Gold … and Jimmy Carter (Part Deux?)

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“Well the week’s intra-day high of 1790 was pretty close, mmb…”

Very sporting of you there, Squire. However: we’ve been leaping and pom-pomming about now for better than a month toward Gold returning to 1800 and it hasn’t happened, even with the Triple Top setup for a pop per our prior missive. And arguably your noting 1790 having just traded, one might opt that ’tis a quadruple top.

But at the end of the day (in this case the week), Gold per yesterday’s (Friday’s) settle at 1769 reflects price having lost some of its shine. Moreover, a bevy of Gold technicals have just turned negative, although we just cannot conceive in any fundamental way too much of a material price decline.

Worse, the “in thing” this Spring is some compelling urge amongst analysts et alia to compare Gold with bits***t as a store of value! The very notion of that is sufficiently disgusting as to heave one’s cookies at such sacrilege! What are these people thinking?

“They’re not, mmb…”

Absolutely right, Squire. Such manias merely add to the many signs of a wholesale topping for horribly overvalued markets and assets. By which let’s segue to our title.

Remember ole James Earl Carter Jr.? We do. The night he was elected U.S. President back in ’76, my roommate at The University of Spoiled Children (U$C) said “This can’t be good…”, straightaway grabbed Grandpa Hugh Baillie’s sterling silver mixer and filled it with crushed ice, Tanqueray and a splash of Noilly Prat.

Gold that day (02 November ’76) was priced at 125, the annualized rate of inflation was 5.7%, and the “prime” lending rate was 6.50%. Come Election Day four years hence (04 November ’80) Gold was 660, inflation 11.3%, and “prime” 15.50%.

We mention this as, upon learning the context of President Joe “Nikita” Biden’s address this past Wednesday night, we thought: “Here we go again…”

For you know, and we know, and everyone with a brain from Bangor, Maine to Honolulu and right ’round the globe knows that “greater government investment” is akin to that in pyrite (aka “fool’s gold”); but its stagflationary ramifications bode well for real Gold, (as is made obvious in the preceding paragraph). “Pass the peanuts and Billy Beer” and let the long, sorry sloth begin.

And we can start with Thursday’s release of Q1 Gross Domestic Product: +6.4% “Oh, Yes!” Uh, but wait: the Chain Deflator was +4.1% “Oh, nooo…” That’s its largest reading since Q1 of 2007, a year after which it all went wrong, albeit due to massive overextension of unrepayable credit. And how about yesterday’s report for March’s Core Personal Consumption Expenditures Index: ’tis the Federal Reserve’s favoured read on inflation, and at +0.4% for the month, that annualized reading of +4.8% is more than double the Fed’s target of +2.0%. But such inflation is “transitory” says the FedHead. On verra…

What we do know is — at least by the below graphic of the BEGOS Markets from one month ago-to-date — one might deduce “the rising tide of inflation is lifting all boats”. Every grey trendline is firmly up. BUT: look at Gold’s baby blue dots of linear regression trend consistency: they’ve just slipped sub-80% which infers lower prices near-term, (thus generating the word “SELL”). Yet as noted, we don’t see too much downside given the structural support zone of 1759-1723. Mind Silver as well, for her “Baby Blues” have begun also to slip:

010521_begos_dots

As for the BEGOS Markets Standings year-to-date, every component is in the same position as ’twas at March’s end. Of particular interest therein is Copper. You website followers out there know that for each subsequent trading day is posted a “guesstimate” of the “high if an up day” or “low if a down day”. For Copper (as is normal for all the components), a “low if a down day” typically is achieved once per week in prices’ normal ebb and flow. However: Copper has not touched its “low if a down day” for 27 consecutive trading days: that’s akin to falling off the end of the Bell Curve. Which means we’re expecting an imminent falling off of the Copper price. (“And as goes Copper…”). Nuff said. Here are the Standings:

010521_begos_standings

Now to another Gold technical negative as we turn to the weekly bars from one year ago-to-date: the diagonal dashed trendline has noticeably rotated to negative for the first time in over two years (since the week ending 23 March 2019). Further, in price not near-term achieving at least 1800, the parabolic trend remains Short, although the reduced flip price to 1808 is still within the expected weekly trading range of 55 points from the present 1769 level. That noted however, Gold’s parabolic trend on its daily bars just confirmed flipping from Long to Short per Friday’s close, again suggesting a reasonable test of the 1759-1723 structural support zone:

010521_gold_weekly

And it being month-end, let’s also go year-over-year with the percentage tracks for Gold and the high-level metals equities. Note that ’tis the two Silver representatives that have out-paced the Golds. From top-to-bottom we’ve Pan American Silver (PAAS) +50%, the Global X Silver Miners exchange-traded fund (SIL) +34%, then falling off to the VanEck Vectors Gold Miners exchange-traded fund (GDX) +7%, Agnico Eagle Mines (AEM) +6%, both Franco-Nevada (FNV) and Newmont (NEM) +5%, and Gold itself +4%. Of note: Q1 Earnings Season has thus far been very metals-favorable, NEM’s bottom line nearly double what was earned year ago, and that for AEM nearly triple. Here’s the graphic:

010521_gold_gdx_nem_aem_fnv_sil_paas

Now as we turn to the Economic Barometer, let’s present you with the usual scary stat: our “live” price/earnings ratio for the S&P 500 now sits at 73.2x. One year ago to the day, such P/E was 35.7x (yes, even that being outrageously “high” by business school standards). The S&P 500 a year ago was 2912, but today is 4181, +44%. So: the P/E having more than doubled means that “implied earnings” for the S&P 500 have actually declined from this day a year ago. (And yes, that’s still the case even if we exclude Tesla [TSLA] from the S&P 500!) Here’s a thought: “Got Gold???”

And here’s the Baro replete with its robust (as expected) week…

010521_econbaro

… as the “boom”, the “vigorous rebound”, and the “takeoff” (in the words of Dow Jones Newswires) “at the expense of businesses and the wealthy” all come to fruition. (Hilarious, even if historically proven horrendous). More peanuts and beer, please.

But crying in one’s beer we fear are the prices of the precious metals as we turn to their 10-day Market Profiles. Clearly for Gold on the left, the 1768 level appears as the final near-term price of dominant trading volume support, (notwithstanding the aforementioned 1759-1723 structural support zone). And as for Silver on the right, 26 remains her key fix, though she may dive to 25 given Gold losing a bit of jive:

010521_golf_silver_profiles

Again it being month’s-end, ’tis time to bring up Gold’s Structure from 2010-to-date by the monthly bars. Price has been revisiting haunts of long ago, “The Northern Front” notably so. And even given a near-term pullback, we’re maintaining our forecast high for this year at 2401 with eight months in the balance:

010521_gold_structure

So on the surface, everything’s great. Below the surface it looks to stagflate. Might Jimmy (still blessedly with us at 96) chime in to articulate? To be sure, Gold near-term looks to abate, but make sure you’ve yours before ’tis too late!

Cheers!

www.deMeadville.com

Gold Triple Top Suggests Upside Pop

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We begin by quoting the late Hervé Villechaize as Nick Nack in the film ‘The Man with the Golden Gun’ –[United Artists, ’74]: “So near… and yet so far…”

Admittedly, those are (barely) consecutive lower highs. “Growl!” goes the bear. But to look at the three tops graphically…

240421_gold_triple_top

…that has “Triple Top ‘n Pop” written all over it. And you already know from your dog-eared paperback copy of ‘Traders’ Truthful Tenets’: “Triple Tops are meant to be broken!” Thus we look to 1800+ in the new week and in turn the opportunity for Gold’s weekly parabolic trend to flip from Short to Long at 1820. “Roar!” goes the bull.

Animal audibles aside, Gold settled yesterday at 1777, (a whopping one point net loss for the week). Moreover, ’twas Gold’s third consecutive week of recording both higher lows and higher highs. To which the contrarian may say: “Well, it has to go down then.” To which the trend follower may say: “There have been six, seven, and even eight consecutive weeks of both higher lows and higher highs on multiple occasions across the past 20 years.” But bless the dear Shorts, for we need them to take the other side of the trade. And right now for Gold, 1800 is all but made.

Further as just mentioned, should 1820 trade in the new week, Gold’s parabolic trend per the following chart of weekly bars shall flip from Short to Long. At present, Gold’s expected daily trading range is 24 points, and its expected weekly trading range is 58 points. Thus in that vacuum, 1800 is within a day’s range, and 1820 is within a week’s range, (barring the Shorts spoiling the party):

240421_gold_weekly

In fact, should you be planning for the flip to Long, there’ve been since the year 2002 a total of 42 weekly parabolic Long trends. The “median maximum” price increase for Gold across those 42 occurrences is +9.1%. So in that vein, should Gold’s weekly parabolic trend flip to Long in the new week at 1820, a median repeat performance of +9.1% would eventually put price up to 1986. Yes, that pales in comparison to our call this year for 2401: but ‘twould be a lovely upside lurch en route. (And for those of you fortunate to be scoring at home, the median duration of those 42 Long trends is 11 weeks: ’tis thus conceivable by those yardsticks that we’ll again see Gold 2000 by July: don’t forget to tell your friends).

Now let’s turn to the StateSide Economic Barometer:

240421_econbaro

As bereft was incoming data for the boppy Baro this past week, its few reports were firmly led by March’s New Home Sales topping the one million mark for just the second time in better than 14 years: that means one in every 328 Americans bought a new home in March, a fairly dazzling statistic.

“Well mmb, Americans are flush with cash from all the COVID handouts…”

So we’re told, Squire .. and so as well are we thereto dubious. Since the start of COVID crackdowns, the United States Department of the Treasury has issued an all-in total of $370 billion to the nation’s population of 328 million. That’s an average of $1,155 per man, woman, other and child. “Hey Mabel! We got an extra two grand! Let’s go buy a house!” (Uhhh… no). As well, March’s lagging report of Leading Indicators rose, (but you already knew they would, given you follow the Econ Baro).

Thus the big bee in our butt remains the unconscionable level of the S&P 500. Our honestly-calculated “live” price/earnings ratio per the website is now 77.5x, which from “The Broken Record Dept.” is nearly four times what was taught in business school as “expensive”. But wait, there’s of course more: per the site’s S&P Moneyflow page, whether on the weekly, monthly or quarterly basis, the moneyflow is not supportive of the Index’s level (4180); indeed by that quarterly measure, the S&P 500 is nearly 400 points “too high”. Another measure is that of the S&P’s Futures at present reading 190 points above their smooth valuation line as shown on the site’s Market Values page. Again, that’s really scary stuff if you own stocks, (save, naturally, for those tied to precious metals).

Even more broadly, we’re reminded of a very valued friend and charter reader of The Gold Update who less than two years ago — way back there at S&P 3000 — was suggesting a 50% correction to be in order, (similar to that of the DotComBomb during 2000-2002 and the GlobalFinFlop during 2008-2009). At the time, we thought our friend’s -50% notion was a bit excessive; now we view it as realistic. Recall, too, we’ve another long-time and extremely successful trading colleague engaging in put options sub-S&P 2000. On verra: but when it all goes wrong, hopefully you’ll have “Got Gold!” Across of all the prior stock market crashes we’ve witnessed, never have we seen valuation excesses such as those today. Or as our great colleague here says: “I’ve run out of words.”

Meanwhile as the States seemingly are climbing out from COVID, such seems not the case elsewhere. On this side of The Pond ’tis reported that institutional demand for lines of credit and loan facilities has now fallen for three straight quarters. New COVID case rates according to the government agency Santé Publique France alone doubled during April from the pace during this year’s first quarter. With both economic statistics and yields on balance having risen in the U.S., one wonders how much longer the €uro (at present $1.21) can stay afloat: ’tis up 13% from its COVID depths of $1.07 during March 2020. “We’ll bid but one buck, please!”

Escaping from their own recent depths are the precious metals. First, here we’ve Gold’s two-panel graphic of its daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. The baby blue dots of linear regression trend consistency having essentially arrived at the +80% level confirms that the uptrend is indeed just that: consistent. As for the Profile, the days of the 1600s seem passé, supportive of our notion from a month ago that, with hindsight, 1673 may stand as this year’s low:

240421_gold_dots_profiles

Very similar is the two-panel state for Sister Silver with her “Baby Blues” (at left) for the past three months now kissing the +80% level and Profile (at right) showing 26 as near-term support:

240421_silver_dots_profiles

Now the fundamental highlights of the ensuing week include 12 incoming metrics for the Econ Baro (most of which are expected to be improvements), plus the Federal Open Market Committee’s gathering on Tuesday and Wednesday. Dare they make a market scare? (Probably not…) Rather, let’s focus on Gold’s Triple Top entrée to 1800!

In closing we’ve the following unsolicited recommendation. We recently were privileged to meet Alex Krainer and read his book “Mastering Uncertainty in Commodities Trading: Generating sustainable profits in forex, commodities and financial markets through trend following”. The book was actually published back in 2016, but ’tis more apropos of today’s markets than ever. If you are fascinated by following markets and applying the elbow grease to be successful in trading and investing, we really recommend reading this book. Indeed, its readability is wonderful: the chapters are succinct and the sentences breeze by.

The content is supported throughout by classically analogous quotations, fine footnoting, graphics and engaging wisdom not without wit, (his commenting for example with respect to the work ethics of algorithms being such that they “don’t get tired, call in sick, take vacations or ask for a raise.”) If ever you’ve had the hankering for systematic market engagement, this book is for you. ‘Tis truly a worthwhile read, (emphasis on “worth”). A big tip of the cap to Alex!

240421_livre_alex

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

We’ll Soon Behold 1800 Gold

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With respect to this week’s title, in each of the prior three missives we’ve anticipatively penned:

20 March: “So clearly we see Gold as on the go through here: 1800 seems quite reasonable as an initial goal, however the 1800s in general could well be fraught with much to and fro.”

27 March: “…we expect Gold to now be on the rise, even with 1800 as a reasonably near-term prize.”

03 April: “This remarkable week of resiliency for Gold really fuels our recent reckoning that price is setting a near-term course for 1800.”

“But you’ve suggested ‘the when’, as near-term, mmb…”

Duly noted there, Squire, is your diplomatic use of the word “suggested”. Typically when we talk “near-term” we’re thinking out about a month’s time. However should we behold 1800 Gold even by mid-year, no one is going to say boo about it: rather, they’ll gladly take it.

Moreover in settling this past week yesterday (Friday) at 1744, price traded en route to as high as 1759, a mere 41 points below 1800. Further, given Gold’s “expected weekly trading range” is now 61 points, 1800 is well within that range. Thus briefly here are Gold’s weekly bars from a year ago-to-date, wherein a wee bit of sheer magnetism may be all that price needs:

100421_gold_weekly

Now let’s expound upon a driving Gold positive: this next bit is important. Any one who understands The Gold Story a wit (and that’s you) already knows that price is significantly undervalued (our opening Scoreboard valuation now reading as 3759, which is more than double the present 1744 level).

