) was but 43% ($9.5Tn) of what ’tis today ($22.2Tn). Or by our opening Gold Scoreboard, 1861 today is 45% of the 4125 valuation. Be that as it may, we’re conservatively maintaining our forecast high for 2254 in 2022 per the graphic’s topmost line:

120222_gold_weekly

As to the Stateside economy, we’ve this from the “Not Sure What They’re Smoking Dept.” You’ll recall from a week ago as regards January job creation, the figure from ADP showed shrinkage of -301,000 following December’s gain of +776,000. Not nearly as dire but still somewhat slowed was Labor’s version of +467,000 vs. the prior month’s +510,000. But nonetheless from Dow Jones Newswires came “Strong Jobs Report Points to Likely Fed Rate Rises in March and May; Friday’s report showed surprising strength in hiring…” That we ain’t buying. ‘Tis why we maintain the Economic Barometer:

120222_econbaro

Specific to this past week, ’twas fairly light on data, the improvements being in fewer Jobless Claims and the U.S. Treasury actually reporting a year-over-year budget surplus despite the threat en route of interest payment defaults. Metrics sporting worse month-over-month readings came for the Trade Deficit, University of Michigan’s “Go Blue” Sentiment Survey, slowing Consumer Credit, and a backup in Wholesale Inventories.

And as for the stock market, we wrote to our Investors Roundtable prior to Thursday’s session that “…We think the S&P’s high is in for the year…” following which come Friday the S&P put in a two-day drop of -3.7% (-169 points) and — for you WestPalmBeachers down there — “The Dow” a two-day drop of -2.9% (-1,030 points). Moreover in a text to our great and good colleague here we tapped “…the S&P is a fundamental disaster…” Response: “I agree with you.”

But there is some good news: for the first trading session since 02 July 2020, the S&P 500 settled Friday with our “live” price/earnings ratio below 40x, indeed at “just” 38.8x. This is a direct result of the “P” falling combined with Q4’s “E” rising. Given the S&P’s P/E historically reverts to its mean (now 22.2x), that suggests the “worst” correction from here (4419) — should earnings stagflatingly stall — would be to 2528, only some -43% … just in case yer scorin’ at home. (You might scribble that 2528 on the back of a napkin for review, barring it being wiped with ragu, later in the year).

‘Course, problematic is yield running well behind inflation, which by the Federal Reserve’s favoured gauge of Core Personal Consumption Expenditures is some +6.0% annualized; hard to shield by this table of yield:

120222_yields

Meanwhile, have you noticed of late that each inflation report adds an additional FedFunds hike? As of two weeks ago with expectations for three hikes of the FedFunds rate, we’ve since had Q4’s Chain Deflator, the aforementioned Core PCE, the Consumer Price Index, and come Tuesday (15 February) the Producer Price Index which is anticipated to leap. Thus with these four additional metrics that now gets us to seven rate hikes this year, at least as now is being espoused by the financial community. Further, there is speculation of raising in stints of +0.50% rather than the “usual” +0.25%. Irregardless, how may that play out for Gold? Here’s one Golden-Oldie from The Gold Update archives:

120222_gold_fedfunds

That’s a +58.8% three-year increase in the price of Gold. Increasing today’s 1861 by that pace puts price during the year 2025 at 2955, fairly underwhelming by the 3Ds of Debasement, Debt and Derivatives, let alone the present Scoreboard valuation of 4125. But we’ll take what we can get.

As for “The Now”, here are the 10-day Market Profiles for Gold (below left) and for Silver (below right). Two lovely bottom-up moves there; but shall the geo-political spike sustain, or instead revert next week with the usual wane?

120222_gold_silver_profiles

Let’s do The Stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4125
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Gateway to 2000: 1900+
2022’s High: 1867 (11 February)
10-Session directional range: up to 1867 (from 1786) = +81 points or +4.5%
Trading Resistance: none, by the Profile

Gold Currently: 1861, (expected daily trading range [“EDTR”]: 22 points)

Trading Support: Profile notables 1859 / 1836 / 1828 / 1804
10-Session “volume-weighted” average price magnet: 1818
The 300-Day Moving Average: 1805 and flat
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
The Weekly Parabolic Price to flip Short: 1791
2022’s Low: 1779 (28 January)
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

To wrap, if you’re a fan of the Econ Baro, next week works right into your wheelhouse: 17 metrics are due! That is off the edge of the Bell Curve for a typical week’s schedule. But which way shall the Baro break? We’ll have our take. In the meantime, geo-political breakout or fake-out, with Gold ensure you’ve yours staked out!

www.deMeadville.com

Gold’s Technicals Look Terrible

This title for this week’s missive is a quaint way of putting it, eh? More laid bare it could well read “Gold Harnessed, Silver Tarnished” or “Gold Whacked, Silver Shellacked!” Yet any way we couch it, the near-term technicals look terrible. We love Gold, but as the late great Howard Cosell would say, “That’s tellin’ it like it is!” Which is what we endeavour to do week-in and week-out.

290122_gold_scoreboard

Indeed from high to low, since we met a week ago, Gold was kicked in the teeth to the tune of dropping 75 points (from 1854 to 1779) within these past four trading days. Maintain that pace of points loss and Gold shall reach zero (“0”) on 15 June of this year. (That’d be pretty terrible, just in case you’re scoring at home).

Notwithstanding our cheery opening, let’s go back to University and Macroeconomics 101. Doubtless, you will remember that classroom: guns and butter, price stability, marginal propensity to consume, the super cute person sitting one row down to your left, economic growth, and so on.

Now fast forward and let’s focus on the latter — economic growth — given this past Thursday’s first peek at Q4’s annualized pace of the Gross Domestic Product (“GDP” +6.9%) relative to its Chain Deflator (“CD” +6.9%). Recall from your class Professor Iamecon’s formula to calculate Real Growth (“RG”):

  • GDP – CD = RG … thus for Q4: 6.9% – 6.9% = 0.0%

Moreover, the Federal Reserve’s favourite gauge of inflation — Core Personal Consumption Expenditures — after having been +0.5% for both October and November, stayed the course with another +0.5% for December. Annualizing such consistent increases gives us +6.0%, basically bang-in-line with the Chain Deflator.

Thus as outlined two missives ago, the StateSide economy — rather than “really” growing — is stagflating. And you regular readers shall also recall: during such scenario historically, the price of Gold has skyrocketed.

But given the paradigm of today wherein Gold ownership has been relegated to the Old Timers’ League, price performance — rather than a firework — is but a fizzling dud. That’s right, Bud. These days, folks we encounter under the age of 50 laugh when we speak of Gold: none of them own it, nor have they any intention to so do, (until they pony up to buy it upon price being beyond 10,000). Either way, today’s road to wealth — rather than paved with yellow bricks — is littered with shiny objects. So be it until it isn’t.

“Well again, mmb, there’s also all that dollar strength…”

As discombobulated as ’tis Squire, the Dollar is refuting any and all things learned back at University in Professor Iamecon’s Macroeconomics classroom. For today’s axiom is: the more there is of something, the more ’tis worth. The numbers prove it just across these past two years:

  • U.S. Money Supply (“M2”) on 03 January 2020: $15.5 trillion; Dollar Index: 96.521
  • U.S. Money Supply today on 29 January 2022: $22.1 trillion; Dollar Index: 97.215

That’s right: M2 in just two years has increased a staggering +43%; but nonetheless, the Dollar Index now is higher too. (Write to University to request your course tuition refund).

Gold looks terrible

Thus as titled, technically for Gold it now looks terrible. Per the following chart of Gold’s weekly bars from a year ago-to-date, the parabolic Long trend denoted by the rightmost series of blue dots is about to flip Short: price need merely trade below 1779 in the new week and it seals the deal. With Gold having settled yesterday (Friday) at 1790 and the expected weekly trading range now 49 points, the normal price flutter alone shall make it so. Yes Bunky that’s right: get ready at minimum for the annoying perma-price of 1780 all over again:

290122_gold_weekly

Further, ’tis not just our deMeadville analytics that look lousy for Gold: the standard “canned” studies that come with whatever platform you use also have near-term negative notions: be it by Gold’s daily bars, those weekly, or even those monthly, the MACDs (“moving average convergence divergences”), price oscillators, moneyflows, EMAs (“exponential moving averages”) and parabolics are not near-term promising one wit. ‘Course to the contrarian, all of that is a massive buy signal … on verra …

Yet to be fair, the burning question “How low is low?” ought be addressed. This is not a prediction, but should the year-over-year lows of the 1680s bust, structurally onto the board comes 1613. (Let’s not go there).