That 3759 valuation is being aided and abetted by an unconscionable creation of faux dough having increased the U.S. money supply (“M2”) at an annualized rate within the last year of over 25%. Worse, the essentially infinite universe of the 3Ds — Debasement, Debt and Derivatives — is such that if we all simultaneously tried to convert our so-called “assets” into cash, 99% of us would receive nothing, i.e. zero (“0”).

Again, you already know all that. So why isn’t Gold already way up there? The market never being wrong, its offers taken and bids hit have rightly put price at 1744. But as is oft our wont to point out, perceived price is not veritable valuation. And to embark on the road up there, Gold really needs a positive catalyst, one that regrettably for many mainstream market analysts shall become the reality. And that is: there shan’t be a materially-robust post-COVID economic boom. Sorry, but ’tis better to grasp that eventuality right now rather than later. And as such surprise sinks in, ’twill make Gold “real popular real fast” as we’ve seen in the past.

From our purview, this remains seemingly unconsidered across the financial spectrum. But we’ve herein hinted at it in recent weeks and upon it being realized could help propel Gold to 1800 … to our forecast high this year of 2401 … in time to our Scoreboard valuation of 3759 … and beyond.

‘Tis today comprehensively considered conventional wisdom that “if” or “when” post-COVID the economy “fully re-opens”, that ’tis going to go upside gonzo nuts. “Straight up, baby!” ‘Tis already been priced in a bazillion times over per the now 4128 level of the S&P 500, (which “if” or “when” halved would still be too expensive given its constituents’ lack of earnings).

Oh no: we don’t see the economy post-COVID going upside gonzo nuts . It already has. Oh to be sure: COVID creamed 21,557,000 Non-Farm Payrolls in March-April of 2020. But since then, albeit still at a net deficit, 13,657,000 already have been re-created during the May’20 – March’21 period. (By comparison, the May’19 – March’20 period created but 1,009,000 such payrolls).

Oh yes: The StateSide private sector with some benevolent public sector sprinkling has been busy. To wit, here is an expanded edition of the Economic Barometer from January 2019-to-date, the Baro line itself coloured as “periwinkle” pre-COVID (through February 2020) and then as the usual navy blue-to-date. ‘Tis darn stark in the chart that following the COVID bottom, the economy already has gone upside gonzo nuts. ‘Tis what industrious folks cause to happen by dealing with the problem and then getting on with the program:

100421_econbaro

The point is: when the economy lacks puff moving forward, especially as higher minimum wages and higher corporate tax rates both exacerbate unemployment, the upside gonzo nuts shall instead be job cuts. And then ’twill be Gold that goes nuts! That’s how we see it unfolding.

In fact, is the Federal Open Market Committee nervously seeing same, but not so saying? After all, Alternate Member Cleveland FedPrez Loretta “Jump Back” Mester notes that March’s “great” payrolls report is not an incentive for the Fed to raise rates. As well, the FOMC’s minutes of the 16-17 March meeting supports the ongoing dovish policies.

But perhaps the unmentionable through the hallowed halls of the Eccles Building is that “upside gonzo nuts” ain’t gonna happen. Still on a broader basis, the International Monetary Fund is looking to 6% growth for the globe in 2021 which is pretty much on par with what the Atlanta Fed is expecting for the U.S. in Q1’s annualized rate: we get its first peek in April’s last week. Just be wary that the bottom line through this year’s time may not be as fine. And that is a Gold positive catalyst.

Here’s another one, technical in nature. ‘Tis Gold’s 300-day moving average which in bearish times keeps the lid on price, but supports same when the bulls (as now) are winning the game, (per last week’s piece “Gold Buyers Own the Trading Volume“). And the penetration of the bright blue line within a bullish climb screams for it being buying time:

100421_gold_300

Drilling deeper into “The Now”, here we’ve our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and price’s 10-day Market Profile on the right. The baby blue dots of linear regression trend consistency are resting upon their 0% axis, meaning that price today is basically where ’twas 21 days (one trading month) ago. The Profile is now indicative of trading support in the 1720s:

100421_gold_dots_profile

The same graphic for Silver is arguably weaker by the negative level of her “Baby Blues” (below left); however her price these past two weeks has been rebounding in stride with Gold. As well per our thought a week ago, she has now regained the 25s per her Profile (below right). C’mon Sister Silver and fix at 26! For by the present Gold/Silver ratio of 68.9x, Gold 1800 = Silver 26.12:

100421_silver_dots_profile

Finally, let’s wrap it with something scary. Remember all those futuristic fictions such as Orwell’s ‘Animal Farm’ and ‘1984’, H.G. Wells’ ‘The Time Machine’, Saul David’s ‘Logan’s Run’ (MGM ’76), et alia? Well doggone if they ain’t coming true. Clearly the public sector has gone Orwellian, the private sector is populated — and worse more and more managed — by Eloi (adults with the brain development of an eight-year old), and if you’re over the age of 30, you’re an unnecessary “has been”.

And now we’ve got The United States Department of the Treasury earnestly envisioning a “Global Minimum Corporate Tax Rate”?? To quote tennis great John Patrick McEnroe: “You canNOT be SERIOUS!!” Well, “Old Yeller” herself is taking it darn seriously as is the G20. And under what Global Law shall this be governed? Oh, they’ve not yet invented that, but ’tis coming? My oh my, we again ask: “Got Gold??”

www.deMeadville.com
www.TheGoldUpdate.com

Gold Buyers Own the Trading Volume

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But here’s the real but: Gold’s trading range for the week initially ran from 1733 down to 1677, and then back up to 1732 — boo boo bee doo, you Short April Fool. That’s a 55-point positive reversal through which true Longs survived, but shallow Shorts died. ‘Tis once again exemplary as we’ve on occasion put forth these many years that “Shorting Gold is a bad idea.” And the recovery off the week’s low was fierce against the frail Shorts, price therein leaping 34 points within just six hours on 31 March: “Got Gold to show in your portfolio for the Q1 close?” Darn tootin’ you do!

But wait, there’s more: The cumulative contract volume on the way down (across 38 hours) was 75,760. The cumulative contract volume on the way back up (across 54 hours) was 370,239. Thus with the Sellers in charge, an average of 1,994 contracts traded per hour; but when the Buyers then took charge, an average of 6,856 contracts traded per hour. Buyers win by 3.4x. Right now, the Buyers own the trading volume … Ready for higher Gold prices?

This remarkable week of resiliency for Gold really fuels our recent reckoning that price is setting a near-term course for 1800. ‘Course, ’twas all obscured within the FinMedia, the overwhelming focus there instead being on the S&P 500 eclipsing the 4000 level, at which moment we sent the following one-liner to our Investors Roundtable: “S&P 4000 … ‘Live’ P/E 74.9x … Lord have mercy …”

Suicidal stock market insanity. From 1987-to-date, we’ve been through all the major S&P 500 crashes, none of which remotely were preceded by such pricing excess relative to earnings as we have today. And with the next debacle in the inevitible balance, metaphorically to again quote Gabor Vernon in the role of Borchoi, (‘Octopussy’, United Artists/Eon Productions, 1983): “Be at least 25 miles away when it goes off.”

Now as ’tis month-end, (plus one full trading day), let’s go straight to this eye-opening graphic of the percentage tracks from one year ago-to-date of Gold and those of its major equities brethren. This is one of these best examples we’ve had of the leverage inherit in metals stocks: whilst Gold itself shows as +8%, Franco-Nevada (FNV) is +26%, Newmont (NEM) is +33%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) is +40%, Agnico Eagle Mines (AEM) is +43%, the Global X Silver Miners exchange-traded fund (SIL) is +76%, and the “once-dog-now-darling” of this group Pan American Silver (PAAS) is +115%. Granted: the power of these up moves is the result of money moving into the metals just after their COVID plunge during March a year ago. But the chart nonetheless highlights the leverage of the equities:

030421_gold_gdx_nem_aem_fnv_sil_paas

All that excitement aside, across the same time frame in turning solely to Gold’s weekly bars, clearly the rightmost bar’s resilience is there, its low (1677) nearly matching that of three weeks ago (1673), which as then stated may still in hindsight mark 2021’s low. If so, 1800 by default (assuming the Gold market doesn’t dry up) comes into play, perhaps fairly straightaway. Gold’s “expected weekly trading range” is now 64 points, which in that vacuum should a “straight up week” now ensue, the high’d be 1794 in front of 1800’s door:

030421_gold_weekly

In fact, as we openly note the deteriorating diagonal upslope of the dashed trendline across the above graphic, ’tis in concert with Gold actually being -9.0% year-to-date as we go to the BEGOS Markets Standings. The Bond’s demise as yields rise (are you listening S&P 500?) finds the great debt instrument having replaced Gold as the cellar dweller, with Oil, Copper and the S&P on the podium in the same positions as they were when we last viewed this table at February’s end.

Should the year unfold as we anticipate “it ought” and Gold achieve our forecast high of 2401, ‘twould then be +26.3% whilst the undoing (via the “Look Ma, No Earnings!” crash) of the S&P would find it at the bottom of the stack, having unraveled some -30%, -40%, -50%, or whatever:

030421_begos_standings

Now to the economy — and for the second week running — Dow Jones Newswires points to that StateSide as “hot”, indeed this time ’round stating it to be “red-hot”, (as so-printed on 01 April … thus their joke?) Either way, as we go strictly by the numbers, it doesn’t look so “hot” to us … not bad mind you, but hardly “hot”:

030421_econbaro

And moreover, let’s repeat that from a couple of weeks back: “…if the economy is ever allowed to reopen in full, the expected surge shan’t be there, simply because the private sector has already adjusted to carrying on with business as best it can…”

To be sure, incoming metrics this past week for the Economic Barometer were positive on the various sentiment fronts and notably so for March’s Payrolls increase of nearly one million jobs; however, Hourly Earnings declined for the first time since those from last June, February’s Construction Spending shrank for the first time since last September, and Pending Home Sales were whacked -10.6%, their worst reading since the early depths of COVID a year ago. And up next? Income tax payments! No April Fools’ joke there. And higher tax rates await! Ain’t that great? At least they’ll pay both for fixing the roads and the climate … (“Whew!”)

Meanwhile as France goes into a comprehensive one-month lock-down now across all of its Departments, International Monetary Fund Managing Director Kristalina Georgieva’s crystal ball sees the global economy as brighter given vaccines and stimuli … and lions and tigers … and bears, oh my …

What of course bears watching are the trends of the BEGOS Markets as we go ’round the horn for the whole lot of them with this graphic of their daily bars from one month ago-to-date, diagonal grey regression trendlines, and the baby blue dots which depict each trend’s consistency. Of note: only Gold and the S&P 500 (“Spoo”) are at present sporting uptrends:

030421_begos_dots

And as for the precious metals’ 10-day Market Profiles, the prices of both Gold and Silver survived their intra-week dives. The yellow metal’s goal now is to get above the 1730s whilst that for the white metal is to at least get comfortably above 25:

030421_gold_silver_profiles

Finally, it being month-end plus a day, here we’ve Gold’s structure by the month since 2010. That blue line at the top indicating our forecast high for this year of 2401 seems “a fair piece” from here; but as pointed out in recent missives, Gold — as it has done percentage-wise on numerous occasions historically — is perfectly capable of getting there within the nine months of this year’s balance. And once the price of 2000 is re-achieved, that run to such high may come swiftly:

030421_gold_structure

To close we’ve a question with respect to Normura Securities, Credit Suisse, et alia looking at equity desk losses on something to do with an Archegos Capital significant asset unwinding: yes, it does beg the obvious, but with the S&P 500 at an all-time high, how does this happen? Just askin’…

Better to jump on the volume trend and get yourself some Gold! Just sayin’

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold on the Go and We Review ‘The Crow’

200321_gold_scoreboard

But first, Gold indeed is on the go. Recall as penned just a week ago: “…with price having traded down to 1673 — practically the precise low of the 1789-1672 structural support zone — as the year unfolds we may find that 1673 level to be Gold’s 2021 low…”

That year-to-date 1673 Gold low printed 10 trading days ago on 08 March. With price having settled yesterday (Friday) at 1744, ’tis 71 points above such low of 10 days ago. And across the past 15 years, whenever Gold has settled better than 70 points above its intra-day low from 10 days ago, price’s gain within the next 10 trading days has averaged 49 points higher. Or more conservatively, the median gain has been 37 points higher.

So the point is (be it by average or median), we can see Gold from here move up into testing the overhead structural area spanning 1767-to-1963 (which ran from the 30 November low to the 06 January high). If robustly “above average”, price en route ought eclipse the presently declining red dots of parabolic Short trend as is their state per Gold’s weekly bars from a year ago-to-date:

200321_gold_weekly

Further sorting it out, from the “Expected Range Dept.”, that for Gold’s daily trading range is at present 29 points, whilst the expected weekly trading range is 69 points. Contextually, the distance to the rightmost red dot is 152 points. Remember, that is range not change; but if Gold has now embarked on a new up leg, the above graphic’s Short position may well be Long in a month’s time, (given the accelerating red dot rate of descent currently ’round -20 points per week).

“Too much information”, you say? It just depends how much you’re into it. For example per Ian Fleming’s “Casino Royale” from back in 1953: “Bond…simply maintained that the more effort and ingenuity you put in…the more you took out.” Moreover as we regularly state to those who see the markets as a casino: “The critical edge the trader has over the casino is that markets trend.” And that has made all the difference, (thank you Bob Frost, 1915).

Thus in spite of the weekly parabolic trend still well Short, we are constructively becoming more Gold bullish in furtherance to last week’s missive “Higher Gold from Here“, so ‘twould appear.

For here’s another promising view, the year-over-year graphic of Gold’s price versus (in the upper panel) its smooth valuation line, and therefore Gold’s price less valuation (in the lower panel). As you website followers know, the smooth valuation line suggests a level for Gold based on how its price is changing relative to the price changes of the other primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P). The graphic puts Gold at 49 points below this method of valuation, i.e. price near-term is “too low”. (Interesting how that matches the aforementioned 49 points “average” ensuing 10-days increase). ‘Course by the opening Gold Scoreboard, price today at 1744 is 1978 points “too low” below its 3722 currency valuation level: but that is to where Gold need catch up over the enusing years. Here is “the now”:

200321_gold_value

Speaking of increasing, what’s not of late is the Economic Barometer. Oh there were some positive metrics received during this past week, including an ample rise in March’s New York State Empire Index and a better than doubling of that for the Philly Fed Index. But here’s the but: the month’s National Association of Home Builders Index slipped as did February’s Housing Starts and Building Permits, and worse, that month’s Retail Sales actually shrank (-3.0%) as did Industrial Production (-2.2%) along with Leading (or if you regularly follow the Econ Baro, lagging) Indicators hitting the brakes (decelerating from +0.5% to +0.2%). Bring it all together and the Baro suffered its largest week-over-week loss in the last half year (since that ending 18 September). Still, few really want to hear, see or talk about it, the Biden Vaccine more than mitigating all the negatives (at least per our views of the “news”):

200321_econbaro

And we had a wry chuckle over this one. As herein penned a week ago: “Scarier still: We know, and you know, that Federal Reserve Chairman Powell, his Fed Presidents and FOMC all know, the stock market is horribly due for a massive blow … And the FedFolk cannot prevent it.” No sooner had our ink dried there than Dow Jones Newswires declared: “Powell Can’t Let Markets See Him Sweat” with respect to our otherwise being told the “turbocharged economy” under the new Administration has returned to form; (clearly Chair Powell is eying the Econ Baro rather than the FinMedia).

In fact from watching the progression of the Econ Baro (which as you know is an oscillator more than a nominal measure of the economy’s level), it nonetheless has surpassed its depths from COVID (leading into last June), such that if the economy is ever allowed to reopen in full, the expected surge shan’t be there, simply because the private sector has already adjusted to carrying on with business as best it can. To be sure the hospitality/travel/entertainment area can improve, but hardly is it comprehensively shut down, nor is it representative of the whole economic pie. Again: has the stock market crashed yet? Just askin’…

Meanwhile, free faux dough remains the order of the day. We find this rich: a Mom and Dad with a combined annual income of $150k and three kids are eligible to receive $7k in stimulus, ($1.4k per parent plus dependents). Clearly no need for assessing need there. Again: has Gold reached 4000 yet? Just askin’…

At least Gold is curving in the right direction, i.e. up! Let’s go to 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. Price’s baby blue dots of linear regression trend consistency continue their climbout, which in having crossed above the -80% axis generated a buy signal as we stated a week ago. The Profile shows the bulk of trading these past two weeks to have occurred in the low 1730s such that ’tis the supportive platform from which we seek higher levels near-term:

200321_gold_dots_profile

And of course here’s the like drill for Sister Silver, her “Baby Blues” (at left) also curving upward whilst her most dominant trading supporter appears (at right) as the 26.10 level:

200321_silver_dots_profile

So clearly we see Gold as on the go through here: 1800 seems quite reasonable as an initial goal, however the 1800s in general could well be fraught with much to and fro. But as we always say: “Hang onto your Gold!” And now let’s assess “What Became of the Crow?” See below!

Review of Robert Moriarty’s just published:  “What Became of the Crow?  Inside the Greatest Gold Discover in History”

From what begins as a would-be stone’s throw (wait a sec, is this a gold nugget that was just naturally lying there on the ground?) at a smart savvy crow is another Mighty Moriarty adventure to unfold toward discovering history’s vastest treasure trove of Gold.  This is an engaging adventure throughout – but wait – ‘tis actually a work of non-fiction, i.e. you can’t make this stuff up!

“What Became of the Crow?” is my third Bob Book and right in the classic Moriarty mode as a great gripping read and page-turner, (or if you prefer, finger-flipper, even as yours truly is a slow reader).

The book is a start-to-finish pursuit toward miraculous Gold discovery enabled by the brilliance of its real-life hero Dr. Quinton Hennigh ultimately to the success of Novo Resources amid the stingy and yet generous geology of Western Australia’s Pilbara region. “The how” is everything.

Moreover, if you’ve ever wondered about the wild world of lesser mining companies, the so-called “juniors”, mid-tier producers and their common stock and warrants that trade for mere pennies, this is an educative eye-opener in every aspect. Moriarty strips bare the bones of junior miners with the world’s greatest gold discovery in the balance.  And the book’s colourful photographic eye candy of Gold nuggets arrayed in trays, the harsh environment’s geology, and the stars of the story at physical work in their element brings you right there into the action!

The book is Moriarty at his best, his chronologically taking us along the truthful trail punctuated with brains, brawn, bargaining and bottles of wine priced beyond belief.  Bob’s delivery is refreshingly raw, rightly irreverent, and politically incorrect when it ought be, the whole saga replete with winners, losers, flaming a**holes ‘n cheaters … and the few prescient good-guys who keep their eyes on the ultimate prize.

Moreover, toward digging beyond Moriarty’s robust text is included his substantive bibliography.

So grab your pan and pickaxe, your magnifying glass and metal detector, along with a fistful of A$ and a corkscrew, and join Bob on location through this fabulous and at times frenetic adventure into the parched wilds of Western Australia!  For ‘tis all about the Gold, baby … oh is it ever!

I loved the book and am smarter for it.  (And no crow therein was adversely affected).

Mark Mead BAILLIE
20 March 2021

www.deMeadville.com
www.TheGoldUpdate.com

Higher Gold from Here

130321_gold_scoreboard

But regardless your permutation interpretation, Gold has run a corrective course, checked the salient boxes therein, and has thus passed muster to resume its upside luster.

In fact this past Monday with price having traded down to 1673 — practically the precise low of the 1789-1672 structural support zone — as the year unfolds we may find that 1673 level to be Gold’s 2021 low. Box checking, indeed. Check ’em out:

■ Confirmed come 19 February, Gold’s weekly parabolic trend flipped to Short (price then at 1783); thus price went down as we expected ‘twould — “Check!”

■ How far down ought be down? We cited the 1789-1672 structural support zone, which as just noted has now been essentially traced in full — “Check!”

■ The technical trading community then kicked into gear, Gold from 1673 leaping $65/oz. (+3.9%) in just 60 trading hours (2 1/2 trading days) to 1738 — “Check!”

■ Gold completed a full reversion to (with some undershoot too) its mean of the stalwart supportive 300-day moving average (today 1785 and rising) — “Check!”

■ President Biden just signed $1.9 trillion worth of faux dough into the system, the StateSide legislature pulling together an additional $2 trillion “starter” bill to turn everyone green, (which shall be the case when they can’t afford anything) — “Check!”

■ Nine years ago almost to the day (26 March 2012) the U.S. Money Supply (by “M2”) was half what ’tis today; Gold then was 1689 — “Check!”

■ Got Gold? — “Check!”

Now check out Gold’s noted weekly bars from one year ago-to-date. The “flip-to-Long” level is 1915, which is 189 points above the present 1726 price: Gold’s expected weekly trading range is now 72 points. Within that vacuum — should Gold have just bottomed — we might expect to see the parabolic red Short dots flip to blue Long dots in three weeks’ time. That may seem a bit of a stretch, but as you know when Gold goes, it GOES!

130321_gold_weekly

Moreover, at yesterday’s conclusion of trading, our end-of-day BEGOS Markets signal table popped up as follows:

130321_begos_signals

And as you seasoned watchers of the website know, a “BUY” signal in this case is generated when our “Baby Blues” of linear regression trend consistency move above their -80% axis as next shown on the left across the last three months-to-date of Gold’s daily bars:

130321_gold_silver_dots

Whereas on the right, the “Baby Blues” for Silver hardly are encouraging a wit, albeit her price has not deteriorated at Gold’s pace. In fact, from the leftmost closing price (10 December) on both panels, Gold today is 6.2% lower whereas Silver is 7.8% higher. ‘Course those three months back the Gold/Silver ratio was still a well-out-of-whack 76x; but since then, Silver has duly been catching up to Gold. That ratio today is 66x, smack on the millennium-to-date average ratio of 66x. So with these two precious metals finally in pricing sync, they can now rightly rise together, we think.

Which by the way given the “We Never Go Down Dept.” begs this question: Has the S&P 500 crashed yet? Again, we’re just askin’…

“No way, mmb…”

A facetiously flippant reply with a wink of the eye from Squire our guy. Further, the S&P (3943) is at an all-time high. Yes, ’tis gone beyond all we were taught, beyond sustainability, beyond money management responsibility and beyond ridiculous. Indeed, let’s run another checklist:

■ The S&P’s present 3943 level is not far from what Gold ought be (see the opening Scoreboard) — “Check!”

■ Gold’s 1726 ought instead be the S&P’s fix, our “live” price/earnings ratio for the Index at 74.6x — “Check!”

■ Yields: S&P 1.458%; US 10-yr. Note 1.635%; US 30-yr. Bond 2.402% — “Check!”

■ Scarier still: We know, and you know, that Federal Reserve Chairman Powell, his Fed Presidents and FOMC all know, the stock market is horribly due for a massive blow. And the key unmentionable in the fertile minds of every one of them is exactly what Stephen Stills admitted to the masses at Woodstock pre-dawn on 18 August 1969: “We’re scared s**tless.” And the FedFolk cannot prevent it. — “Check!”

In fact, a very valued and successful trading colleague of ours (and you know who you are out there) is accumulating put option “LEAPS” (Long Term Equity Anticipation Security) on the S&P with strike prices below 2000. Yeah, that’s for a 50% correction. Just like the DotComBomb (2000-2002) and the GlobalFinFlop (2008-2009). Next crash in line: “Look Ma! No Earnings!” And if it didn’t sink in with you a week ago: of the 505 S&P 500 constituents — at this writing based on “trailing 12-months earnings” — 83 of ’em (that’s 16% of the Index) ain’t got none.

But who cares, right? Rather, let us all rejoice in all the great economic growth (already overly “priced in”, but we’re not supposed to say that) coming our way. To wit, our Economic Barometer:

130321_econbaro

And this past week’s big Baro highlight? The University of Michigan Sentiment Survey leapt from 76.8 in February to 83.0 for March: that is the seventh-largest leap for such reading in better than a decade. “Everybody’s happy!” Meanwhile, February’s inflation readings were rather benign; (we’ll see how long that lasts as the month’s Treasury Budget blew up); but its new Secretary “Old Yeller” opined that stimulus likely shan’t be problematic as regards inflation. Ok, thanks. As for January’s Wholesale Inventories, they backed up, (uh-oh, but mum’s the word, Mum…).

Adding to the parade of great news, the Fed just said that the net worth of U.S. households reached a record $130 trillion in Q4. (Better get those stimulus checks out a.s.a.p.)

If anything ought be done a.s.a.p. ’tis ensuring one has exposure to Gold, and Silver too! Here (below left) is Gold’s 10-day Market Profile along with that for Sister Silver (below right). The yellow metal’s denoted 1717 apex appears as a nice platform from which to launch; that for the white metal requires price first getting back above her denoted 26.10 apex:

130321_gold_silver_profiles

All-in-all, here’s the present state of The Gold Stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3719
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 Weekly Parabolic Price to flip Long: 1915
The Gateway to 2000: 1900+
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
The 300-Day Moving Average: 1785 and rising
On Maneuvers: 1750-1579
Trading Resistance: 1733

Gold Currently: 1726, (expected daily trading range [“EDTR”]: 33 points)

Trading Support: 1723 / 1717 / 1696 / 1687 / 1678; (structural support: 1789 to 1672)
10-Session “volume-weighted” average price magnet: 1713
10-Session directional range: down to 1673 (from 1757) = -84 points or -4.8%
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

We’ll wrap it here with this FinMedia confusion, courtesy of Dow Jones Newswires: “U.S. Set to Power Global Economic Recovery From Covid-19 For the first time since 2005, the U.S. is expected to make a bigger contribution to global economic growth than China, say economists.” Ummm … did we not very recently read that China is only just now passing the U.S? Or was that by gross domestic product rather than by global economic growth contribution? Regardless, just make sure on your contributory checklist that you’ll benefit by higher Gold from here!

Cheers!

www.TheGoldUpdate.com

Gold – 1600s Brushed!

And that low is flirtatiously close to the defined bottom of the 1789-1672 structural support zone as shown in the following chart of Gold’s weekly bars:

Further infused (as a week ago mused) is the annoyance of weathering price so abused. Obviously per the graphic’s rightmost declining red dots, the parabolic trend (our friend?) is Short, but as we’ve sassed in the past, “…with friends like that, who needs enemies…”

“Uh, mmb, are you going to also mention the deeper COVID 1704-1451 zone?”

Well clearly ’tis there, Squire, but best that we not mention it, as:

a) ’tis comprehensively nonsensical for Gold to venture much lower from here;

b) we don’t want to unduly shock our valued readership; and

c) why trade lower when our forecast high for this year of 2401 means Gold trade higher?

Moreover, always maintain in mind that price historically “reverts to the mean” (if you will) of its currency-debased value (even as adjusted for the relatively wee increases in the supply of Gold) which per our opening Scoreboard today puts price at 3710. Other pop-valuation schemes of where Gold “ought be” we deem as comparatively meaningless.

Speaking of means, we’ve been herein wary for some time of Gold’s price having traveled so far above its stalwart 300-day moving average that a technical correction was realistically in the cards: and there it starkly shows at right in the following graphic of price’s daily closes across the past ten years. Such reversion to that mean now seen, ’tis time for Gold to hit the brakes whilst wresting the steering wheel into full 180° lock, let it snap back to center, pop the clutch and hit the throttle!

Fact is, as you regular readers well know, hardly are we as concerned about the price of Gold as are we about the unsupportable (understatement) level of the stock market as measured by the S&P 500. Herein we’ve been hammering on the yield of the riskless 10-year U.S. Treasury Note (1.554%) at some point surpassing that of the riskfull S&P (1.517%).

And in the wake of our writing a week ago to “watch for increasing volatility in the markets”, so it came to “pass” (not surprising you a wit) this past Thursday when at precisely 17:20 GMT the yield on the 10-year U.S. Treasury Note passed above that of the S&P in eclipsing 1.500%. The S&P Index at that moment was 3827 … but 97 woeful minutes later at 18:57 GMT, the S&P had careened down 100 points … that is over double the median trading range of an entire day (in measuring from one year ago-to-date).

Moreover, ’tis just another of many indications that the stock market is due for a wholesale crash, be it due to rising yields, a terrible earnings season for the S&P (only 59% bettered their bottom lines, and worse, 82 of the 505 constituents don’t even have earnings), single stock manias, bogus bits**t, and our favourite measure: the honestly-calculated S&P “live” price/earnings ratio now being 68.7x.

But the S&P may have one saving grace from a fall with same: the p/e of TSLA finally is under 1,000x (at 818x). “We’re saved!” Besides, Bloomy just reported that for February, a record $86 billion was invested into exchange-traded funds. “It’s all good!” (Remember 2008? Or 2001? Or ’98, ’90, ’87?)

In the midst of it all, there are those presently arguing for inflation, some for stagflation, some for depressionary deflation and at the other end of the spectrum those for hyper-inflation. But regardless your flavour of flation, at the end of the day, again ’tis the supply of faux dough vs. that of the yellow metal which ultimately determines the price of Gold. (Unless after 5,000 years ’tis suddenly different this time … we don’t think so).

Meanwhile the Federal Reserve — the oft-overlooked role of which is to maintain a steady valuation of the Dollar (stop laughing) — is looking to “keep prices well in check” even as Chairman Powell adamantly desires sticking to “easy money” all ’round.