And then there’s Silver. After herein excitedly extolling her virtue a week ago, she suffered her third-worst weekly decline by both points and percentage loss since the “Ovid to Covid” back in March 2020. Precious metal Silver settled her week at 22.49 … and yet she’s “worth” 61.75 … go figure, (we do):

  • Gold Scoreboard Valuation 4108 ÷ Average Gold/Silver Ratio 66.5x = Silver Valuation 61.75

Next, let’s keep it ugly in reviewing Gold’s percentage tracks along with those of key precious metals equities from this time last year-to-date. Therein we’ve Franco-Nevada (FNV) +8%, Newmont (NEM) 0%, Gold itself -3%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -15%, the Global X Silver Miners exchange-traded fund (SIL) -27%, Agnico Eagle Mines (AEM) -34%, and Pan American Silver (PAAS) -35%. Ugly indeed:

290122_gold_gdx_nem_aem_fnv_sil_paas

More ugly? We’ve got it right here —> The Economic Barometer:

290122_econbaro

That on the heels of Dow Jones Newswires having just stated this past Thursday the “U.S. Economy Grows as Fourth-Quarter GDP Shows Strongest Year in Decades.” Any mention therein of the Chain Deflator? No. Nor was there in the New York Times extensive exposé on it all. Nor was there at the website of CNBS. Oh to be sure, those with a political bent might suggest “Anything to make Joey look good”; but the present bent of the Econ Baro now is ugly.

And the panicky bunch in the Baro at lower right well-represent the arguably “younger” shiny objects crowd that have yet to experience a true market “correction”. Why even the once-venerable CNN tells us “Get ready for more wild swings. Volatile markets are back. After a long period of calm, market volatility has returned in dramatic fashion.” They don’t know what “dramatic” is. Save for the aforementioned and very short-lived (great pun) “Ovid to Covid”, the S&P futures haven’t put in a “limit down” day for some 12 years. (Get ready).

As for the metrics from the past week, December’s New Home Sales improved and there was less strain on Initial Job Claims. But: Consumer Confidence, Durable Orders, Pending Home Sales, Personal Income, Personal Spending, the Employment Cost Index, and Michigan’s “Go Blue!” Sentiment all came in worse than their prior period.

Q4 Earnings Season

Then there is Q4 Earnings Season, which for the S&P 500 (with 148 of the 505 constituents having reported) finds 80% having improved over the like period of 2020. But: the average year-over-year increase — whilst admirable at +37.5% — is nowhere near what is necessary to halve the price/earnings ratio (our live reading now 42.0x) back to its median as the yield environment rises. That for the all-risk S&P is presently 1.419%; risk-free debt yields from 5-to-30 years range from 1.624% to 2.083%.

And specific to the Fed, we got from its Open Market Committee on Wednesday exactly what was expected: tapering toward termination of asset purchases with a doubling of the FedFunds rate on 16 March … unless the Baro continues to tumble … or in the interim inflation provokes a Volcker-like “massacre”.

Speaking of which, have you of late bought a quart of Oil for your car? With (save for one trading day) this year’s first month now in the books, Big Oil is the only positive component thus far amongst the eight BEGOS Markets. Here’s how they stand:

290122_begos_standings

And as it starts its demise, believe thy eyes, that is the S&P 500 in last place. As inferred above, -7% to this point is peanuts; and true, from the year’s high-to-low, the Index has already been -12%. But: priced today at 4432, we see this current downtrend initially testing 3984 (-17%); then would come 3950 (-18%), followed by 3827 (-21%), and then more vigourously 3588 (-26%). Just some good “back-of-the-napkin” numbers for reference should you find yourself conversing with a “shiny objects” person.

Visualizing said S&P trend, ’tis at the lower left as we go ’round the horn for all the BEGOS Markets’ past 21 days. The baby blue dots denote the consistency of the diagonal grey trendlines. And specific to our Metals Triumvirate (Gold/Silver/Copper) it does not look good, all three trendlines given their declining “Baby Blues” rotating toward negative. You tell ’em, Howard:

290122_begos_dots

Now to the 10-day Market Profiles we go for Gold on the left and Silver on the right. Clearly both are lying low, with technically more downside to go:

290122_gold_silver_profiles

Finally, it being month-end (save for Monday), here we’ve Gold’s Structure by the monthly candles since 2011. The endless battling between The Northern Front and Final Frontier continues just as it did a decade ago when the U.S. Money Supply was half was ’tis today. To which we’re again prone to say, ’tis diabolical:

290122_gold_structure

Next week looks to bring more bad news for the Econ Baro: of the 13 metrics on the docket, by consensus, at least half are expected to be worse than their prior period. ‘Course we’ve learned over the 25 calendar years of maintaining the Baro that hardly does “consensus” turn out to be “actual”. But: fortunately for Gold — to end on a fundamental positive — its “actual” worth (4108) is better than double its price (1790)!

290122_gold_double_bars

Cheers!

www.TheGoldUpdate.com

Gold Garners No Fear but Silver Gets into Gear

Twas Silver’s best weekly net gain since that ending 03 May 2021, (at +6.2% the best week of last year). And as you regular readers know, Silver is long overdue to get off the schneid and higher glide.

220122_gold_scoreboard

Gold, maybe? Not really. From its close of a week ago (1817), the yellow could fare no better than reaching 1849 — that’s +1.7% — in settling its week at 1836, +1.0%.

And yet, what have we got?

  • We’ve got the S&P 500 at long last, (or perhaps better stated from the trader’s perspective at “short” last), en route to a correction of at least 10% — toward what rightly ought be 50%-60% simply for price to get in line with earnings, (i.e. the lack thereof);
  • We’ve got President Biden ostensibly as the final arbiter between the mighty-mite Putin and the wee Zelensky;
  • We’ve got stagflation rearing its ugly head as herein detailed a week ago;
  • We’ve got the overnight lending rate charged by the Federal Reserve about to double, (yes they “ought” do it this Wednesday, but shall opt to wait another seven Wednesdays to 16 March, unless in the interim they implement a Volcker-like “massacre” per last week’s missive);
  • We’ve got the liquid “M2” money supply of the U.S. on the threshold of eclipsing the $22 trillion level, (per next week’s missive) for a +43% “Venezuelan-esque” increase in only two years; and…
  • We’ve got Gold garnering nary a bid of fear whatsoever.

Indeed, Gold has become the proverbial Monty Python flayrod having gone askew on the treadle. Gold has become oblivious to any and all influences fundamental; rather, its price is content to just lollygag along sideways as weeks, months and illogicity pass it by:

220122_gold_weekly

But Sister Silver is getting into gear by her weekly bars as we show here. And her rightmost encircled blue dot is a splendid sight to see, welcoming her fresh parabolic Long trend to an up spree:

220122_silver_weekly

And not to belabour but rather emphasize the point: we’ve Gold by our opening Scoreboard now valued at 4096 via accounting for currency debasement, even as fairly tempered for the increasing supply of Gold; and the Gold/Silver ratio’s century-to-date average is 66.5x; thus arithmetically: 4096 ÷ 66.5 = 61.59 for Silver’s valuation. That’s 2.5x times above today’s present level. Got Silver?

Or do ya still got stocks?

No problem. Hardly are we anti-stocks: ’tis just hard to hold something for which one today can redeem double its value … even as price now slips away. Besides, the time-honoured truthful tenet remains that the S&P 500 is not so much indicative of a “stock market” as ’tis a “market of stocks”; (you website readers know that by our Valuation and Rankings page); thus therein is value if you know where to find it.

However, here’s the key point: year-to-date the market capitalization of the S&P 500 has been hoovered by some $3.24 trillion. That is a terrific amount of money now “sitting on the sidelines”; and its going to get bigger. But when “they” gut it up to reinvest: shall it go back into risk-full stocks? Or shall it go into risk-less debt? “What’s it gonna be?”–[Paul Revere & The Raiders, ’67] Shiny objects?

Or Savings accounts? As of yesterday’s settles, the yield on the S&P 500 is 1.384% with full risk; the yield on the Bond is 2.064% with no risk, (barring Old Yeller’s Treasury triggering a debt default). ‘Course, the obvious bottom line is: ’tis better to hold something which is worth well more than double what ’tis priced: Got Gold?

Meanwhile in the midst of all this, we’re seeing the early signs of something wonderful: the Economic Barometer seemingly is returning to its role of directionally leading the S&P. As you long-time colleagues and readers know, such was the case for the Baro’s first two decades. But upon it being determined a few years back that the stock market shall never again go down, the relationship ceased — until these past few New Year weeks. Have a look:

220122_econbaro

Notwithstanding the rightmost Econ Baro plunge, we read that “…economists surveyed by The Wall Street Journal…” still see 2022’s Gross Domestic Product registering growth of +3.3%. ‘Course, since the economic fallout from Covid, this number has become meaninglessly volatile.

“How can you say that such an important number is meaningless, mmb?”

Simply by mathematics, Squire. When the standard deviation of the quarterly GDP results exceeds that of their average, that’s meaningless. Or meaningfully put, all bets are off the table. Either way, next Thursday we’ll get our first peek at Q4 GDP: they’re “expecting” it to have been an annualized pace of +5.6% after being less than half that rate for Q3 at +2.6%. And to be fair in judging by the above Baro up to its recent peak, the Q4 number ought be fairly firm.

By the way, did you note January’s New York State Empire Index went from December’s +31.9 down to -0.7? “Have a great day!” Not to be ignored however, “Little New York’s” Philly Fed Index improved: what a difference just 95 miles can make, eh?