And as for the Economic Barometer, its week was chock full of “better buts”: February’s Payrolls (Bureau of Labor Statistics) grew, but those per ADP fell; Hourly Earnings grew, but the Average Workweek fell; the Institute for Supply Management’s Manufacturing Index grew, but its Services Index fell; whilst for January, Factory Orders grew, but so did the Trade Deficit, and Construction Spending increased, but Consumer Credit decreased. Dump it all into your Osterizer, press “purée”, and voilà, here’s the Baro along with the S&P (red line) commencing what we believe ought be a long overdue journey lower:

Lower of course remains Gold as to our proprietary technicals we go, the last three months-to-date of daily bars on the left and 10-day Market Profile on the right. Neither panel is pretty, Gold’s baby blue dots of linear regression trend consistency declining ever more so, whilst in the Profile some supportive defense has been created ’round the denoted 1696 level:

As for Sister Silver, the like dual-panel drill finds her “Baby Blues” only barely below their 0% axis, albeit looking to accelerate lower into the new week; Silver’s 26.13-to-24.04 support area (below left) is thoroughly being tested, with the key trading supporter per her Profile (below right) at 25.25:

To wrap it all for this week, we saw the Dow Newswires report that (according to the Congressional Budget Office) StateSide national debt is projected to be some 202% of Gross Domestic Product by 2051. Should we make it that far, we’ll be nearly 100 and the price of Gold (by regression extrapolation) up beyond 5000. Which put us in mind of this graphic from away back in our 18 February 2012 missive:

So don’t allow such destiny to brush you away; rather, take advantage of Gold’s brush with the 1600s today!

www.deMeadville.com
www.TheGoldUpdate.com

Gold is So Rip-Snortin’ Cheap!

270221_gold_scoreboard

Thus upon Gold’s weekly parabolic trend a week ago flipping from Long to Short, we assessed the numbers, wringing from them what we could best foresee, and wrote that Gold (then 1783) faced getting sold sub-17f00. And for this past week in settling yesterday (Friday) at 1733 — the net decline of -2.8% being Gold’s worst weekly loss in three months — price en route traded down to within 15 points (at 1714.9) of the 1600s. Again, to write and be right can be downright annoying, especially per the following graphic of Gold’s weekly bars from a year ago-to-date wherein said parabolic Short trend has only just started per the rightmost two red dots:

270221_gold_weekly

Gold’s technical saving grace however is the delineated 1789-1672 structural support zone. Gold’s fundamental saving grace is (by the price today of 1733) being just 47% of our opening Scoreboard currency debasement valuation of 3698. Too, 1733 — should we be correct about Gold reaching 2401 in 2021 — means a gain of 39% remains in the offing from here this year. And per currencies’ bizarro printing pace (other than the market never being wrong) hardly can valuation be “priced in” a wit.

The first time Gold reached 1733 (nearly 10 years ago on 09 August 2011) the U.S. Money Supply as measured by M2 was $9.5 trillion and the Gold supply was 175k tonnes. Since then, M2 has more than doubled, but the supply of Gold is only 14% higher. “So, why are we here?” you ask. “So, when do we leave?” we ask. (Ours is not to reason why, but rather be on board for departure).

“So, mmb, what you’re saying is there’s not too much more Gold downside from here?”

Squire, Gold is so rip-snortin’ cheap at this juncture ’tis a gift from the gods: currency debasement proves it so. Just as the S&P 500 is so fatally beyond expensive ’tis a trap to snap: lack of earnings proves it so.

(Note for those of you scoring at home during this Q4 Earnings Season: with 455 of the S&P’s 505 constituents having reported, 79% have beaten estimates … but just 59% have actually bettered their bottom lines over those of a year ago. And our honestly-calculated “live” price/earnings ratio for the S&P at this writing? 73.1x … share that with your money manager and then watch them squirm in their game to disclaim same. Or perhaps you’ll just hear crickets…)

That said, we’ve still Gold at the bottom of the year-to-date BEGOS Market Standings, the two big economic (stagflative?) winners being Oil and Copper. Indeed for you readers of our daily Prescient Commentary, you’ll recall our penning on 02 February (Oil then at 53) that “…structurally ‘twould appear price can run up to test the Jan 2020 high of 65.65…” Oil reached 63.81 this past Thursday, Black Gold thriving, but Real Gold diving. Here’s the table:

270221_begos_standings

Now as we turn to our month-end review of Gold and key precious metal equities from a year ago-to-date, we’ve quite a performance range. From first-to-worst ’tis Pan American Silver (PAAS) +49%, the Global X Silver Miners exchange-traded fund (SIL) +33%, Newmont (NEM) +24%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +8%, Gold itself +5%, Franco-Nevada (FNV) -1%, and Agnico Eagle Mines (AEM) -8%. Plenty of profitable turnarounds to the upside awaitin’ there:

270221_gold_gdx_nem_aem_fnv_sil_paas

Economically, StateSide reports on balance are a-poppin’. Just in the past week, The Conference Board’s February reading on Consumer Confidence improved, as did January reports for Leading (we say “lagging”) Indicators, New Home Sales, Durable Orders, and both Personal Income and Spending. True, there was one real stinker: the Chicago Purchasing Managers Index suffered its largest drop since COVID really kicked in last April. But otherwise, Jumpin’ Joe’s economy is, well, jumpin’:

270221_econbaro

‘Course as Australia’s sovereign Future Fund chairman Peter Costello just remarked, “Anyone who thinks they know what the conditions of the economy will be in three years’ time is kidding themselves.” He (as we) sees a global equities markets “clean-out”, (and see the aforementioned S&P P/E).

Still, Federal Reserve Chairman Powell in testifying before Congress this past week expects “easy money” to be maintained, all of which ought soundly redound to Gold’s gain. And whilst others of the week’s FedSpeak expressed little concern over rising interest rates, we’re watchin’ them with an eagle eye: the yield of the 30-year Bond is now up to 2.182%, that on the S&P 500 is 1.474% (where is your dough sitting, eh?), and that on the neighbouring 10-year Note is 1.460%. “Tick, tick, tick…”

In moving to the specific state of the BEGOS Markets across their respective daily bars from one month ago-to-date, there are some really obvious anomalies per the grey diagonal trend lines. The €uro is rising against the Dollar … but the Swiss Franc is falling; Silver is rising … but Gold is falling. And the bullish economic lean is there as the Bond falls (i.e. yields rise), with Oil, Copper and the S&P 500 having gone to the skies. The key across the spectrum, ‘natch, are the “Baby Blues” of each trend’s consistency (S&P & Queasy):

270221_begos_dots

Despite being broadly optimistic for the precious metals, our view per their 10-day Market Profiles — Gold on the left and Silver on the right — is a bit onerous given the denoted bulk of overhead trading resistance across the big bellies of both Profiles:

270221_gold_silver_profiles

Moreover is seen the yellow metal’s monthly malaise year-to-date as we turn to Gold’s Structure across the past 10 years. With just two months now complete in 2021, Gold has been “Southbound”–[Allman Brothers, ’73] in having departed “The Gateway to 2000”, with whistle stops at “The Final Frontier” and “The Northern Front”, to have now arrived back “on maneuvers…” all as therein labeled. And yet, our forecast high for this year of 2401 remains confidently in place at upper right:

270221_gold_structure

Another busy week awaits the Economic Barometer with some 14 incoming metrics coming due; plus on Wednesday we get the Fed’s Tan Tome of regional activity. Regardless, watch for increasing volatility in the markets. A would-be Gold brush with the 1600s is hardly far from here, but more importantly either way we sense firming in the offing for higher levels.

And as for the S&P, a variety of its textbook technical studies have already turned negative, notably the daily MACD (“moving average convergence divergence”) and daily Parabolic studies; too, the daily Price Oscillator is negatively trending, and the Moneyflow as regressed into S&P points is extremely negative.

And yet: you’re still in the stock market? Ouch! Please take care there… And for wealth’s sake, do remain Gold-aware, as by the numbers we keep, ’tis so rip-snortin’ cheap!

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold’s Near-Term Brush with The 1600s

200221_gold_scoreboard

However, from the “Nothing Moves in a Straight Line Dept.” — and as has been our cautionary concern of late — Gold’s weekly parabolic trend just flipped from Long to Short. To which, (employing our slide rule, protractor and French curve), we find Gold’s nearby structural support zone ranging from 1789 down to 1672: hence this piece’s suggestive title.

Either way, here it all is by Gold’s weekly bars from a year ago-to-date, the rightmost encircled red dot heralding the new parabolic Short trend and the 1789-1672 structural support as delineated:

200221_gold_weekly

“But, mmb, wouldn’t it be a stretch for Gold to then get all the way up to 2401 from 1672?”

‘Twould at first blush so seem, Squire, even with some 10 months left in the year’s balance. Not that 1672 shall actually trade: indeed Gold just settled the week yesterday (Friday) at 1783, an ample 111 points above 1672. Further in reviewing the past five years of Gold’s overall uptrend, therein just three of the past ten parabolic Short trends incorporated drops exceeding 100 points.

Still to Squire’s query, were Gold to sink during this parabolic Short trend to as low as 1672, yet then nonetheless recover all the way up to our year’s forecast high of 2401, ‘twould be an increase of 43.6% within 10 months. Can Gold do that?

Absolutely! Gold has done exactly that on multiple occasions across the last 15 years. The following table depicts those stints of mutually-exclusive up-runs of at least 43.6% within 10 months for Gold; the bottom row then hypothesizes a repeat of same should Gold have a near-term brush with the 1600s, as measured from the structural support low (1672) up to 2401:

200221_gold_ten_months

And from the “Oh By The Way Dept.”, have you been tracking Cousin Copper? Well, ’tis worth following, (see our 28 July 2018 missive entitled “Gold is Copper???”, wherein is detailed the positive correlation of the yellow metal vis-à-vis the red metal). Moreover, ’tis said that broadly Copper leads Gold. And of late, Copper is doing great given post-COVID expectations for economic expansion, China being a leading consumer of Copper, and anticipation for ramped-up inflation. Thus within that context in looking at the percentage tracks of Gold and Copper from one year ago-to-date, think Gold has some catching up to do?

200221_gold_copper

‘Course, the cynic shall simply say that Copper had overshot Gold to the downside as COVID came on, and that now ’tis overshot Gold to the upside. But here’s the but: Copper today is 4.0670, having not traded at that level since 09 September 2011 … on which date Gold settled at 1861, just three days after having broken above 1900 for the very first time. Moreover by today’s Gold Scoreboard, price today “ought be” 3683. (We analyze to make you wise).

And wise or otherwise came word this past week that forecasters are raising their 2021 economic growth expectations, (which is why the stock market never goes down despite the disastrous dearth of earnings). The new Stateside Administration says it “can’t promise” that in a year’s time we’ll be “distancing” less and so forth, but the Economic Barometer says “smile for the camera”, for after all it too is again on the rise. Reports this past week included increases in February’s New York State Empire Index as well as in January’s Retail Sales, Capacity Utilization, Wholesale Inflation, Building Permits, Existing Home Sales and Export Prices. “Smile away”–[McCartney, ’71]:

200221_econbaro

Plenty of good news there, even as the Federal Open Market Committee’s 26/27 January Meeting Minutes inferred that easy monetary policy shall remain in vogue. (By the way, have you noticed that both the U.S. Department of the Treasury and Federal Reserve are going into the Climate Change business? We’ll see up with which potential Treasury-positioned Sarah “Bloomin'” Raskin and FedGov Lael “The Brain” Brainard come). “In other news, the Fed looks to maintain its monthly purchases of both fertilizer and organic air…”

Meanwhile: economies this side of The Pond don’t seem to be faring as well. ‘Tis reported that the United Kingdom is attempting to weather its worst economic slump in three centuries; newly-named Italian Prime Minister Mario Draghi is trying to pull all of his nation’s parties together to weather the deep downturn there; and ’twill be a tough task for Europe at large to weather weaning itself off of some €1.5 trillion in COVID economic relief programs. Bonne chance à tous…

‘Tis time too for a little good luck to come the way of the precious metals, even as Gold’s aforeshown weekly parabolic trend is now Short. In next looking at the last three months of daily bars for Gold on the left and Silver on the right, their “Baby Blues” patterns of trend consistency hardly are encouraging, albeit both metals recorded a firm Friday per their respective rightmost bars:

200221_gold_silver_dots

As for the past fortnight, here we’ve the Market Profiles for Gold (below left) and for Silver (below right). Clearly, Gold really needs the 1770s to hold, else get sold, (perhaps with that low structural support price of 1672 in the balance). And again for Silver, 27 continues to be her key area below which not to breach:

200221_gold_silver_profiles

So let’s assess the Gold Stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3683
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 Weekly Parabolic Price to flip Long: 1963
The Gateway to 2000: 1900+
10-Session “volume-weighted” average price magnet: 1807
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
Trading Resistance: (prices as noted per the Profile) 1795 / 1817 / 1825 / 1843
Gold Currently: 1783, (expected daily trading range [“EDTR”]: 28 points)
Trading Support: 1782 to 1774; (structural support as mentioned: 1789 to 1672)
The 300-Day Moving Average: 1773 and rising
10-Session directional range: down to 1759 (from 1857) = -98 points or -5.3%
2021’s Low: 1759 (19 February)
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

Now ahead of another busy week of incoming economic data, let’s close with these few observations:

■ We read this past week that “U.S. Airlines Saw 60% Drop in Passengers in 2020”; from our observations in airports and on planes during the year, ‘twould seem more like a 90% drop…

■ We cannot make sense of this Dow Newswires bit from Thursday: “Supporters of a higher minimum wage can argue the move is proof employers can afford wage increases, while opponents can say it is an example of effective free-market forces.” What? Folks are actually paid to write this unintelligible dribble. (If Grandpa Hugh were still running the show today, the “pink slips” would be flying)…

■ We honestly had a good grin over this one: “Cannabis Stocks Nosedive as Rally Driven by Hopes for U.S. Legal Reforms Comes to a Screeching Halt”, the time-honoured ’60s phrase coming to mind that “Only dopes smoke dope” — or put into current context — “buy into earningless stock manias”…

So don’t be a dope: yes, perhaps a 1600s brush with which to cope, but keep Gold focused in your scope!

www.deMeadville.com
www.TheGoldUpdate.com

Make Gold Your Stash Before the S&P Crash

130221_gold_scoreboard

And when old Swannee flew, all of our BEGOS Markets (Bond / Euro / Gold / Oil / S&P) were initially flushed down the loo, of which mildly (by comparison) were two — the Bond and Gold — as we graphically review:

130221_begos_blackswan_08-09

The above seven-month stint from the beginning of September 2008 through the end of March 2009 found the S&P 500 (closing price basis) down as much as 47%, (and moreover Oil down as much as 71%). Yes Gold suffered, but relatively less so in falling 15%, whilst the Bond’s loss was at most just 4%.

However: come the end of that carnage-filled run, Gold was firmest +11% whilst the S&P was still -39% with many an investor especially at the retail level having been capitulatively smashed in the process. Chances are you know of some who were, indeed may have been one yourself, (congrats thus being in order if you’re still around).