Then there’s China, a key difference being their Peoples’ Bank cutting its lending rate as the Federal Reserve prepares to hike same. (Just in case you’re rate shopping out there). “Howdy…”

220122_yuan

Next we fix our eyes on the two-panel graphic featuring Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Whilst Gold’s regression trend visibly is up, its scattered “Baby Blues” of consistency are anything but. Yet for the Profile, at least there’s much more definition therein than we saw in last week’s “hodgepodge”:

220122_gold_dots_profile

As similar as appears the like graphic for Silver, her recent daily bars’ (at left) climb is clearly more alacrative than that for Gold, per our opening. And by her Profile (at right), Silver’s 23s are now key support, (but beware “The M Word” crowd…):

220122_silver_dots_profile

The ensuing week’s Tuesday and Wednesday (25/26 January) bring together the fertile minds of the Federal Open Market Committee, the Policy Statements from which — despite all the inter-meeting dissent — are nonetheless time and again met with unanimity. Our stance remains they raise their Bank’s Funds rate right now; their stance shall be to wait. But then seven weeks hence, perhaps they shan’t have to … that courtesy of the “Why Raise If Then We Rescind Dept.” (wink wink, nudge nudge, elbow elbow). Mind the Econ Baro, the extent of the S&P’s descent, and absolutely so your Gold and Silver!!

Cheers!

www.TheGoldUpdate.com

Here Comes the Stagflation; (Got Gold?)

Specific to the three-year run from 1973 (and its intolerable lines for gasoline) through 1975, the annual Consumer Price Index came in respectively at 6%, 11%, and 9%, (kinda akin to this past year). The price of Gold settled 1972 at 58; come 1975, it settled at 141: that’s a three-year net increase of +143%. Got Gold?

150122_gold_scoreboard

Then came President Peanut, (with a resurgence of petrol queues), and by 1980 Gold in a hyper-spike traded up to 873, (before unraveling to 300 by 1982 as President Gipper and the Economic Recovery Tax Act stimulatively kicked into gear).

Fast forward to today and we ask what’s next? In this time of investors and sovereigns being disinterestedly impervious to any and all Gold stimuli, who knows? To the hardened analyst, everything that used to work no longer does, as algorithms — bereft of all that is fundamental and even at times technical — are running the show. But common sense — as is its historical wont — shall return along with positive interest rates (savings accounts), acknowledgment of non-supportive earnings (S&P “dip”), and recognition of real value (Gold and Silver).

Indeed, the FinMedia Word of the Week was : “7% inflation for 2021!” they shrieked. “Fastest pace since 1982!” they screeched. “It is far different this time!”, they preached.

Sheesh. ‘Course, statistical selectivity set up the staggering story. Obviously the “7%” came from simply summing 2021’s 12 individual monthly top-line CPI increases. What if, instead, we summed 36 months: that gives us “10.5%”, a total less than the “11.3%” into the summer of 2008. Takes some of the edge off that four-decade drama, doesn’t it? After which what happened? The S&P “dipped” -48.8% over the ensuing six months, (or if measured from October 2007’s high, -57.7%), as the shearing of Lehman et alia came to pass, (following which the price of Gold rose +108% into 2011).

But let’s get to the point of the present, for ’tis the unmentionable that wrecks the whole story:

  • This past October’s CPI pace was +0.9%;
  • It then slowed a pip to November’s pace of +0.8%;
  • And now in turn for December it cooled to +0.5%.

In other words, the pace of CPI inflation growth is actually slowing!

“But you can’t make a trend out of just three months, mmb…”

Watch us, Squire. Linearly trendline those three months and come March 2022’s CPI pace ‘twould actually be DEflationary! But to your point, we are not predicting that. Inflation is all around us.

Still, did you notice that December’s wholesale Producer Price Index (PPI) pace — which logically leads the CPI — was just +0.2%?

Either way, be it inflation — or more likely stagflation — with a doubling of the Federal Reserve’s overnight lending rate in the balance, we recall: “Double double toil and trouble. Fire burn and cauldron bubble.” –[W.S., 1623]. Move Macbeth to modern-day and with the muted real increase in earnings we’ve Acte I of “Has the S&P Crashed Yet?”

“Muted, mmb?”

Clearly so, Squire. The “live” price/earnings ratio of the S&P 500 is now 47.7x. Its lifetime median is 20.4x, (and the average is 22.1x). To align with that as has always historically happened, if the ever-stubborn “P” refuses to go down, then the lackluster “E” needs to go up: indeed more than double!

Is it happening? No. With Q4 Earnings Season underway, five major Banks reported yesterday (Friday). Their average earnings increase over a year ago? +11%. That’s it. Zip, Zero, Nada. Even as the FinTimes reported on Wednesday that “US companies tipped for strong earnings season…” (Do call their editor and inform them of what “strong” need be, i.e. over well over +100%).

But wait, there’s more (or better stagflatingly-stated, less). We’ll get to Gold’s perpetually sleepy analytics in a sec, but first if perchance you haven’t already looked at the website, here is the Economic Barometer. Not so great for President Ohno:

150122_econbaro

That rightmost drop is the vastest five-day oscillative plunge in the Econ Baro since March of last year, and moreover (should you be scoring at home) it ties for second worst in the past six years. Amongst the low-lights of the week’s incoming metrics, Retail Sales actually shrank via their second-worst December in the 24-year history of the Baro. “What happened to Christmas?” The month’s Industrial Production shrank as well. “I can’t get the proper equipment!” –[Algernon, “Help!”, ’65].

Then from the Fed came nothing but calls for an urgent end to stimulus, with rate rises in the balance. (Still nursing that variably-priced debt? Get ready). From Chair Powell himself to Fed officials Barkin, Bostic, Mester, Brainard and Evans (after whom we stopped counting): flocking together are those birds of a feather. And again we opine: why are they waiting for 16 March when they “ought” just pull the trigger a week Wednesday, 26 January?

‘Course the Fed could fool us and raise rates inter-meeting, à la Paul Volcker’s 06 October 1979 “Saturday Night Massacre”, following which the S&P fell a full -10% in just 15 trading days; (if you’re still scoring, that in today’s “Dow” terms would be a 3,600-point drop).

Further for the record, Gold settled that prior day (05 October 1979) at 393, from which it lurched +122% to the aforementioned 873 come 21 January 1980, (i.e. in less than four months). Again we query: “Got Gold?”. Repeat same today and from 1817 we’d see 4034, practically smack-on today’s opening Gold Scoreboard “valuation” level of 4087! Not so far-fetched after all, is it? No ’tisn’t.

However, then there’s “The Now”, indeed the “Sleepy Now”. A week ago we made a fairly iron-clad technical case for Gold to fall near-term some “62 points, suggestive of 1735”. ‘Twas based on Gold’s daily MACD (“moving average convergence divergence”) having approximated such drop on the prior 12 like negative crossings. But as stated above: “…everything that used to work no longer does…” So rather than drop, Gold netted a sleepy up week as we next see per the rightmost weekly bar:

150122_gold_weekly

Puts us in mind of George Kennedy’s observation of the north face climbers in “The Eiger Sanction” (1975): “…they won’t be able to come down… they won’t be able to go up… they’ll be stuck…” That’s Gold these days.

Next, we break it down into the last three months of daily bars for Gold on the left and Silver on the right. Whilst both precious metals are for the moment in linear regression uptrends, the declining “Baby Blues” depict such respective trends as weakening:

150122_gold_silver_dots

Then we’ve the 10-day Market Profiles for Gold (at left) and Silver (at right). If you get out your Funkin’ Wagnalls and look up the definition of “hodgepodge”, you’ll see these two charts:

150122_gold_silver_profiles

And for what ’tis worth in a stagnant market — albeit with stagflation lurking in the balance — here’s The Gold Stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4087
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Gateway to 2000: 1900+
2022’s High: 1833 (06 January)
Trading Resistance: 1821
Gold Currently: 1817, (expected daily trading range [“EDTR”]: 19 points)
Trading Support: 1815 / 1809 / 1800 / 1791
The 300-Day Moving Average: 1807 and falling
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
10-Session “volume-weighted” average price magnet: 1783
10-Session directional range: down to 1781 (from 1833) = -52 points or -2.8%
2021’s Low: 1781 (08 March)
The Weekly Parabolic Price to flip Short: 1768
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

Finally: we bid a fond farewell to LIBOR. During our three-year stint with Barclays back in the 80s, ’twas really cool to talk LIBOR. It was like being “in the know”, a real cocktail party attention-getting dazzler versus boring old “Prime”: “We’re international, baby. The Big Time!” And now ’tis gone. But today with stagflation in the offing, we primed to see Gold become The Big Time!

Cheers!

www.deMeadville.com

Gold Reamed, Silver Creamed, Now Lower Still, It would Seem

080122_gold_scoreboard

And yet in commencing this 22nd year of the 21st century, we’ve had far worse five-day starts per the following table, 2022 being Gold’s seventh-worst and Silver’s third-worst, as measured from 2021’s close through last week’s low:

080122_gold_silver_dips

The Good News is with respect to Gold’s side of the table, in just one of those years (last year) did the yellow metal go on to finish its year in the red. The Bad News is with respect to Silver’s side of the table, it finished its year in the black but two times.

To mitigate such silvery concern, prospective must be maintained via our oft-quipped vein that “change is an illusion whereas price is the truth”. Thus to reiterate and update: Gold by our opening Scoreboard rightly is valued at 4079; the Gold/Silver ratio’s century-to-date average is 66.5x; therefore that puts Silver at 61.34 (should you be so fortunate to be scoring at home). Either way, worth writing down.

Regardless, we duly acknowledge that “the market is never wrong”, by which Gold yesterday (Friday) settled out its first week of the year at 1797, the “Annual Finale Rally” of the prior week (having reached as high as 1831) now comprehensively extinguished.

Bereft of all common sense, Gold continues to lie (pun intended) low, its price at present just 44% of valuation. Which for you WestPalmBeachers down there means a run from price of 1797 to valuation of 4079 is a gain of 127%; enhance that with some precious metals equities leverage and the potential gain becomes 200%-to-400%. And that’s by ownership of a tangible something vs. a cryptocrap nothing. ‘Tis coming.

Negatively for now, what is coming per the following graphic of Gold’s weekly bars are the rising blue dots of parabolic Long trend … without price itself on the rise. That puts Gold in a technically precarious position: currently 1797, should price penetrate 1761 in the ensuing week, the parabolic trend flips to Short. And given Gold’s “expected weekly trading range” is now 47 points, just a 36-point dip completes the trip:

080122_gold_weekly

Further aiding and abetting Gold’s starting askew in 2022 is the daily MACD (“moving average convergence divergence”) having confirmed a negative cross at yesterday’s close. Such study presently ranks as “best” amongst the website’s Market Rhythms for Gold. Here ’tis:

080122_gold_macd

Thus for Gold’s fallout seemingly to follow, the prior 12 negative MACD crossings averaged 68 points of downside typically within a month’s time, which from today’s 1797 suggests 1729; (the median downside drop is 62 points, suggestive of 1735). ‘Course, “average” hardly is “absolute”, and to us ’tis fundamentally nonsensical for Gold’s price to drop whatsoever a wit: please inform a sovereign bank and/or large institution near you to get on with their preservation of wealth program.

Toward preservation of economic health, our StateSide Barometer caught a wee cold in commencing the year. Improvements arrived for December in ADP’s +60% Employment pace, the Dept. of Labor Statistic’s lower Unemployment Rate and Hourly Earnings growth, along with November’s Factory Orders and Consumer Credit.

But there was deterioration in Labor’s -20% Payrolls pace for December and in the Institute for Supply Management’s readings for both Manufacturing and Services, as well as in November’s Trade Deficit which reached over $80 billion for just the second time in the Econ Baro’s 23-year history. So yes, there’s again a dichotomy in the job numbers, but who’s counting, right? We are:

080122_econbaro

With respect to the Federal Reserve, the response to their Open Market Committee’s December Meeting Minutes by the FinMedia gave the impression that they’d not actually read the formal Statement issued back on 15 December: yes, the door is fully open to raise the Bank’s Funds Rate. (Why is this so surprising to grasp?) Purportedly, the taper caper terminates in March; the Rate rises in June; and we stand by that which we’ve put forth in many a recent missive that the FOMC just do both come the 26th of this month.

To be sure, the Fed’s great fear is an unraveling of the S&P so significantly dear that today’s marked-to-market millionaires suddenly face the reality of being just thousandaires, in turn retreating from the high life to that which is low … and again down the economy shall go. (That courtesy of the “Rock and Hard Place Dept.”) Nevertheless, to the Fed’s rescue came St. Louis FedPrez James “Bullish” Bullard who on Thursday at the city’s Chartered Financial Analyst Society said the Fed “is in good position” as regards monetary policy. (We’re lovin’ it).

But not so is Gold in a good position, (at least not yet: recall Gold’s 53% rise during the Fed’s 2004-2006 Rates rise). Still for “The Now”, in addition to Gold’s aforeshown MACD negative cross, we next turn to our two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. “Shur ain’t purty there, Mabel…” as the baby blue dots of regression trend consistency turn tail and price descends into the Profile’s basement, (overhead trading resistance levels as labeled):

080122_gold_dots_profile

The picture is essentially identical for Sister Silver. Despite her being priced today (22.39) at but one third of her aforementioned valuation (61.34 upon Gold getting off its own butt to 4079 and the G/S ratio coming back into line), her “Baby Blues” (at left) are dropping as is price through her Profile (at right):

080122_silver_dots_profile

“Seems like a lot of wishful thinking there”

Of course it does, Squire. ‘Tis always that way until it happens, after which we’ll then hear “What was I thinking?” by Stoopid and the Shiny Objects Society.

We’ll wrap it here with a fun fact: prior to the wee dip in the S&P 500 this past week, much ado was made over the market capitalization of Apple (AAPL) having surpassed the $3 trillion level. ‘Tis since trickled down a tad to $2.8 trillion; but nonetheless, that still is equivalent to 13% of the entire U.S. liquid money supply (“M2”); (recall the entire S&P 500 market capitalization is about double said liquid supply).

But that’s still an impressive single stock pricing consensus. Cooler still, a one kilogram bar of Gold is basically the same dimensions as the iPhone SE. That’s right: breast-pocket size. ‘Course the bar weighs nearly nine times the phone — and by price — is 159x more expensive ($63,387 vs. $399). But they do make a lovely couple. “Got Gold?”

Cheers!

www.deMeadville.com

Gold 2254 in Year 2022

Welcome to next year: ’tis here.

010122_gold_scoreboard

In settling yesterday (Friday) at 1831, Gold’s five-day gain was +20 points, or more meaningfully just +1.1%, ranking it 11th amongst the 18 “Finale Rallies” years this 21st century-to-date. (Recall from last week’s piece that ’04, ’11 and ’15 were instead finales down into valleys).

But that’s all quite immaterial really given comparable respect to Gold missing our forecast high for 2401 in 2021: Gold never got beyond 1963 (06 January). To reprove ourselves in the words of Dr. Kananga (aka “Mr. Big”) from “Live and Let Die” –[Eon/UA, ’73]:

“I gave you every break possible. You had a chance. You weren’t even close.”

  • The best “break possible” was the U.S. money supply (“M2” basis) increasing from $19.4 trillion at year-end 2020 to $21.8 trillion as of yesterday, (+12.4%). Not only did Gold balk, but for the year on balance, price instead went backward from 1902 at year-end 2020 to 1831 yesterday (-3.7%).
  • We “had a chance” as with flawlessly favourable fundamentals, the predicted 2401 level was merely the extrapolation of 2020’s linear regression trendline (per weekly closes) through 2021. But repeat same for 2022 and — given Gold’s 2021 trend was down — ‘twould find price’s extreme for this new year lower than higher. Bereft of all common sense, that.
  • Thus we “weren’t even close.” Period. Say no more. We can only scrape what remaining credibility we might maintain off the floor and look to what is now 2022.

Accordingly, per this missive’s title and its opening Gold Scoreboard, we’re going with 2254 as Gold’s high for 2022. How did we arrive at that price? You website followers out there may be familiar with our Market Ranges page, which each day updates our EDTR (“expected daily trading range”) for the following trading day. At times, too, we’ve assessed same for weekly and month measures.

2254 is borne of the yearly measure on a percentage basis: Gold’s EYTR for 2022 is 30.4%, (which for you WestPalmBeachers down there means the expected distance from Gold’s 2022 low to its high). A derivative of the EYTR is the realistic assumption that Gold shan’t simply go straight up (which if it did would bring us 2387 this year). Rather, should Gold put in an up year for 2022, 23.2% (the expected maximum percentage up move from 1831 with the overall 30.4% trading range) puts the projected high at 2254.

Thus in the following graphic, here is where 2254 appears above (still way above) Gold’s weekly bars and parabolic trends from a year ago-to-date. 2021 was a year wherein Gold couldn’t find its way out of a paper bag despite Debased currency wreckage, Treasury insolvency to meet Debt service, and non-covered Derivatives run amok. The 3Ds in a rotted nutshell, right there … Yuck!

010122_gold_weekly

But what shall it take to wrest Gold out of its high-1700s to low-1800s malaise? Yes, obviously Gold’s foundational fundamentals support price above 4000 right now, a valuation even deemed modest by some hardcore analysts; (we just do the honest Debasement math). Not helping is the metastasizing notion of “Manipulation” put upon price by entities with sufficiently margined futures accounts to measuredly repel upside movement time and again.

‘Course a sovereign bank can give “them of the M” a run for their money; add to that the buying participation of large institutional funds and Gold can be off to races really fast. Rather than Gold getting a lurch by some geopolitical event (following which price always sags back from whence it came), large scale buyers shall ultimately put price right — and right quick at that — upon real erosion of currency-based wealth. And were that to occur this year, our 2254 can well appear as a modest speck in the rear-view mirror. Stay tuned…

Meanwhile comes our high-level mix of precious metals-based equities. By their percentage tracks starting from this time a year ago, the mild-standout is Franco-Nevada (FNV) +10% along with also-positive Newmont (NEM) +4%. But then ’tis nothing but red with Gold itself -4%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -11%, the Global X Silver Miners exchange-traded fund (SIL) -20%, Agnico Eagle Mines (AEM) -25%, and from worst-to-first-and-back-to-worst Pan American Silver (PAAS) -28%. ‘Course from the “Eternal Hope Dept.”