Yet now our notion is “Here We Go Again”. And as dumb-downed amongst financial writers as has become the word “crash”, we are measuredly cautious to ever to use it in a missive’s title. Across the dozen years of The Gold Update, only twice have we so done: once as a suggestive query during November 2013 and once during the “Gentlemen’s Crash” of late summer 2015. That’s it.

Even more exasperating given the bazillion reasons for the S&P 500 to imminently crash, the fact that it hasn’t means it shan’t … you veteran traders know exactly what we mean by that. (Or in chiding a trading colleague this past week, “The instant you go Long the S&P, ’twill be over.”)

But indeed, why crash, whatsoever? So sophomorically silly is such notion. After all:

■ We’re having a terrific Q4 Earnings Season with 79% of the S&P 500’s constituents beating estimates (“shushhh … only 59% have improved”);

■ Interest rates are all but zero (“shushhh … the yield on the Bond now is above 2.0%, that on the 10-year Note is up to 1.2%, and for the all-to-lose S&P ’tis only 1.4%”);

■ Americans now “flush with cash” are buying stock as COVID limits their spending elsewhere, (“shushhh … Federal Reserve Chairman Powell says fiscal stimulus need continue, SecTreas Yellen in agreement thereto”);

■ The Biden vaccine shall have us all made right just in time for summer, (“shushhh … post-vaccination shall nonetheless mandate masks, indeed double-masks, and social distancing for many months”);

■ The S&P’s uptrend is our friend (“shushhh … the market is textbook ‘extremely overbought’, its recent moneyflow comprehensively unsupportive, and the honest, live price/earnings ratio of the S&P is 75.2x”);

Comfy? Great.

Toward true worthiness, let’s turn to Gold’s weekly bars wherein we now below see six weeks (weaks?) of blue parabolic Long dots having been recorded … but with price at best treading water. Those six rightmost dots encompass 2021 so far, and yet Gold’s settling yesterday (Friday) at 1825 marked only the second up week of the year. 1786 becomes the price above which to stay in the ensuing week, else the parabolic trend shall flip to Short.

That is 39 points of wiggle room with Gold’s expected daily trading range of 27 points and on the weekly basis 70 points. But upon an S&P fall, a Gold advance to at least the rising dashed trendline at 1953 is a reasonable call:

130221_gold_weekly

As to the Economic Barometer, “The Biden Effect” appears to have run its honeymoon. Reports for the Baro this past week were poor, notably February’s University of Michigan Sentiment Survey sporting its third-worst drop in 10 months, January’s core retail inflation going flat but the Treasury’s deficit ballooning, and December’s Wholesale Inventories backing up. But: ’tis all a-OK as the S&P 500 now sits at an all-time high (3935). (Yet is it finally from here that it says “Bye-Bye?”)…

130221_econbaro

Specific to the price of Gold as broadly supported by the ever-burgeoning 3Ds of Debasement, Debt and Derivatives, the following near-term view may not appeal, save to those seeking a buyer’s deal. Given the value of Gold by Dollar debasement alone per the opening Scoreboard at 3686, we again recall the late great Richard Russell’s premise that “There is never a bad time to buy Gold.” (To which Inspecteur Clouseau would quip: “And this is it!” –[The Return of the Pink Panther, UA, ’75]).

Still on the left, the recent stance of the daily bars from three months ago-to-date appears fragile, and on the right in the 10-day Market Profile, price’s last bastion of near-term volume support shows at 1813, the hump over which to swiftly climb being 1839-1843:

130221_gold_dots_profile

Sister Silver’s like graphic appears a bit firmer, her daily bars (below left) essentially in an uptrend, although her “Baby Blues” of the trend’s consistency are anything but; and her key line in the sand per her Profile (below right) still starkly shows at 27.00:

130221_silver_dots_profile

So, Hamlet: “To crash, or not to crash; that is the question.” ‘Twould be noble for the S&P to so do for some return to sensible valuation. But: the market never being wrong, ’tis what ’tis. Yet, the expanding amount of email traffic calling for at least a multi-hundred-point pullback in the S&P is palpable. ‘Tis the trader’s toil to determine if ’tis probable.

Either way, the daily newsflow is at the very least rife with eye-rolling entertainment. Here are our three Goofball Headlines of the Week just past:

■ “GameStop Shares Climb 19% on Friday (04 Feb) to Finish (that) Week Down 80%” –[CNBS]

■ “$15 Minimum Wage Would Cut Jobs, Reduce Poverty” –[Dow Newswires]

■ “Fed to Weave ‘Inescapable’ Climate Change Risk into Bank Oversight” –[Reuters]

This is to where we’ve arrived, folks. Be it the “Look Ma, No Earnings!” Crash, the “Dissemination of Misinformation” Crash, or merely the “No One Knows What the Hell to Do” Crash, something has to give, for ’tis what markets inevitably do. And the catalyst may simply be which investment bank is the first to blink: we’ve witnessed historically wherein one of them announces reduction of client equity exposure, and the market then goes over the cliff. (And this time, ’tis one heckova cliff…)

Add to that next week’s streak of 16 incoming Econ Baro metrics and either way it all goes, ’tis best for the Long run (intended pun) to hang onto your Gold, indeed make it your stash before the S&P crash!

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold’s Current Commodity Costume

060221_gold_scoreboard

Otherwise, its being disregarded and disrespected occurs when ’tis treated as a commodity, especially whilst the sinister stock market is fawned over as being, well, “Gold”. Such seems the current state of these two mighty markets.

In last week’s missive we used the phrase “This drives us bats” in citing FinMedia enthusiasm over stock market earnings beating estimates instead of beating prior period results, the latter being the case for just 60% of S&P 500 constituents thus far in Q4 Earnings Season.

Now, the same phrase applies to Gold’s being booted about as a commodity rather than being revered (not just as a currency but) as THE Currency. One wonders for how much longer the blind eye to both non-supportive earnings and Dollar debasement can be maintained. From our perspective, the Great Halving of the S&P and Doubling of the Gold price is hurtling toward us like a freight train. (Yet given that few seem to hear it, perhaps ’tis a silent, green e-train…)

Further, in musing over writing a book on it all going wrong, we sense ’tis so close to so doing, ‘twould occur in the midst of penning the tome. Were such circumstance morphed into one of those disaster films, the star would exclaim: “There’s not enough time to warn the sheeple!” Dollar bills in people’s pockets would start spontaneously combusting with the financial planet then bursting to bits, even as some FinTV knucklehead shrieks “It’s a buy! It’s a buy!” Don’t laugh: ’tis coming to a theatre near you.

That said, Gold really is off to a lousy start for the year, whilst the S&P 500 garners yet another all-time high (3887), +3.5% in 2021. As we saw a week ago in our BEGOS Market Standings, Gold remains the worst of the bunch, now -4.5% in settling yesterday (Friday) at 1815. Even with the air coming out of the “Silver Squeeze”, she’s still +1.9% on the year. And at the sharp end is Oil +17.9%, clearly no surprise given Executive direction to curtail StateSide energy supplies.

In fact, so maligned was the price of Gold this past week, that in trading down to 1785 ’twas just six li’l ole points from eclipsing the 1779 level that would’ve flipped (“Don’t say it!”) the weekly parabolic trend from Long to Short. Fortunately, Friday’s bargain hunters fought their way up through the market’s offers to allow Gold to live Long at least through week’s end. Here are the weekly bars with said parabolic trends from one year ago-to-date:

060221_gold_weekly

But this Long parabolic trend is now well within the range of being Short-lived (thank you “Pun Dept.”) given that the distance from the present 1815 price to the flip price (1782) is just 33 points: Gold’s expected daily trading range is now 30 points, let alone the expected weekly trading range being 72 points. So now is the time to come to Gold’s fold, lest it really gets sold as nothing more than a commodity in costume mode.

Still from a broadly technical perspective, higher Gold can start to unfold. Follows is our long running chart of Gold’s daily closes from some ten years ago-to-date, the wavy blue line therein being the once stalwart 300-day moving average. Recall during Gold’s bull phase of this century’s first decade, the 300-day moving average was a precision supporter of price. Then through the first half of the second decade, the average was a reliable repeller of price. But more recently, these last two years again find the average supportive: and given ’tis now up to 1763, the notion is that any further Gold downside from here shall be limited to that average’s rising level. So don’t find yourself in the “If Only I’d Bought…” crowd. To reiterate, our forecast Gold high for this year is 2401 per the top line in the graphic:

060221_gold_300

As to the StateSide economy and the nation’s new Executive having already signed some 48 “actions”, you know what they say: “The more the control, the greater the dole.” ‘Course, that hasn’t yet worked into the Economic Barometer’s metrics: such transition ought begin having some early effect once we get into March (as February data gets reported).

Still, in what we’ve been tongue-in-cheek referring to as “The Biden Effect”, the Baro put in another relatively good week as the ADP Employment change whirled ’round from -123,000 in December to +174,000 for January. Whirling ’round as well was the Bureau of Labor Statistics payrolls number, their Unemployment Rate improving from 6.7% to 6.3%. And with the balance of the bunch, the Baro again bounced:

060221_econbaro

Regardless, we’re not sure the Congressional Budget Office is tracking the Econ Baro, their projecting this past week for the U.S. economy to reach the “pre-pandemic peak” by the middle of this year. ‘Course by the above Baro, ’twas already well-achieved this past November but incoming data then became more problematic as shutdowns were extended. (Remember way back in March when just a two-week worldwide shutdown was expected to have rid COVID? “If for two weeks it can’t spread, it’ll be dead” … so they said).

“Control is an intoxicant, mmb…”

So some say, Squire, until it comes back to bite one’s own butt. Still, Minneapolis’ Neel “Best Name for a FedPres” Kashkari sees the StateSide economy far and away from full recovery. And whilst Asian metrics are improving, the EuroZone’s economy is being dubbed as “desperate” given COVID continuing to rampage amid the comparably slow roll-out of vaccines.

Meanwhile, rolling downward has been our Gold although hardly so has Silver. Here we’ve the two-panel graphic across the last three months of daily bars for the yellow metal on the left and for the white metal on the right. Clearly the latter’s failed “squeeze play” is evident, but the better news is the pricing of Silver vis-à-vis Gold, the G/S ratio today at 67.1x, well in-line with the millennium-to-date average of 66.2x. Stay in that vein and a Gold high this year of 2401 says Silver sees 34.30:

060221_gold_silver_dots

So standing to reason is Gold’s 10-day Market Profile depicting price as having been weaker than that of Silver. No Gamestop gaming of our Gold there. Indeed for Gold (below left), its trading resistance thicket runs from the 1830s well up into the 1860s. Yet for Silver (below right), after being squeezed then unseized, she finished Friday essentially on her most heavily traded price of the past fortnight per the white volume line at 27:

060221_gold_silver_profiles

Therefore, our bottom line finds Gold at present being treated more as in commodity costume than as true currency.

…oh that is rather raggedly pathetic. So sorry, Helvetia! Hang on a sec… (“Squire, will you please get on to the Graphics Dept?”) In the meantime, put in a good word for your own financial well-being and grab some real Gold! (Good gracious, really…)

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold Churns but Silver (Finally) Returns!

 

300121_gold_scoreboard

Thus should you be casually queried off-the-cuff as to the present price of Gold, your simply responding “1850” without nary a thought ought be fairly spot on, impressively making you appear as one “in the know.”

But year-to-date, the precious metals story (albeit somewhat stealthily) is Silver. For have you been watching the Gold/Silver ratio of late? We have as it has its own dedicated cell on our key screen of live data. Which is why for the first time “in forever” we of a sudden sat bolt upright this past Thursday in taking notice of said ratio being sub-70x!

“Is it live? Or is it Memorex?”, (i.e. on tape from nearly four years ago). For that was the last instance of the Gold/Silver ratio being below 70x: 17 April, 2017 at 69.9x. Fast forward that tape to today and the ratio is now 68.4x.

The millennium-to-date average of the Gold/Silver ratio is 66.2x such that ’tis fair to say these two precious metals are well within a standard deviation of having returned to being on “par” with one another. (For those of your caring to include a full generation prior, said average ratio as dated from 1975 is 59.7x). Either way, here’s the daily graphic across these past twenty years (plus one month) of the Gold/Silver ratio with its average as having evolved throughout:

300121_gold_silver_ratio

Indeed peeking back to The Gold Update of 04 April 2020 (“Gold Losing A Gear As Markets Are Losing their Fear”), we therein penned: “…the Gold/Silver ratio … [is] a staggeringly high 113.5x, nearly double the millennium-to-date average…” On that date, the price of Silver was 14.53: today at 27.06 ’tis +86.3% since then; (Gold across the same time frame is but a comparable +12.2%).

Hence the race back to a more realistic reading. And clearly ’tis not because of any fallout in Gold. Rather, ’tis due to Silver finally garnering long-overdue committed notice by getting much more of a bid than has Gold in recent months. Even for just this brief year so far, Gold is -2.7% — in last place by the BEGOS Market Standings — but Silver in second place is +2.0%. Here’s the table with 2021’s first trading month officially in the books:

300121_begos_standings

‘Course Oil +7.7% is the big winner thus far in 2021, clearly being cushioned by the nixing of new StateSide energy facilities, (the void of which hardly shall be filled by substantive “green” sources perhaps for decades). But again as to Sweet Sister Silver’s outlook for the balance of this year: should the Gold/Silver ratio of, let’s say 70x, be maintained and Gold touch our forecast high of 2401, that mathematically would see Silver at 34.30 … “Got Silver?”

As for the present we’ve got Gold by its weekly bars from a year ago-to-date, price’s churning nonetheless keeping the relatively fresh parabolic Long trend intact, its fourth blue dot appearing as shown. But priced at 1850 with the “flip to Short” price at 1779, such distance of 71 points is basically the same of that portrayed a week ago, which given the present “expected weekly trading range” of 70 points still finds this Long trend technically subject to being short-lived.

In fact, despite the turbulence in the S&P 500, Gold’s “expected daily trading range” (per its website graphic) is actually narrowing a bit (31 points at present). Yet, notwithstanding Gold’s churn, both the weekly parabolic and linear regression trends remain to the upside:

300121_gold_weekly

As is our month-end tradition, let’s review Gold vis-à-vis key precious metals equities from this time a year ago. So per the following chart we’ve (in ascending order): Agnico Eagle Mines (AEM) +15%, Gold itself +18%, Franco-Nevada (FNV) +21%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +25%, the Global X Silver Miners exchange-traded fund (SIL) +42%, Newmont (NEM) +46%, and Pan American Silver (PAAS) +57%.

The mild downside bias across the entire group from last summer onwards belies the benefit from the inevitable monetary printing waiting the wings. Again, we’ve mused about it being already priced in … but mathematically it really has not, simply by the opening Gold Scoreboard’s valuation today of 3721. “Got Gold?”