We reprise a savvy trader’s quip from decades ago: “Ya can’t sell ’em on the way up if ya didn’t buy ’em on the way down!” And featuring Stoopid and Smart, this display definitely depicts “down”:

010122_gold_gdx_nem_aem_fnv_sil_paas

For the BEGOS Markets as a whole in 2021, the economically-driven components skīed whilst the safe-havens died. Per our final percentage standings for 2021, Oil led from the get-go and never looked back, the +55.8% gain its largest since 2007. The ever-earnings-ignorant S&P 500 scored a podium finish, as did Copper. Then at the dividing line appropriately is the Dollar with the +6.4% gain seemingly impossible given its massive Debasement: that’s called “market dislocation on steroids”. Finally in the red are the safe havens after two fairly solid prior years:

010122_begos_standings

Now for the past year’s full look at the Economic Barometer: when you go from “no economy” (2020) to “full economy” (2021), you look really good. However, recall our emphasizing through 2020 that the private sector naturally negotiated Covid’s swerving curves: folks found their way through the friction-filled fray. But at the end of the day, 2021 finished with the Baro at a better than three-year oscillative high, the S&P itself making an all-time high at 4809 on 30 December. Lookin’ great there, Joey Baby!

010122_econbaro

Still, from the “Cooler Heads Prevail Dept.” Bill Stromberg (T. Rowe Price Prez/CEO) pointed to investors being in “free-form risk-taking”, the FinTimes going on to further note that “investors can be right for the wrong reasons.” That’s responsible reporting, the antithesis of which came from Dow Jones Newswires referring to corporate profits for the past two years as “Rip-roaring”. Really? Query: If “Rip-roaring”, how then can one account for our “live” reading of the S&P 500’s price/earnings ratio having climbed from 39.0x at the end of 2019 two years hence to now 49.5x?

“Because of the commensurate rise in stock prices, mmb. Happy New Year, by the way.”

To you as well, faithful Squire. And your having demonstrated four-syllable wording in commencing the new year is impressive. ‘Course, ’tis way beyond “commensurate”; we see it as “catastrophic” … rip-roaringly so when it doth go.

As to the now, what is on the upside “Go!” is the linear regression trend of every BEGOS Market save for the Bond. Here are the last 21-days (one month) for each of them as we go ’round the horn, money pouring into “everything” except debt, (poor TreaSec Yellen). The baby blue dots depict the day-to-day consistency of the grey trendlines:

010122_begos_dots

Next we’ve the 10-day Market Profiles for Gold on the left and Silver on the right. Simply stated, life again at the top looks good, and more so given price being so materially undervalued. Today at 1831, Gold is priced at just 45% of its Debasement valuation of 4070. The Gold/Silver ratio is today 78.4x, but the average from 2001-to-date is 66.5x. Thus doing the simple arithmetic: were Gold today actually at its proper valuation of 4070 and the G/S ratio at its average of 66.5x, the price of Silver (today 23.36) would be 162% higher at 61.20!

010122_gold_silver_profiles

And it being month-end, moreover year-end, here is the Gold Structure monthly bars graphic across the past 11 years, our 2022 forecast high of 2254 ratcheted down from last year’s 2401 target as the battle across The Northern Front for the Final Frontier furiously continues, purportedly against the forces of “The M Word” crowd:

010122_gold_structure

Now as a closing bonus, here we’ve the annual closing price of Gold across the past 51 years, from 35 then to 1831 today, (thank you, Dick):

010122_gold_annual_closes

2021 is done with 2022 right on cue. We expect volatility to remain rather rampant throughout the year across the BEGOS Markets. Therein, clearly the S&P 500 is beyond due for another major wallop similar to those during 2001-2002 and 2008-2009 for the most basic of reasons: the money isn’t there. Indeed to update a favoured stat from 2021: at yesterday’s close, the market capitalization of the S&P 500 alone is $42.0 trillion; the StateSide liquid money supply (M2) is “only” $21.8 trillion; (globally ’tis rounded at $40 trillion).

So how much shall Stoopid actually receive when Stoopid finally sells? On the other hand, Gold today at 1831 is “worth” (by tonnage) $13.1 trillion … but at proper valuation (4070) ’tis worth $29.2 trillion. “Hey Stoopid! Got Gold???”

Happy New Year and Cheers!

www.deMeadville.com

Gold’s Annual Finale Rally

The last time 25 December arrived on a Saturday was 11 years ago in 2010:

  • ‘Twas the date of Gold Update No. 58; today we’re penning No. 632;
  • The price of Gold then was 1379; today ’tis 1810, (+31%)
  • The U.S. money supply (“M2” basis) then was $8.9 trillion; today ’tis $21.6 trillion, (+2.4x)
  • The supply of Gold then was 173.7 tonnes; today ’tis 202.8 tonnes, (+17%).

251221_gold_scoreboard

Query, (courtesy of the “Fun With Numbers Dept.”):

Given across these past 11 years the +2.4x increase in the U.S. money supply, even as tempered for the duly noted +17% increase in the supply of Gold itself, ought its price nonetheless now be 2747? After all, currency debasement is the ultimate, primary driver of price, lagging as ’tis been.

Further by the above opening Gold Scoreboard which comprehensively accounts for 41 years of currency debasement, more than double present price is Gold’s valuation today of 4030! Thus analogous in reprising the infamous query of immortal football coach Vince Lombardi: “What da hell’s goin’ on out dere??”

251221_gold_weekly

‘Course, you regular readers of The Gold Update know exactly what’s goin’ on out dere. ‘Tis “The Age of the Shiny Object”. Why purchase Gold — as stated just +31% from this day of days 11 years ago — when by merely owning the S&P 500 itself you’ve recorded a gain over same of +276%? Better still, how about your cryptocrap with its gains of +%? But wait, there’s more: How are those NFTs workin’ out for ya? (We think of them ultimately as “non-fundable tokens”). Then, too, is “The M Word” crowd: “Churn it and burn it, baby!” Or as Carly Simon might have sung it from back in ’71: “Manipulation…”

Regardless, with the S&P now at an all-time “Santa Claus Rally” closing high of 4726 (thank you record level of stock buybacks), Stoopid is sleeping securely because should the market dip from here, it always comes back, right? Arithmetically that’s been undeniably true. Undeniably true as well by its historical track is the S&P’s price/earnings ratio (our “live” read now 49.5x) having always returned to its median (at present 20.4x since the Index’s inception nearly 65 years ago on 04 March 1957).

So here’s the crux: we’ve already accounted that year-over-year earnings’ increases from a “shutdown 2020” to an “open 2021” were not sufficient enough to materially boost the “E” of the P/E such as to mitigate the ever-rocket-boosted “P”. Therefore: the next reversion of the P/E to its 20.4x median essentially requires a move of the S&P from today’s 4726 level down to 1948, (i.e. a -58.8% “dip”). But Stoopid worries not: “Been there, done that, it always comes back.” Even as this time ’round rates rise, in turn ramping up that variably-priced interest on Stoopid’s fully drawn credit cards. “Got Gold?”

For which there is some good news, both aft and ahead.

  • Aft – Whilst during each of this past Monday, Tuesday and Wednesday Gold dealt with dilly-dallying ’round as usual in the 1780s, price finally saw its way clear to close on Thursday above 1800, its first weekly settle north of said number since that ending 19 November.
  • Ahead – Per this missive’s title, ’tis time for Gold’s annual finale rally, (our now pointing that out meaning it shan’t occur). But it being a festive day, let’s stay positive as traditionally is Gold’s wont through the final five trading days of the year. For as the following table displays, Gold during this stint has risen in 17 of the 20 completed years thus far this millennium. We thus anticipate that for this 21st year of the 21st century, Gold shall be higher in a week’s time than today’s 1810 level:

251221_gold_final_5day_rallies

That is a statistical gift. Now here’s one that is technical:

251221_gold_prcosc

The above graphic depicts Gold’s daily “price oscillator” (a mainstay of the website’s Market Rhythms page) during 2021’s fourth quarter-to-date. The rightmost wee blue nub just crossed to positive, the trader’s signal thus being to get Long Gold. The prior 12 such Long signals (dating back to 27 March 2020) saw upside price follow-throughs averaging as much as +77 points which in that vacuum from 1810 would be to 1887, the more conservative median being +31 points to 1841. No guarantees ‘natch, but nicely on time to synch with Gold’s annual finale rally should it come to pass.

Meanwhile, unsurpassed for better than three years until just now is the current level of the Economic Barometer, which with but a week to run in 2021 saw this past week’s set of 13 incoming metrics move the Baro to its highest oscillative level since 31 July 2018.

Yes, there were a few weak links in the data: Q3’s Current Account Deficit sagged to its worst level since Q3 2006; and although the quarter’s final read on Gross Domestic Product increased to an annualized “growth” rate of +2.3%, that was more than double-mitigated by the party-pooper Chain Deflator being finalized at a +6.0% “growth” rate. (For you WestPalmBeachers down there, that basically means there is no real GDP “growth”, but rather “stagflation”; look it up). Too, increases slowed in November’s Personal Income and Spending.