300121_gold_gdx_nem_aem_fnv_sil_paas

And here is additional impetus for higher prices of Gold and Silver, the cutting-edge Dow Newswires having figured out that the “U.S. Economy Shrank in 2020 Despite Fourth-Quarter Growth” Who knew?

Further, ’tis said China has surpassed the U.S. in attracting direct overseas investment, albeit the latter is looking for stimulus savings to ramp up StateSide economic growth, especially as the new Administration is credited with COVID vaccines now becoming widespread. What one difference a week makes, eh? Why even the International Monetary Fund is saying economic growth is to improve, (the other side of its mouth maintaining the outlook as “uncertain” giving lags in both Europe and emerging markets).

More specifically, in looking at our Economic Barometer, is that more “Biden Bounce” which we see? Without new policies as yet affecting the Baro, still the past week brought us better readings for January’s Consumer Confidence and the Chicago Purchasing Managers Index, as well as for December’s Pending and New Home sales, Personal Income and Spending (the latter being less negative), and more inflative Core Personal Consumption Expenditures. (Or is it stagflative?) Here’s the Baro:

300121_econbaro

As for the stock market when measured by S&P 500 (red line above), it put in a down January. But the notion of “As Goes January So Goes The Year” is best relegated to the “Myth Dept.” Through the first 20 years of this Century, 10 of the years for the S&P 500 went as did January … and 10 of the years went as opposite January. Besides: given our “live” price/earnings ratio for the S&P now 77.6x, can the Index really go any higher? (See our closing comments at the foot of this missive).

First, for the BEGOS bunch as a whole, let’s go ’round the horn for their last 21 trading days (from 30 December)-to-date along with their respective grey diagonal trendlines and their “Baby Blues” of each trend’s consistency. At present, only the trends for Oil and the S&P (“SPOO”) are rising, however consistently less so given their blue dots are falling:

300121_begos_dots

Next, the 10-day Market Profiles for Gold on the left and for Silver on the right reveal the bulk of trading for the yellow metal between 1859 and 1845, and for the white metal ’round the 25.30 area, albeit present price has proceeded up to into the 27s:

300121_gold_silver_profiles

And now to our chart of Gold’s Structure by the month from the highs of 2011-to-date. Since Gold’s most recent All-Time High of 2089 this past 07 August, Gold has returned to being a-churn all about the The Northern Front, The Final Frontier, and The Gateway to 2000. Our forecast high for this year is as noted at 2401:

300121_gold_structure

With this week’s wrap, here is our thinking on the S&P 500. Not yet fully with conviction, we are considering that the Index’s high for this year (3871 just this past Tuesday, 26 January) may be “all she wrote” as the balance of the months unfold. To wit:

■ Per Reuters this past week we read that “Not Company Earnings, but Vaccines Now Steering Investor Sentiment”. Well thank you for that, but Earnings have hardly been any kind of steering mechanism for the S&P for the last several years. This drives us bats, the piece going on to read that “Of the 159 companies in the S&P 500 that reported earnings through Thursday morning, 83% posted results that topped analyst expectations…”, blatantly omitting what is of paramount import: that (now through Friday with 164 companies having reported) only 59% have actually bettered their bottom lines over Q4 of a year ago. Isn’t that about which it is all supposed to be? In what kind of a valuation (or lack thereof) era are we living? You already know our take, but to reiterate: the S&P by earnings ought be half or worse of where ’tis, whilst Gold by Dollar debasement ought be double or better of where ’tis. And yes, we still expect their levels to pass one another.

■ Emails and texts have found their way here querying about Gamestop (GME) stock, for which (honoured as we are to be asked) we humbly reply with our stock answer that “We don’t do stocks.” Common stock trading is beyond our risk profile, understanding and pay grade. Rather we value our sleep in siding with the serenity and security of the futures Markets which comprise BEGOS. And yes, that’s plenty enough with which to deal.

■ Therefore: lack of substantive earnings and this hardly newfound kind of “pet rock” stock market speculation is typical of what precedes major crashes. To be sure, our sense remains that the S&P 500 “is horribly due for a massive crash”. And yes, it may be starting right now.

So gather in some Gold whilst ’tis in churn. Silver’s doing her part to return. And rest in comfort whilst the balance doth burn!

300121_stocks_gold

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

‘Abidin’ Biden by Gold

230121_gold_scoreboard

For wealth to withstand, indeed endure, the onrush of that which is negative — specifically Bidenomics — one can abide by Gold.

‘Course, such is obvious in preaching to this choir. Yet combined with “the market is never wrong”, it may be said the Dollar’s debasing demise must already be priced into Gold (as herein mused a week ago). Right?

Wrong! Rather, Gold’s attractive price reflects there being just a minuscule percentage of the investing world which outright owns it and/or has some exposure to it.

Upon exposure to Gold morphing from minuscule to material, price shall have departed from its present lowly level of 1856, have passed up well through our forecast high for this year of 2401, to then reach our present Scoreboard valuation of 3719 … and beyond! (Again, ’tis merely about “the when”).

Indeed as a Gold colleague just to the north of us penned this past week, “Biden Will Extinguish The Dollar.” Blunt, that. “Got bits**t?” (Just kidding…)

To be sure, the common sense investing world (oxymoron) would expect Gold to at least mitigate the Biden and overall StateSide power-shift by precious metal prices racing upward. After all, certainly so shall taxes and the stagflative cost of living race upward. “Got Oil?” (Not kidding…)

And yet, Gold’s remaining severely under-owned simply doesn’t find it in play today. Yes, the yellow metal had a fine performance for 2020, +25.1% for the year, and the white metal +48.2%. But ‘twould seem those who desire to own Gold already so do, (even with many more yet to own too). The point is: trading in Gold has been at best fair to middlin’ even through Washington’s transition.

To wit, one of our favourite indicators of interest (or lack thereof) in a market — be it bullish or bearish — is the extent by which its actual daily trading range (which for you WestPalmBeachers over there is the distance between price’s daily high and low) exceeds (or not) that which is expected. Here from three months ago-to-date is Gold’s expected daily trading range (line) with each day’s actual trading range (bars).

And all-in-all it appears average. (‘Course for day trader, if you’re sufficiently clairvoyant so as to sell the high or buy the low, and you “know” the expected range, you’ll be sittin’ in the pound seats). Either way, here’s the rather benign state of Gold’s trading range at present:

230121_gold_edtr

Fortunately, Gold did put in an up week (just its second of the past five) and more importantly strayed away from the underlying parabolic blue dot at 1775, which if eclipsed in the new week would flip the weekly bars trend from Long to Short. (Please perish such thought). Still, ’tis prudent to keep in mind that Gold’s weekly expected trading range is 72 points, the rightmost blue dot being 71 points to the south and thus not entirely “out of range”. Moreover, the tip of that diagonal trend line is 1976: thus a reversion to that mean from here likely puts price back above 2000 such that the drive to 2401 in 2021 shall rightly be underway:

230121_gold_weekly

As for the Economic Barometer, bring on an Inauguration and the Baro gets a bounce. Rainbows and unicorns, baby, or as Grace Slick put it at Woodstock back in ’69, “It’s the new dawn…”:

230121_econbaro

Clearly they’re feelin’ fine in Philly, the January level of the Philadelphia Fed Index tripling from December’s 9.5 to 26.5. Moreover, both Housing Starts and Existing Home Sales worked higher in December, beating consensus along with November’s numbers being revised higher still. Lovely how this anticipation of life under “unity” always begins euphorically: Enjoy! Why even the S&P 500 is recording all-time highs, despite our “live” price/earnings ratio being now at 80.9x. But as Q4 Earnings Season kicks into gear, with 47 of the S&P 500 constituents having reported, only 24 of them (just 51%) have improved their bottom lines from Q4 of a year ago…

“So aren’t you spoiling the party with that, mmb?”

Squire, you know as well as anyone that across decades of financial writing, never are we prone to unrealistic expectations nor conspiratorial exaggeration. For example, our valuing Gold today per the Scoreboard at 3719 is a merely mathematical exercise that aligns realized money supply growth with that of Gold.

Similar for the stock market as measured by the S&P (notably with respect to the lack of earnings), we repeat that it “is horribly due for a massive crash”. ‘Tis nothing new. In our lifetime we’ve witnessed 1987, 1989, 1992, 1998, 1999, 2001, 2009 and now now, (whenever “now” turns out to be). But ’tis nigh.

(Reminder: the overnight limit down on StateSide equity index futures is -7%, which by the S&P is -269 points or -2,170 “Dow” points). “You say it opened far below your stop, Mr. Buckerfaster? Sorry about that. No there’s nothing we can do. Please meet your margin call immediately.”

What one can do ‘natch is to get Gold, the inevitable reduction of its under-owned nature to well serve the Gold holder. And from the “Buy Low and Hold Dept.” we’ve our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. The baby blue dots of regression trend consistency are dropping below their 0% axis; however the daily bars are exhibiting some grip. Meanwhile in the Profile, price reveals the supportive trading volume from 1868 down to 1841:

230121_gold_dots_profile

As for Sister Silver, her Daily bars (below left) and Profile (below right) are both similarly shaped to those for Gold. Thus clearly she is adorned in her precious metal pinstripes (rather than in her industrial metal jacket). Lookin’ serious there, Sister!

230121_silver_dots_profile

In closing, we’ve a big week ahead for both incoming Econ Baro metrics and Q4 Earnings, highlighted in the midst of it all by the year’s first Federal Open Market Committee Policy Decision. And guess who is back: that’s right, our old friend Old Yeller!

With Senate passage literally certain, former Federal Reserve Chair Janet Yellen shall be confirmed as United States Secretary of the Treasury, which means that you can get her autograph right on the Dollar bill, (or what’s left of it). And what she said toward receiving unanimous approval by the Senate Finance Committee leads to this Hilarious Headline of the Week (courtesy of Dow Newswires): “The Debt Question Facing Janet Yellen: How Much Is Too Much?”

Are you kidding us? ‘Twas already way too much way too long ago!! But sayeth Madame Secretary-to-be: they must “‘Act Big’ Now to Save Economy, Worry about Debt Later”, (thank you Reuters). Thus this appropriate BeaTlesque bit:

“It’s only debt and that is all…
230121_yellen
…why do I feel the way I do?”

GOT GOLD???

www.deMeadville.com
www.TheGoldUpdate.com

For a look at all of today’s economic events, check out our economic calendar.

Gold Sheared, Silver Smeared

160121_gold_scoreboard

But relax: have a cracker ‘n schmear, perhaps even a beer, and we’ll try to relate to making it all clear.

To be sure — given all that we and you from here to Kalamazoo fundamentally understand about Gold – its moving lower in the ongoing financial environment makes nary a wit of sense whatsoever. The market is never wrong by traders having put price where ’tis, irrespective of its going the wrong way.

And given the fundamental precious-metals-positive state of essentially everything, ’tis diabolical that price descend.

Indeed as Gold leaped out of the gate to commence the New Year by gaining +3.2% (and Silver +6.0%) within the first three trading days, it struck us that our call for a Gold high this year of 2401 may have been too conservative. And from the “Under-State and Over-Deliver Dept.”, such 2401 forecast may still be too conservative even given the present pullback.

Either way, Gold settled out the week yesterday (Friday) at 1828 … which is but half the above Scoreboard’s debasement valuation of 3644. Moreover, ’tis before President-to-be-Biden rolls out his nearly $2 trillion instant COVID/economic relief plan, which with Congress now all “blue” ought pass right through.

“But even that is already priced into Gold, right mmb?”

Of course ’tis, Squire, just as always is everything. (Pity the poor trader who thinks he has it all figured out before anyone else does: “Take a seat at the back of the bus, buddy…”).

And again, please spare us the argument that bits**t is the modern alternative to Gold. Cryptocrap — which within two trading days just fell -27% — ain’t fallin’ into our lap.

And again (again), the fundamental stance for Gold we continue to view as 100% positive given the ever-burgeoning levels of the 3Ds (Debasement, Debt, Derivatives), the declining Economic Barometer (as we’ll below show), COVID clearly not contained (nor the effects of its vaccines preordained), and the endless spending of even more $trillions beyond the initial $2 trillion under Biden/Harris/Congressional reign!

So: why has Gold been declining? Reprise: the technical stance for Gold may merely be viewed as price having leapt too far too fast, as least by its recent deviation above the 300-day moving average.

To wit: since the start of the millennium we’ve had 5,043 trading days. Therein, Gold has settled more than 10% above its 300-day moving average a fair amount of the time: 1,697 days, to be precise (or one-third of days overall). That alone is a testament to the price of Gold rising over the long-term whilst all of the aforementioned fundamentals reduce the value of the faux dough Dollar.

In commencing 2021, so swift was Gold’s up move that price found itself nearly 13% above its 300-day moving average. And from the year 2001-to-date, Gold’s average price decline within three months upon a deviation of greater than 10% above that average is -6.2% (the standard deviation being 4.9%). So with Gold recently settling at 1954 (05 January), ’twas +12.6% above said average. A -6.2% decline from there puts price at 1833, (the recent low being 1817). ‘Course, hardly have three months yet to ensue: thus let’s further subtract the standard deviation which puts price down to 1739. On verra, but a positive Gold stance by the fundamentals belies such demise.

Besides, as we saw a week ago, Gold’s weekly parabolic trend has flipped from Short to Long, dubious as it appears on the following graphic of the price bars from one year ago-to-date. The wiggle room between the rightmost blue dot (1771) and present price (1828) is but 57 points, somewhat daunting as Gold’s “expected weekly trading range” is now 72 points. Thus the new Long trend is within range of being Short-lived.

And to quickly flip back to Short would leave any fundamentalist further flabbergasted. The point is: the Gold Bull ought not be put out of sorts should the lower 1700s be tested. Indeed, Gold appears to be structurally supported in the 1792-1673 range, but we don’t honestly find any rationale for price to venture there.

160121_gold_weekly

‘Course, the Dollar has actually been getting a bit of a bid to start the year, which in turn is why the BEGOS Markets year-to-date ain’t lookin’ all that great, the sole exception being Oil which typically shall slide during a Dollar up-glide. (Speaking of Oil for those of you who follow the website’s Market Rhythms page, the 12-hour MACD study looks to confirm a negative crossing in starting the new week). Otherwise, through these first 10 trading days of 2021, Gold as we below see is thus far the weakest of the five primary components which comprise BEGOS:

160121_begos_markets

In trying to ferret it all out from the FinMedia, one may be better off with a shot of tequila. Try these “back-to-back” readings from the Dow Jones Newswires: “…the labor market is losing momentum amid rising coronavirus cases…” (followed by) “…This Could Be the Best Year on Record for Job Growth. Gains are expected to be driven by a re-emerging economy…” That must have come from their “Now and Then Dept.”

Or try this FinTimes and Reuters bit: “…JPMorgan, Citigroup and Wells Fargo cite increased certainty on vaccines and improving economic outlook…” (followed by) “…U.S. Labor Market Losing Speed as COVID-19 Spirals Out of Control…”

And we know throughout history that such opposing opinions when elicited as policy result as follows:

160121_deux_locos

And it appears that the S&P finally is beginning to crack, the “live” price/earnings ratio being essentially a record — indeed stratospheric — 78.7x and our “textbook” technicals reaching “extremely overbought” this past Tuesday into Wednesday. ‘Tis right in line as we’ve written of late that the S&P “is horribly due for a massive crash”.

Even a terrific Q4 Earnings Season would hardly right this ship: bottom lines ought need triple to-quadruple just to get the P/E in line with any acceptable historical norm. And hardly is the economy helping: beyond December’s improvements in Industrial Production and Capacity Utilization, the month’s Retail Sales actually shrank whilst Import and Export Prices rose. Can you say “stagflation”? As well, January’s New York Empire State Index sported its weakest reading since July.

Then we’ve Cleveland FedPrez “Jump Back” Loretta Mester pointing to the StateSide economy’s needing strong 2021 government support, (and you know ’tis coming in $trillions: Got Gold?) Chiming in, too, is overall FedHead Jerome Powell stating the road to recovery for jobs is long with open-ended easy money to remain available. Again: Got Gold?

Still, not everyone has got Gold (now that is to Under-State) nor are stocking up en masse as we turn to our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right. Problematic for both markets is their respective sets of “Baby Blues” falling below the 0% axis, meaning that the 21-day linear regression trends have rotated from positive to negative: Sheared and smeared, indeed:

160121_gold_silver_dots

And as for the past fortnight — which is year-to-date — both precious metals obviously find themselves near the bottom of their respective 10-day Market Profiles:

160121_gold_silver_profiles

We’ll sum it up here with the stack:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3644
  • 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+
  • 10-Session “volume-weighted” average price magnet: 1887
  • Trading Resistance: (most immediate) 1843 / 1849 / 1859
  • Gold Currently: 1828, (expected daily trading range [“EDTR”]: 34 points)
  • Trading Support: none per the 10-day Market Profile
  • 10-Session directional range: down to 1817 (from 1963) = -146 points or -7.4%
  • 2021’s Low: 1817 (11 January)
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • The Weekly Parabolic Price to flip Short: 1771
  • On Maneuvers: 1750-1579
  • The 300-Day Moving Average: 1745 and rising
  • 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

Next week is lite for incoming economic data and brings joyous relief for the media in welcoming the 46th President of the United States via an Inauguration replete with virtual festivities. But ’tis said the 47th President in terms of time may not be far behind. So let the StateSide and geo-political schmear unfold whilst you fortify your financial well-being with Gold!

160121_25th_sec3

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Gold Leaps – then Cascades – to Start the New Decade

090121_gold_scoreboard

Gold opened the Third Decade of the 21st Century this past Monday at the price of 1908, after which — (with a little cachet we’d like to think from our call for 2401) — come Wednesday price had leaped up to 1962.

From there, extrapolating such a robust rate of ascent (+3.2% every three days), would’ve found Gold reaching our 2401 target on 04 February. “Cachet, baby!”

But in truth: “Correction, baby!”

As a valued veteran trading colleague of ours has quipped over many-a-decade: “All gaps get filled.” And for Gold, it did indeed and then some as price yesterday (Friday) alone cascaded -3.4% to settle at 1850 in commencing the new decade on the wrong weekly foot, its net loss being -52 points. (Fortunately, there remain 51 weeks in 2021 to achieve our Gold target of 2401).

But for the financial world at large, everything obviously is great. After all, the S&P 500 is at an all-time high. (Wanna know it’s “live” P/E? Wait for it…) The value of money (as has become the value of stock market earnings) is clearly deemed to be irrelevant. Fully-foundationless bits**t has now reached $40,000 (a seasoned Wall Street analyst noting that one day there actually shall be an established, accepted “cryptocurrency” but that it shan’t be bits**t).

Too, the four-wheel battery company Tesla (with its price/earnings ratio now 1,554.3x) ranks fourth by market capitalization in the S&P. Moreover, remember some years back when by money flow the S&P was “Nuthin’ but Apple”? Today ’tis “Nuthin’ but Tesla”. Write this down: 91% (“ninety-one percent”) of the capitalization-weighted net change in the S&P 500’s money flow from this past Monday through Friday was Tesla’s share alone. Think about this: what if the newly-empowered StateSide “Green Squad” moves to eliminate batteries from the planet… “And the new Boeing 7×7 shall solely fly on solar power…”

Meanwhile good old Gold — an actual tangible currency — priced today at 1850 is but 51% of its supply-adjusted, Dollar-debased value of 3625 as we update weekly in the above Gold Scoreboard.

“Yeah, so what else is new, mmb…”

Squire! Grand of you to pop back. Let us guess: clearing snow in the Apennines? “Actually, rescuing stranded snow-removal equipment in the Dolomites, mmb…” (Why after all these years do we even ask…)

But our good colleague’s point is valid: nothing has changed. Gold remains reluctant to really get roaring even in the face of ultimately disastrous currency debasement, whilst S&P 500 earnings have become even less supportive of the rising Index, its “live” P/E at this writing (here it is) 83.5x ahead of Q4 Earnings Season commencing in the new week. Again, don’t argue: do the math yourself.

With time at a premium for us this Saturday, (you being the beneficiary as we’re posting this piece 10 hours ahead of schedule), let’s swiftly move through our key graphics, beginning with Gold’s weekly bars from one-year ago-to-date. And therein (dare we say at “long” last) the parabolic trend has finally flipped to Long following a 19-week stint as Short. The rightmost fresh blue dot is there, but Gold’s end-of-week fold makes for a rather inauspicious start to it all:

090121_gold_weekly

Then here across nearly ten years, we’ve Gold’s daily closes vis-à-vis its 300-day moving average. As you regular readers know, that average (being 111 points below the present price) is the only technical negative for which we’ve voiced some concern. ‘Course, this is more than mitigated fundamentally by price being (as noted) 51% below our Scoreboard valuation level of 3625. Note the upper line on the chart as our forecast 2401 high for this year:

090121_gold_300

As for the Economic Barometer, ’tis now in complete opposition to the S&P 500, which again at such extreme valuation that as written a week ago: “is horribly due for a massive crash”, (we ought to think led by Tesla as a falling battery can be devastating to all in its path). Of economic note this past week, November’s Trade Deficit reached its widest gap in 14 years, whilst the month’s Factory Orders and Construction Spending slowed. And as for December, job creation was instead job deprivation. Here’s the Baro with the S&P (red line):

090121_econbaro

But not to worry, for fortunately new Federal Open Market Committee voting member Charles “ChiFedPres” Evans looks for monetary policy to stay accommodative (and we quote) “for a long time”. That’s nice. Is everyone watching the rising yield on the U.S. Treasury Bond as it approaches 2%? Currently, at 1.863%, that compares with the S&P 500’s yield of just 1.465%. “Got risk?”

To be sure, the precious metals suffered some risk after first starting out the week/year/decade to the upside. In the following two-panel graphic we’ve Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Hardly the prettiest picture, but remember: the weekly parabolic trend has now flipped to Long. Bring on the bargain hunters (please):

090121_gold_dots_profile

As for dear ole Sister Silver, ’tis quite the similar picture. At least in her and Gold’s case, Friday’s closes were well off session lows:

090121_silver_dots_profile

So there it all is ahead of a week with 15 incoming metrics scheduled for the Econ Baro. We’re underway in 2021, and you know the long-standing saying: “As goes January…” Perhaps ’twill be the case for the Econ Baro as Bidenomics shan’t help. But we believe hardly for the rising S&P. In fact, let’s see if Gold along the year’s route to 2401 passes above the level of an inevitably declining S&P!

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

For a look at all of today’s economic events, check out our economic calendar.

Seeking Gold 2401 (+26%) in 2021

We now look for Gold in the first year of the Third Decade to reach 2401 for a gain of +26%.

By comparison (for those of you fortunate enough to be scoring at home during this calendar milestone weekend), the U.S. Money Supply (per “M2”) finished the decade +119%. And the earning-less stock market index which honestly is horribly due for a massive crash (i.e. the S&P 500) recorded a decade’s gain of +199%. Such overly-hedged inflation “mitigant” further compares to 10-year increases in the StateSide Producer Price Index of just +15% and +17% for the Consumer Price Index. The result is our “live” price/earnings ratio of the S&P closing out the decade at 70.5x … and if you don’t believe that, do the math yourself. Here (yet again) is the formula using earnings actually booked:

(“Oh my goodness, it’s true, it’s true!”)

So: welcome to the Third Decade of the 21st Century. That’s right: 20% of the 21st Century is already gone!

Remember watching “The Jetsons” back in the 60s? Remember Stan Kubrick’s “2001”? Been there, done that. Feeling old, are we? Last May marked the 53rd anniversary of the release of “Sgt. Pepper’s Lonely Hearts Club Band”, since which the price of Gold all told is at present up 53 times. And to quote The Dead from ’70: “What a long, strange trip it’s been”:

Now let’s expand upon our seeing the price of Gold in 2021 reaching 2401, i.e. +26%. Across the 50-year span since Nixon’s nixing of the Gold Standard at $35/oz. back in 1971, the yellow metal has recorded 19 down years and 31 up years, including 14 years of gains bettering +20%. And with the currency debasement pedal stomped all the way to the metal, Gold ought to be in top gear.

Obviously, markets always revert to “their mean”, but what do we really mean by “mean”? Per technical analysis, whether one is scrutinizing Gold, or the S&P, or any market, the number of “means” is infinite, given so are the number of studies. Select that which makes the analyst look good, and there it is.

But when it comes to fundamental analysis — at the end of the day — there is one critical “mean” so to speak for the S&P 500: the price of earnings; and one for Gold: the debasement of money. Today, one pays $70 to earn $1 (ex-adjusting for the measly yield of 1.501%) from owning the S&P 500; (historically, paying $20 is “expensive”). There’s your crash. Today, one pays $1,900 to own an ounce of Gold worth $3,652 by our opening Scoreboard. There’s your stash.

‘Tisn’t rocket science a bit; rather ’tis common sense which has yet to be drilled into the 95% (some say 98%) of the investing public lacking Gold ownership. Technically, one may duly say that Gold is “overbought”, the present price of 1902 being 10% above its 300-day moving average of 1732. Fundamentally, one can duly say that Gold is “underbought” given present price being 48% below our 3652 valuation.

As to specifically selecting a Gold high of 2401 in 2021, projecting price comes in all forms. Soothsayers’ tools as noted are infinite. And other than the clearly upside guidance we have from valuing Gold today at 3652, projecting price precisely beyond the All-Time High of 2089 into uncharted territory is tough. We’ve thus decided to KISS (“Keep It Simple Stupid”) by assessing at what level the diagonal trendline in the following chart of Gold’s weekly bars shall be if extended a year: which is 2401 at the present slope’s rate of increase.

And in dipping a toe beyond our pay grade for you Fibonacci folks out there, a “Golden Ratio” extension using 2020’s low and high projected out to the end of next year also puts price into the 2400s. Bestow a blast of Bidenomics and maybe 2401 seems conservative; (mind that “federal income tax withheld” box on your pay voucher).

As for “The Now”, Gold need trade up just three li’l ole points in the New Year’s first week to flip the red parabolic Short dots to beautiful blue Long dots. Thus gettin’ into Gold early on appears the right thing to do:

Gold’s net gain in 2020 was +25%. And with the exception of Agnico Eagle Mines (AEM) +14%, the other key levered equities outperformed with Franco-Nevada (FNV) +27%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +30%, the Global X Silver Miners exchange-traded fund (SIL) +49%, Newmont (NEM) +52%, and Pan American Silver (PAAS) +68%:

As for the 2020 BEGOS Markets in toto, the Metals Triumvirate took the entire podium with Silver +48%, Copper +26% and Gold +25%. Here are the year’s final standings:

In turning to the Economic Barometer for the entire year, one wonders how ‘twould appear had there not been the COVID fear, (or even so, had we not locked down and rather protected those elderly with already serious health issues). StateSide, the economic climbout has nonetheless been surprisingly solid, even as small business sectors and the travel/hospitality industries still swim in dire straits. As a tiny sampling EuroSide, on Wednesday we drove through the lovely town of Bordighera: every business right down the main street seems completely shuttered.

If that is representative of the Continent at large, one wonders for how long the European Central Bank can keep from even furthering its own currency’s debasement. For 2020, the U.S. “M2” money supply increased +26% (almost in tandem with Gold’s +25% increase in price); yet Euro “M2” increased but +10%. Short Euro, Long Gold? Remember: Gold plays no currency favourites … but can gain favour from a falling Baro:

As for the BEGOS Markets’ drive into 2020 year-end, we’ve the final month (21 trading days) replete with each component’s “Baby Blues”, the dots which depict the consistency of the grey diagonal regression trendlines. And note: none of those trendlines are in decline, which means (as Squire would say were he here), the Dollar is going into the dumper. Indeed the Dollar Index settled out the year at 89.89, its lowest monthly close since March 2018. Thus here’s the buoyant BEGOS bunch for December:

And specific to near-term volume concentration in the precious metals, here we have the 10-day Market Profiles for Gold on the left and for Silver on the right, the most heavily traded price apices as denoted:

To close out the decade with our graphics galore is the Gold Structure chart spanning the last 10 calendar years by price’s monthly bars. Clearly the rightmost bar of December 2020 shows a solid up month had by Gold. And with the aforeshown weekly parabolic Short trend on the verge of flipping to Long, we expect January, too, to be another firm up month. (Oh: as for the wee chap that had taken to squatting in this graphic’s lower right corner, he finally was “fired”, literally):

So there’s our crawling out on a limb for 2021 in seeking a high for Gold of 2401. As detailed, the technicals might be regarded as overbought, but the fundamentals as more overwhelming positive, and the fuel to get there being Gold becoming less underbought than ’tis!

Happy New Decade to all of our valued readers through every Saturday since The Gold Update commenced on 14 November 2009! Here’s to Gold threading its way to 2401 in 2021!

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

 

Our Hope from Santa was in Vain – Gold 1,900 Still to Gain

With the markets finishing the week by a shortened session on Thursday, plus our being in motion, we’re getting a head start on this week’s missive.

Now per that from last week’s piece, “Gold’s 1900+ Track Looks to Be in Santa’s Sack”, old Saint Nick doesn’t seem to have come through with that pack. Moreover, peering into the gloom above the ocean as we transit from the Night before Christmas into its Day, nary have we seen any reindeer-driven sleigh. Part-and-parcel of the year 2020, one has to say.

And yet, Gold per se has had a darn good year. In settling out the week earlier today at 1883, with but four trading days left in 2020, price year-to-date is +23.9%; further, Silver at 25.95 is +44.9%. So please no complaining; rather instead be rejoicing, ‘cept we’re not allowed to so do publically en masse, even if wearing a masque. Add, that up here in the air our computer at present says: “Unfortunately, there’s no internet connectivity when flying above the Arctic Circle”, and isolation seems everywhere.