But highlighted were improvements in November’s New and Existing Home Sales, Durable Orders and (not surprising should you follow the Baro) the Conference Board’s Leading (i.e. lagging) Indicators. ‘Course the real stinker was the Fed’s favoured inflation read of Core Personal Consumption Expenditures coming in at an annualized pace of +6.0%. But, perhaps folks “just don’t get it yet” given the level of Consumer Confidence (also per the Conference Board) rising in December to a five-month high. Here’s the whole view:

251221_econbaro

With respect to the Baro’s having re-attained the noted 2018 level, ’twas after that the S&P 500 then declined into the year’s Christmas Eve by -16.5%. Not that history shall repeat same going into next year: we anticipate worse — far worse — either by our “Look Ma, No Earnings!” crash (per the aforementioned P/E assessment), and/or by Federal Reserve Vice Chair Nominee Lael “The Brain” Brainard’s “Climate Change!” crash. Also there’s now ever-increasing amount of “Oh My! Omicron!”

Still, upward economic gains along with increasing inflation strains both serve justice for the Fed to commence raising its Bank’s Funds rate as early as 26 Jan. Which in turn means you’ll have somewhere else to park your dough when the stock market doth over the cliff go. Get ready for “The Return of the Savings Account!” In theatres next Spring. ‘Course far better than that, again: “Got Gold?” And don’t forget Silver too!

All so stated, New York FedPrez John “It’s All Good” Williams looks to the Fed’s rate rises as an economic positive — which to his credit — has historically synched with the beginning of higher interest rates. And perhaps more costly money can be withstood, Dow Jones Newswires this past week having referred to U.S. household wealth as “vast”.

Indeed per a year-old survey from the Fed, the median StateSide household wealth level is $122,000. (Admittedly, we did not dig sufficiently deep into the data to divulge if that includes proceeds from the aforementioned fully-drawn credit cards).

Next let’s fully draw our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and the 10-day Market Profile on the right. Especially encouraging therein are Gold’s “Baby Blues” penetrating up through their 0% axis in confirming the regression trend having rotated to positive. And the Profile shows the most dominant trading level of the past two weeks as (no surprise) 1787:

251221_gold_dots_profile

With the same drill for Silver, we see her “Baby Blues” (below left) in accelerating ascent, albeit the low 23s may be a sticky wicket there. Still, her Profile (below right) appears supportive for the mid-to-lower 22s, (and happy winkies to you too there, Sister Silver):

251221_silver_dots_profile

Time to wrap it up from here with this note: it again appears The World Elites’ Economic Forum in Davos is being “deferred”, the great convening over The Great Reset to instead take place toward early summer. Bit of an economic inflow delay there for little ole Switzerland, but we have it on well-vetted authority they’ll manage.

The small alpine nation may rank just 135th by size and 101st by population. But it ranks seventh in total Gold holdings and far and away first in per capita Gold wealth: there is one tonne of Gold for every 8,322 people which (in sparing you the math) is $7,672 per Swiss resident. (Italy is a distant second at $2,589).

“And Season’s Greetings to you, mmb!”

Thank you, Squire, and our very best to you ‘n yours, all the little Squires down the line, and absolutely as well to our star readers right ’round the world! Everyone take care, and don’t forget the real star: Gold!

www.deMeadville.com

Gold and Silver Takeoff… uh, No…

But given Gold is never really supposed to stray too far from the 1780s, let alone Silver be allowed to do anything material but decline, both precious metals eked out immaterial weekly gains. Gold settled yesterday (Friday) at 1799, +0.9% net for the week, and Silver at 22.36, +0.7% net.

181221_gold_scoreboard

Indeed a net snoozer of a week:

  • Even as the Swiss Franc saw its linear regression trend (21-day basis) rotate further to positive…
  • Even as the Bond’s price moved to a two-week high…
  • Even as the S&P’s MoneyFlow for the week values the Index 120 points lower than ’tis…
  • Even (more broadly) as the U.S. money supply since March 2020 has averaged an increase of $1 trillion every 93 trading days…
  • Even as the Federal Reserve again alerted the world that ’tis preparing to raise rates; (they can’t be outdone by the Bank of England having just so done, even as the European Central Bank remains hand-wringing): we’re actually thinking the Fed terminates the tapering and pulls the trigger in its 26 January Policy Statement… “Sorry folks, but we had to do it, else your stick of butter is gonna cost ten bucks.” BOOM!

And with respect to the latter, as you regular readers well know, the increasing of FedFunds rates was very precious metals-positive during 2004-to-2006 and on balance Gold-positive from 2015-to-2018.

Yes even as we’ve all these historically very Gold-positive events in play, ’tis low that the precious metals continue to lay.

“Well mmb, the dollar refuses to die…”

Duly noted there, Squire. As we’ve been saying, market dislocations are the “in thing” these days. Fundamentals have been flushed down the loo, but at least we’ve quantitative and technical analysis to see us through. For again we quip — even as goofball-wacko as market correlations have become — prices are never wrong, their ebbing and flowing still in play, which for the trader we hope leads the correct way: “Don’t dare think, else you’ll sink!” (That of course courtesy of “The Trend is Your Friend Dept.”).

Either way, these are extraordinarily challenging trading days! Did you know that the EDTR (“expected daily trading range”) of the S&P 500 right now is 67 points? The average annual trading range of the S&P from 1993-1995 was 47 points per year with an average annual percentage tracing of 11%: this year the S&P is tracing a range that averages better than 5% per month! Again analogous to a snake in its death throes.

And yet the precious metals remain a disappointment, (save to “The M Word” crowd). Recall “Gold Forecast High Goes Bye-Bye” penned back on 02 October per nixing our 2401 price forecast high for this year: “…The more likely scenario shall well be Gold just sloshing around into year-end, trading during Q4 between 1668-1849…” We’d hoped to have been wrong about that, but with just two weeks to run in 2021, ’tis exactly what’s happened.

Indeed you can see it “happening” (or better stated “not happening”) here across Gold’s weekly bars from a year ago-to-date. A snoozer indeed, be it this past week or past year, the current parabolic Long trend (blue dots) completely bereft of price actually rising:

181221_gold_weekly

And as an added holiday treat (hardly), here is our like (rarely posted) graphic for Silver, unable to maintain her short-lived parabolic Long trend, indeed now Short (red dots). Rather, a truly tarnished treat, one has to say, her appearing none too festive:

181221_silver_weekly

But as crooned Neil Young back in ’70 “Don’t let it bring you down…”as we’ve a ray of technical hope for Gold into year-end; (‘course, fundamental hope for Gold springs eternal). This next chart displays Gold by the day from mid-year-to-date. In the graphic’s lower panel is a favoured technical study of the trading community, the mouthful MACD (“moving average convergence divergence”). Of interest is the MACD having just confirmed a crossing to positive. And whilst hindsight isn’t future-perfect, it is a useful predictor in forming a reasonable near-term target for Gold, as follows.

This is Gold’s 13th positive MACD crossover since 26 March 2020. The “average maximum” price follow-through of the prior 12 positive crossovers is +87 points within an average signal duration of 27 trading days, (essentially within five weeks).

Thus from the confirmation price of 1799, an average 87-point rise would put Gold at 1886; (more conservatively, the “median maximum” price follow-through across those 12 prior occurrences is +57 points, which if met on this run would find Gold at 1856). So with no formidably recent structural overhead resistance — plus Gold’s penchant to have put in positive Decembers in four of the past five years — a run up to test the denoted 16 November high of 1880 makes some sense, prudent cash management, as always, taking precedence:

181221_gold_macd

‘Course, the biggest “positive” (if you will) of the week was the aforementioned Old Lady of Threadneedle Street raising her benchmark interest rate by 150% from 0.10% to 0.25%. (Dare the 1st Earl of Halifax — one Charles Montagu, who in 1694 devised establishing William Paterson’s 1691 proposal for creating the BOE — flip his wig). Meanwhile across the channel, the ECB looks to curtail its “emergency” asset purchases, but nonetheless is assessing other stimulus measures. No rate hike there. Certainly neither in China as economic consumption and the property market continue to weaken. “Got Dollars?”

For indeed as you already well know lest you’ve been in a hole, the StateSide FedFolks look to bring their Bank’s Funds rate up into the 0.75%-to-1.00% target range by the end of next year. And as noted, we think they’ll initially move on 26 January, barring an excessive bout of “Oh my! Omicron!”

Oh, and from the “Oh By The Way Dept.” President “Jumpin’ Joe” Biden just signed the $2.5 Trillion Dollar Debasement Declaration so that TreaSec Janet “Old Yeller” Yellen can keep paying the nation’s debt obligations and bills through most of next year.

For some perspective: the U.S. money supply from 02 January 1998 to 09 September 2005 grew by $2.5 trillion, (a pace of $1 trillion per 802 trading days) during which time the price of Gold increased by 55%. Today (as previously noted), the money supply is increasing at a an average rate of $1 trillion per just 93 trading days, but terrifically under-owned Gold basically “ain’t done squat” (technical term). Just in case yer scorin’ at home.

Speaking of scoring, the Economic Barometer’s strength through November has run out of puff thus far in December as we see here:

181221_econbaro

Notable Baro improvements from last week’s set of 15 incoming metrics include November’s Capacity Utilization and Building Permits amongst other higher housing measures; but the month’s growth in Industrial Production slowed significantly, as did Retail Sales. And whilst December’s New York State Empire Index marginally gained ground, the Philly Fed Index more than halved what November’s had found.

And oh yes, there was also wholesale inflation for November, the Producer Price Index recording an annualized pace of +9.6%: which makes the old riddle about “How many zeros can fit on a Zimbabwean banknote?” not as funny as once ’twas. But ’tis not to worry, the FOMC having just stated that “…Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation…”

As to how many rising Baby Blue dots does a consistent trend make, let’s turn to our two-panel graphic for Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right. The respective rightmost up turns from the -80% axes are generally harbingers of higher prices, (and to wit the MACD study for Gold earlier shown). But Friday’s rejective price action does initially breed some cause for concern: “The M Word” crowd? The quadruple-witch? Both? We display, you assay:

181221_gold_silver_dots

Next we’ve the 10-day Market Profiles for Gold (below left) and Silver (below right). To be sure, by this view Gold’s infinite 1780s appear supportive, whereas poor ole Sister Silver’s array is a congested display:

181221_gold_silver_profiles

Let’s close with three mentions of inflation:

  • Dow Jones Newswires “reported” this past week that a factor in determining the duration of inflation is how we feel about it, which in turn shall guide the Fed’s interest rate decisions; (folks are well-paid to write this stuff). Here’s what we feel: be it cost-push or demand-pull or both, when the money supply increases 33% in less than two years, ’tis game over;
  • From the same creative bunch also came the notion that because increasing inflation effectively makes for negative real rates of interest, the FOMC by not (yet) voting to raise rates is therefore actually stimulating the economy. Yeah, we get that, but such rationale may be the biggest infatuative policy-wonk hot-air crush ever;
  • Speaking of which, here’s an inflation-induced blast: we read that the rather wealthy Speaker of the U.S. House of Representatives is not supportive of a proposed ban on Congressional members from owning individual equities, her stating that “We’re a free-market economy”: how’s that for a 180° turn? (Maggie Thatcher, you don’t know what you’re missing).

But don’t you miss out in getting some Gold and Silver on the cheap before inevitably they leap. True, they had a rather feeble takeoff attempt this past week. But once they really get airborne, that’ll be our kind of inflation, right there!

www.deMeadville.com

Gold Stays Sedentary Whilst Silver (a Steal!) Skids Senselessly

111221_gold_scoreboard

“Uhh gee, mmb… in the 1780s?”

Spot-on there, Squire, for the simplest reason that the price of Gold is always in the 1780s. Don’t believe it? Feel free to verify the following, (you cannot make this stuff up):

‘Twas in the 1780s ten years ago; ’twas in the 1780s ten months ago; ’twas in the 1780s ten weeks ago; ’twas in the 1780s ten days ago; and ’tis today in the 1780s — 1783 to be precise — as portrayed in the above Gold Scoreboard. That is just 44% of Gold’s Dollar-debased value of 4015, even as honestly-adjusted for the increase in the supply of Gold itself. No kiddin’.

Indeed should Gold have just died, an epitaph of solely “1780” is perfectly apt. “Charles, is this Gold’s gravestone?” … “That, my dear Dysphasia, is a rhetorical question.”

For just as the price of Gold was relatively “fixed” post-Issac Newton in the $18-to-$20 range, then again relatively “fixed” post-Bretton Woods in the $34-to-$35 range — until 1971 upon Richard Nixon nixing such Gold Standard — today we might say Gold is relatively “fixed” in the 1780s by “The M Word” crowd. Indeed, the “manipulation” motif is gaining more and more mainstream mention of late, the market depth of bids and offers rotating marvelously around 1780 as a centerpiece price.

And it never being wrong, the market is what ’tis today: 1780. But broad buying sway can this allay: for Gold remains extraordinarily under-owned, an understatement at that. ‘Course, the day to sell your Gold is the day everybody wants it, even at a five-figure price.

But for now, why own a dense, ductile lump of rather incongruous rock when with a mere tap of the mouse one benefits many times over from an increasing array of shiny objects permeating the markets, be they earningless stocks or cryptocrap or even non-fungible tokens? Certainly they make one and all cocksure and feeling fine! (Until suddenly the objects vanish, but we’re not supposed to say that).

And how about Sister Silver of late? Hardly does she feel very great. Whilst Gold has been ad nausea sedentary in forever wallowing ’round the 1780s, and more accurately being -3.0% month-over-month, Silver senselessly has skidded -10.9%! Quite obviously, Silver has not been adorned in her precious metals pinstripes. So it must instead be that she is sporting her industrial metal jacket, right? For Cousin Copper clearly must be going over the cliff.

But no, ’tisn’t. Rather for the same stint, Copper is off but a mere -0.5%. What To Figure, eh? Last week we wrote of market dislocation: Silver has become so dislocated as to have been left naked! Here are the percentage tracks of our BEGOS Markets’ metals triumvirate from one month ago-to-date (21 trading days):

111221_begos_metals

Further, guess what just crossed above 80x for its first occurrence since 29 September? Exactly right: the Gold/Silver ratio, which now is 80.3x. Its millennium-to-date average is 66.4x. Thus were Silver today (22.215) priced at the average, she’d in fact be +24.6% higher at 27.690. (Think means regression). Either way, by our math, Silver right now is a steal (!!!)

So as Silver sinks even as Copper remains buoyant — which makes no sense — Gold sedentarily sits. In settling out the week yesterday at the aforementioned 1783, price on a points basis traced its narrowest week (since that ending on Valentine’s Day 2020) in the last 22 months, and the narrowest week on a percentage basis since that ending nearly two years ago on 22 December 2019. So narrow was last week’s trading range that it barely shows as the rightmost nub on the graphic of Gold’s weekly bars from one year ago-to-date:

111221_gold_weekly

Economically, the past week of incoming metrics were inflation-persistent. There was an upward revision to Q3’s Unit Labor Costs along with a downward revision for the quarter’s Productivity: that’s Classic Stagflation, right there! Too, November’s CPI remained stubbornly high with an +0.8% reading, (which for those of you scoring at home is an annualized pace of +9.6% … are ya gettin’ that with all the dough you’ve got sitting in the bank? Oh right, you put it all in the stock market).

October’s Trade Deficit backed off from that for September, whilst Consumer Credit eroded and Wholesale Inventories somewhat bloated. December’s University of Michigan Sentiment Survey regained the 70 level, but remains below the COVID-era average of 77. Put it all together and the Economic Barometer lost of bit of tether:

111221_econbaro

With further respect to rising everything (‘cept the metals), Dow Jones Newswires during the week ran with “This Inflation Defies the Old Models. Neither supply or demand by itself is increasing prices; it’s an unusual combination of both.” True enough: we’ve tons of money chasing not enough stuff, the cost of which to produce and supply is ever-increasing. This is what happens when the system is flooded with money. Everybody’s loaded, so why the heck seek work? Especially given your shiny object investments see you retiring at 35. (Or as a French friend oft texts to us: “So gréat!”)

Meanwhile come 21 December (that’s Tuesday a week), some 40% of StateSide obligations shan’t be payable (per analysis from the Bipartisan Policy Center) given the debt ceiling then being reached. “Hey Shinzō, that you? Joe here. Hey listen: we may have to skip that next interest payment. My Janet who? Hello Shinzō? Hey! Are you still there, buddy?” Or something like that. Which leads us to three critical, succinct questions:

“Got Gold?” “Got Silver?” “Has the S&P crashed yet?”

Just askin’. In fact speaking of the latter, our “live” S&P 500 price/earnings ratio is now 48.6x, (another of our honest calculations that the FinWorld elects not to perform). In fact, the “in” thing these days is to value a company — should they not have earnings — by revenues. (This is referred to as “Dumbing-down beyond stoopid”). For example, we read this past week that such valuation method is apparently touted for a shiny object called “Snowflake”. Last year this object’s top line was +$592M and its bottom line -$539M, a truly symmetrical snowflake swing of -$1.1B. Moreover, we read (courtesy of NASDAQ) that negative swings are to be again seen in ’22, ’23 and ’24. And snowflakes do melt. (See 2000-2002). Just sayin’.

‘Course to be fair, Gold’s price as a function of valuation continues to melt. The U.S. money supply continues to rise, yet Gold’s price remains hardly wise, (except in the guise to load up on this prize). To wit, our two-panel graphic featuring on the left Gold’s daily bars from three months ago-to-date and on the right price’s 10-Market Profile. The good news per the “Baby Blues” having just ceased their fall right at the -80% axis is that price’s recent freeze in the 1780s may be the consolidative haunch from which to launch. And obviously, those incessant 1780s clearly dominate the Profile:

111221_gold_dots_profile

Silver’s like graphic shows both price and the “Baby Blues” (below left) clearly more skittish than Gold, whilst her Profile (below right) sees her singin’ the blues. (But grab some Silver whilst you’ve nuthin’ to lose!)

111221_silver_dots_profile

Grab a glimpse too at The Gold Stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 4015
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
2021’s High: 1963 (06 January)
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1815 and falling
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
Trading Resistance: 1785 / 1795
10-Session “volume-weighted” average price magnet: 1783

Gold Currently: 1783, (expected daily trading range [“EDTR”]: 22 points)

Trading Support: 1777 / 1773
10-Session directional range: down to 1762 (from 1811) = -49 points or -2.7%
On Maneuvers: 1750-1579
The Weekly Parabolic Price to flip Short: 1728
2021’s Low: 1673 (08 March)
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

And then there’s next week. 15 metrics are scheduled for the Econ Baro. And the mid-week cherry? A policy statement from the Federal Open Market Committee. “Oh no, not again!” Kinda like those radio hits: good or bad, they just keep on comin’! So c’mon and get yourself some Gold, and don’t forget the Silver too!

Cheers!

www.deMeadville.com

Gold’s 1780s Are Driving Us Crazy!

Indeed, Gold’s median weekly settle price year-to-date is 1788. Yet as anybody engaged in the Gold Story knows, Gold first traded in the 1780s a decade ago on 09 August 2011, the U.S “M2” money supply that day at $9.5 trillion; (today ’tis $21.5 trillion).

041221_gold_scoreboard

So to reprise that from the “You Cannot Be Wrong Dept.”: should anyone ask you “off the cuff” what is the price of Gold, your instantaneous response of “1780” shall (so ‘twould seem for the foreseeable future) not only be correct, but enhance your dazzling intellectual image.

To reprise as well “The M Word” crowd, clearly their parking place of preference is Gold’s 1780s. Of the 233 trading days year to date, 27 of Gold’s closures exceeding 1800 have — within the five ensuing trading days — found price settle in the 1780s, or lower. “1800? SELL!” Sheesh… Gold’s 1780s are driving us crazy!

Regardless, Gold — and moreover Silver — are doing what markets do when their technicals turn negative: price goes down. Per our Market Magnets page, Gold from 1861 on 18 November found price then pierce down through its Magnet: “SELL!” From our Market Trends page, Gold from 1847 on 19 November found the “Baby Blues” of trend consistency begin to plummet: “SELL!” From our Market Values page, Gold from 1805 on 22 November crossed below its smooth valuation line: “SELL!” More mainstream technical signals have since followed to “SELL!” And recall — just prior to it all in our anticipating near-term selling — we nonetheless deemed the 1800s as “safe”: “WRONG!

Having thus now driven you crazy, we obviously deem holding and buying Gold as “RIGHT!” especially as the stock market — be this another false signal or otherwise — finds the S&P 500 doing its dance of a snake in death throes. To be sure we’ve seen such before, only to see the Index magically survive, indeed thrive.

You veteran readers of The Gold Update may recall some six years ago (on 23 January 2016) our characterizing the S&P as being in such “death throes”, the ensuing three weeks then finding the Index fall 5% from a “live” price/earnings ratio of 43x; (today ’tis 47x).

“But don’t forget it’s now time for the Santa Claus Rally, mmb…”

Yet another conventional wisdom notion there, Squire, via your appreciated “leading comment”. Irrespective of what “everybody says” and expects, Santa Claus doesn’t always come to Wall Street. Since 1980, as measured yearly from 01-to-24 December, Santa has skipped gifting the stock market 11 times. “WHAT?” ‘Tis true. For those of you scoring at home, the S&P recorded net losses across that festive stint in ’80, ’81, ’83, ’86, ’96, ’97, ’00, ’02, ’08, ’15 and ’18, the latter being a 409-point (-14.8%) loss. (Advice to the stocking stuffer: buy coal … nudge-nudge, wink-wink, elbow-elbow).

Moreover, have you been monitoring the major market dislocations of late? Talk about the maligning of conventional wisdom! In yesterday’s session, the €uro, Swiss Franc, ¥en — and yes the Dollar Index too — all closed higher. “WHAT?” ‘Tis true. Still, even as there is Dollar demand given the prospect of it paying a positive interest rate, the yield on the U.S. Treasury Bond continues to fall: ’twas 2.177% on 08 October, but is down now to 1.678%. In fact across our BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500), the price of the Bond is the only component with a positive 21-day linear regression trend.

WHAT?” ‘Tis true. And then there’s Oil: by our Market Values page, Black Gold settled yesterday 15 points below its smooth valuation line (66.22 vs. 81.51), even as Oil Inventories fell. “WHAT?” ‘Tis true, (albeit OPEC is gonna keep a-pumpin’). Still, by that measure, Oil’s price is massively, — indeed deflationarily — dislocated near-term from value. Too as noted, the Price of the S&P continues to be ridicously dislocated from the support of its Earnings; but if you get your dumbed-down P/E of 28.1x from the media, when ’tis honestly 47.4x, go ahead and say it: “WHAT?” ‘Tis true.

‘Course, the ongoing and most overwhelming dislocation is the price of Gold vis-à-vis our Scoreboard Dollar-debasement valuation (1784 vs. 4008). Say no more, Igor. A December to remember? Early on, ’tis the season to be dislocated.

To which naturally (as subtly stated) we find Gold located in the 1780s. Why expect it to be anywhere else? So spot-on is Gold in the 1780s that per the following graphic of weekly price, the rightmost close is right on the dashed regression trendline. So are the 1780s driving you crazy, too? At least Gold’s parabolic trend still is Long, although the aforementioned negative technicals have kept on the lid, (to say nothing of “The M Word” crowd?). Note as well the 79.1x reading of the Gold/Silver, ratio, essentially at a two-month high, the white metal having been terribly on the skids of late:

041221_gold_weekly

Anything but skidding these last couple of months has been our Economic Barometer, it now having reached its highest oscillative level in better than three years. Whilst nominally last week’s 13 incoming metrics were quite mixed, their overall effect net of prior period revisions and consensus expectations was to launch the Baro higher still as we here see:

041221_econbaro

Amongst the improvers were November’s Unemployment Rate and Average Workweek, plus both the Manufacturing and Services readings from the Institute for Supply Management, along with October’s Construction Spending, Factory Orders and Pending Home Sales. However: November’s ADP Employment data, Labor’s Non-farm Payrolls and Hourly Earnings, the Chicago Purchasing Managers’ Index and the Conference Board’s read on Consumer Confidence were all weaker.

Therein, too, is the red line of the S&P 500, its aforementioned snaky death throes throwing the Index all over the place this past week. The S&P’s intra-day runs were as follows: Mon +48, Tue -86, Wed -143, Thu +91, Fri -113. Want some perspective for that? The entire trading range of the S&P 500 for the year 2004 was less than this past Wednesday’s session alone. “WHAT?” ‘Tis true.

‘Course, back in 2004, ’twas a greater percentage range, but at least the average P/E for that year was a “reasonable” (vs. today) 26.4x. Thus again is begged the question: “Has the S&P crashed yet?” Obviously not, but we’re feelin’ very leery ’bout January. “As goes January…”(although you regular readers know we’ve demonstrably debunked that conventional notion as well). BUT

As for the Federal Reserve’s removing of the punch bowl, Atlanta FedPrez Raphael “Ready to Raise” Bostic again says its time to step up the Taper of Paper Caper, whilst FedGov Randal “Have No” Quarles says ’tis time for The Bank to prepare to raise. And as noted in last week’s missive: were it not for the “Oh my! Omicron!” scare, we could well see a FedFunds rate hike in the FOMC’s 26 January Policy Statement. So just keep wearing your masque such that everything’s great, and in turn let the Fed increase its rate!

Here’s another positive from the “Good Is Bad Dept.”: the StateSide government shan’t run out of money this time ’round until 18 February. Low on dough? To Congress you go! Just ask TreaSec Yellen, for she’s in the know! Ho-ho-ho…

Either way, west of The Pond “inflation” remains the watchword — or if you prefer the real word — as the word “transitory” is being transited away. East of The Pond, the EuroZone (just 23 years young) sees its inflation level hitting record high levels; but should it be peaking, ’tis thought any European Central Bank rate rise shan’t next year materialize.

And lacking any upside mobility of late (duh) are our precious metals, the following two-panel graphic bearing along as butt ugly. On the left we’ve Gold’s daily bars from three months ago-to-date, their cascading “Baby Blues” reinforcing price’s downtrend, (although price never really departs the 1780s, right?).

On the right similarly is the same story for Sister Silver, who clearly is suffering the ravages of DDS (“Dangerfield Disrespect Syndrome”), by which she’s none too happy. For from the precious metals’ respective highs of just three weeks back, Gold has dropped as much as -5.8% … but Silver more than double that at -12.6%! “WHAT?” ‘Tis true:

041221_gold_silver_dots

Meanwhile, still dwellers in their Profile cellars are Gold (below left) and Silver (below right). Here is the entirety of their trading across the last two weeks, the high volume price apices as labeled. And that is a lot of overhead work to do:

041221_gold_silver_profiles

So after all of that, are you ready to tune out? You can’t be so blamed. Gold’s 1780s have got us all crazy! Puts us in mind of that iconic glamour rock hit by Sparks from back in ’83 — supportive of the film by the same name — “Get Crazy”Tune it in on your radio dial: sure to bring you a Golden Smile!

Cheers!

www.deMeadville.com