Fortunately we gathered most of our salient end-of-week analytics prior to wheels up, so let’s get to it, beginning with Gold’s weekly bars from one year ago-to-date. Santa may not have brought us Gold 1900+, but for the past two weeks price has teased that level, reaching on Monday up to 1912, the highest level since 09 November.

And as was the case a week ago, Gold is well within range — now just 29 points — of eclipsing that same 1912 level which then flips the parabolic trend back to Long: Gold’s expected weekly trading range is 74 points. So clearly a little old-fashioned end-of-year buying can get it done, the rightmost bar nudging its red dot:

Now our good man Squire is not on the scene, however we can hear his cautioning comments for Gold such as “But mmb, they’ll sell Brexit agreement getting done” or “they’ll sell COVID relief getting done” (and then some?). Perhaps.

Yet why sell Gold at 1883 when by the opening Scoreboard’s debasement value ’tis pegged at 3664? Or why sell Gold when the “live” price/earnings ratio of the S&P 500 — with Tesla now a constituent — is 67.2x? ‘Tis not a typo; rather ’tis on beyond stooopid. (Note, too, the mighty Index’s yield is but 1.514% whilst that on the Bond is 1.662%; surely your money manager has brought this to your attention, right?)

Nonetheless, hardly are Gold and the S&P in negative correlation with one another; rather per this view of their respective percentage tracks from a month ago-to-date (21 trading days), ’tis more of an encore performance of their classic pas de deux:

So as the S&P 500 climbs merrily along without any substantive earnings support, neither is the economy providing same, the Economic Barometer being bruised for the third consecutive week. Lowlights included a significant slump in the Conference Board’s reading of Consumer Confidence for December, November’s Personal Income shrinking for the second consecutive month, and Personal Spending deflating as well. Also, the month’s New Home Sales slowed. Thus for the Baro, all is not well, (and for the S&P, pray don’t tell):

As for the Federal Reserve and govermental stimulus train, their debasing activities ought well be working for further Gold gain. To be sure, in turning to the three months of daily bars for Gold on the left and for Silver on the right, the “Baby Blues” of linear regression trend consistency have been firmly on the rise, those for both metals now nearing their respective +80% axis in confirming the uptrend as intact. Again, having the weekly parabolic Short trend flip to Long in the year’s final week ought well induce further upside streak:

And as for the 10-day Market Profiles for Gold (below left) and Silver (below right), price at present for both metals is right ’round the past two weeks’ most dominantly traded levels, those being 1886 for the yellow metal and 26.05 for the white metal:

So there it all is, the great jet having raced the sun and placed us already nine time zones further eastward into Saturday. Remaining is but another brief trading week ahead to close out the year, indeed to close out this — the second decade — of the 21st Century. And by any which way ’tis valued, let not your wonderful life be cancelled, for Gold is poised to race ahead of where IT is!

See you next decade, (i.e. next Saturday), with our outlook for Gold in 2021!

Cheers!

The Gold Update by Mark Mead Baillie — 580th Edition — Monte-Carlo — 26 December 2020 (published each Saturday) — www.deMeadville.com

Gold’s 1900+ Track Looks to Be in Santa’s Sack

Thus we also think it apropos by which to herein open as follows:

Toward 2021: Gold and the S&P 500

Gold: A year ago in this paragraph we penned: “…priced per this writing at $1,482, our valuation measure by debasement alone of the U.S. money supply (M2) is Gold $2,991. No, price shan’t rocket up that far in 2020…”

gold

With Gold today priced at $1,890, our debasement value of Gold is $3,600: and given all the additionally COVID-induced debasement, Gold ought have a super 2021, perhaps not reaching all the way to $3,600. But should history yet again repeat, Gold eventually shall catch up to debasement value: thus price remains terrifically undervalued and shall move up into uncharted territory above the recent all-time high of $2,089 as 2021 unfolds.

The S&P 500: A year ago in this paragraph we penned of : “…the President being re-elected…but the Trade of the Year is to sell the S&P going into Election Day…”

Wrong we were. And yet the S&P is now even more excessively expensive as we’ve ever seen it: upon Tesla (TSLA) being added to the Index, our “live” P/E stands to exceed 60x! Pardon the drama, but that is stock market suicide. Especially as at this writing, the yield on the “riskless” Bond is 1.676% vs. that on the “risk unlimited” S&P only being 1.532% Uh-ohhh… And should the S&P halve itself, ‘twould still by lack of substantive earnings be expensive.

So there ’tis. Plus, as herein penned and graphically depicted (per last week’s missive) of Gold’s rise into year-end over recent years, ’tis thus far again playing out. Moreover, just in time for Santa’s sleigh ride ’round the world. For as we go to Gold’s weekly bars from a year ago-to-date, in settling out yesterday (Friday) at 1887, price is now well within range to take out the overhead descending red dots of parabolic Short trend so as to flip ’em Long in the ensuing week. (That of course barring a bunch of Short Scrooges hitting underlying bids to make it all go wrong).

But the point is: with Gold at 1887, the flip price as depicted at 1925, and our “expected weekly trading range” now at 77 points, the 38-point run up to eclipse the red dots is well within range. “Now, Dasher! Now, Dancer! And the balance of you bunch! Let’s DO this!” (A little poetic license, there):

As for you dot counters scoring at home, the duration of the above red dots is now 17 weeks, ranking it fifth amongst the 42 parabolic Short trends millennium-to-date. For the other prior four of more Short duration, once they flipped to Long, the additional upside Gold points gained were +126 (after 20 Jan ’12), +181 (after 17 Aug ’12), +35 (after 31 May ’13) and +148 (after 07 Sep ’18). So from the “Fun With Numbers Dept.” were the current parabolic Short trend flip to Long at the noted 1925 price and the average points gain following those four other occurrences ensure, the rise would be +122 points to 2047 … sufficiently near the All-Time High of 2089 that 2100+ would be just fine. What’s in your hearth stocking?

Speaking of stock, the market of such obliviously keeps rising, the S&P 500 recording its own all-time high on Friday at 3727. That’s carrying an obscenely high “live” price/earnings ratio of 45.8x. Oh but wait there so much more! The big four-wheel battery company Tesla (TSLA) goes into the S&P 500 on Monday, so we can update that … now hang on, let’s see … the stock is $695/share of which outstanding are 947.9 million and the trailing 12-months EPS is 57¢ which puts its P/E at 1,227.5x and by capitalization weighting ’twill rank fifth amongst all 505 S&P constituents with a 2.021% share of the Index … and WOW: that puts the P/E of the entire S&P up to 69.7x! Cue the late, great sportscaster Bullet Bill King: “Holy Toledo!” (Stock market suicide, indeed).

Further, taking stock of the Economic Barometer finds it in full plunge of late, And let’s face it, ’tis hard to maintain the torrid pace of the Baro’s recovery in climbing out from COVID. ‘Course the stock market per the red line of the S&P 500 could care less about the economy, just as it does not about earnings. (But let’s not through cold water upon Santa’s annual rally, lest his sleigh rudders freeze). Nonetheless, incoming Baro metrics this past week found lower levels for December in each of the New York Empire State, Philly Fed and National Association of Home Builders readings, as well as slowing in both November’s Industrial Production and Leading Indicators, and outright shrinkage for the month’s Retail Sales. Thus the Baro as it currently fails:

But fear not, for riding in on its own steed is the Federal Reserve Bank, its Open Market Committee wrapping up their final meeting for this year with plans to provide “open-ended stimulus” as the 21st century’s third decade is about to commence. Further, zero interest rates are foreseen for some three years forward. That would be a neat trick to maintain as there are glimmers of inflation gain: all that currency debasement is seeing our BEGOS Markets ever-rising of late, notably Oil, Copper, the S&P, the Swiss Franc and rather dubiously the Euro, (which at some point shall face its own “oh-nooo…” per that which we wrote a week ago):

So up with prices, down with economies and voilà comes the stagflation contagion. “Got Gold?” Add to which the public sector woes that our States don’t have the billions (so they say) of dough necessary to get COVID vaccines to the people. What’s so pricey about going to Dr. Plotz to get yer shots? (Beyond our pay grade to analyze).

But ’tis the analysis of Gold for you to behold as we go our two-panel view of price’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. And commensurate with Gold’s rise out from the 1700s three weeks ago, we see the baby blue dots of linear regression trend consistency breaking above their 0% axis. Should Gold soon flip its aforeshown weekly parabolic trend from Short to Long, clearly the 1900s shall be back in play as doth our title sway. As for the Profile, quite the thicket of trading support has now been built into the mid-1800s, which puts us in mind of the time-honoured traders’ quip that “if it can’t down go then it’s gonna go up”:

The analysis by the same dual graphic is similar for Sister Silver, whose “Baby Blues” (at left) are in nice upward acceleration, whilst in her Profile (at right) the 24s appear safe with the current hump ’round 26 the key level over which to get. With the Gold/Silver ratio at 72.6x, should the yellow metal achieve that parabolic penetration at 1925 and from which pop those averaged points up to 2049 (per the above “Fun With Numbers Dept.” assessment), we’d likely find the white metal back up into the 28s:

We thus continue to be pretty bulled-up ’bout Gold; indeed we’ve no reason for it to be sold. Bits**t of course is going bonkers, but its swing risk is so ferocious that we shan’t touch that bit a wit. Comes to mind the phrase about “making a lot out of nothing”, quite literally. Being very conservative when it comes to futures trading, our emphasis these many years on “cash management being more important than market direction” wouldn’t fare well in the cul-de-sac of cryptocrap: $23,000 today, then $400K en route to $1M one day … and suddenly $0, ok? No, thank you. We’ll simply stick to archaic old Gold, for which Santa brings us a 1900+ load!

Merry Merry!

www.deMeadville.com
www.TheGoldUpdate.com

Gold Grindin’ ‘n Gatherin’ toward Groovin

121220_gold_scoreboard

That’s if at the very least “history repeats itself” as chronologically across the past three years Gold from this date through 31 December has respectively increased a net +4.9%, +2.9%, and +2.8%. Moreover at the very most “and then some” is the above Gold Scoreboard’s valuation being nearly double the present price, which historically we know eventually catches up. In fact, a bar of Gold is practically the perfect stocking stuffer, albeit its weight may tear said stocking from its mooring to the mantle. Just a thought.

“But how do you know about these ‘weak longs’, mmb…”

My dear Squire, you’ll recall some three weeks ago our deeming Gold’s price to have been consolidating, only to then correct ourselves in acknowledging its further fallout as correcting. But just as ’tis said that the devil is in the details, so is the verité in the volume. And price declines lacking substantive volume are considered by analysts signs of “weak longs” abandoning the market, oft to the opportunity-thanking “strong longs” as they add to their stack. To wit:

‘Tis have been 14 trading days since Gold morphed from our cited consolidating into correcting, across which trading volume through yesterday’s (Friday’s) close at 1844 totals 3,090,344 “front month” contracts. That is the lowest amount of contract volume traded through the like period for the past four years as we see here:

121220_gold_volumes

“Out with the weak longs, in with those strong; Out with the weak longs, in with those strong…”

“Way to go inside the numbers there, mmb…”

Which, Squire, is why the data provider is very well paid, their annual subscription increase imminent in the face of nearly no inflation year-to-date per the Consumer Price Index (just +0.9% for 2020 cumulatively through November). But you know what they say: “No data, persona non grata.”

‘Course always grata is our weekly glance at the following staple of The Gold Update, price by its weekly bars from a year ago-to-date. And the “double bottom” of the prior two weeks ’round the 1770 level in the middle of The Northern Front has since seen Gold battle back up by better than 100 points all told into The Final Frontier. However, with price today at 1844 and Gold’s “expected weekly trading range” at 77 points, ’tis still a bit of a stretch to expect the red-dotted parabolic Short trend to be taken out in the ensuing week at 1942.

But perhaps that’s something Santa has packed away for us in his own big red bag. As for the present, Gold is capable of regaining The Gateway to 2000 in the new week should price bring on some strong longs. That’d be “Workin’ on a groovy thing, baby…”–[Patti D ’68, 5th D ’69]:

121220_gold_weekly

To be sure, Gold’s net change from a week ago was essentially “unch”. But hardly did the Dollar gain any material ground, (+0.5%) following last week’s piece “Gold Finally Breaks Ties with the Dollar’s Demise”. Yet curiously this past Monday, Reuters cited the Dollar as “sturdy” with reference to the Basel-based Bank for International Settlements’ concerns over weakening emerging market economies. We’re not quite certain what the once-venerable news agency sees about the Dollar as “sturdy” in this year-to-date chart of Gold and the Dollar Index:

121220_gold_dollar

Certainly becoming less sturdy of late is the Economic Barometer. On one hand, a Wall Street Journal survey cites sentiment for further recovery slowing through 2021’s Q1; on the other hand the National Association for Business Economics sees recovery in full by 2021’s end. We sense that the Econ Baro on balance has exhibited quite robust recovery, although the past few weeks have shown renewed weakness, the most recent reports seeing a surge in Initial Jobless Claims, October’s Wholesale Inventories backing up, and that month’s Consumer Credit significantly slacking. Thus just in time for ski season, the Baro is providing a nice downslope:

121220_econbaro

Meanwhile from the “Gold Plays No Currency Favourites Dept.”, the European Union is all in on spending rather than cutting, (not that such strategy is new), whilst the European Central Bank is further ramping up its Bond purchases and sub-0% bank lending. ‘Tis said that Europe’s economy is taking a harder COVID hit than has the U.S. (see the above Econ Baro) such that ’tis our sense the Euro (having climbed from $1.07 in March to $1.21 today, +13%) shall whirl right back down again should the U.S. continue to firm yet Europe squirm. Add, too, any trading fallout from Brexit. On verra mes amis, but just sayin’…

And yes, Gold can rise under Euro demise: 2008 into 2010 saw the Euro drop from 1.60 to 1.20 whilst Gold rose from 900 to 1200; or more recently from 2018 into 2020 the Euro dropped from 1.25 to the aforementioned 1.07 level whilst Gold rose from 1320 to 1780. “Got Euros?” (Uhhhh…)

China-side, demand for their goods finds exports +21% from a year ago and yet inflation at the consumer level actually shrank for the first time in better than a decade, -0.5% for November. Moreover, Chairman Xi, (conveniently with Buddy Biden apparently White House-bound), is taking comfort in increasingly overseeing private sector activity, which as history records doesn’t pan out very well. Too, David Malpass over at the World Bank sees as many as three years passing before pre-COVID global output levels are re-achieved. All-in all: “Got Gold?” (Ahhhh…)

More technically, here’s what we’ve got for Gold on the left and Silver on the right: their respective sets of daily bars from three months ago-to-date and baby blue dots of linear regression trend consistency. Given the oft-bullish seasonality in passing from one year to the next, ‘twould appear at present that the precious metals’ recent woes may have passed:

121220_gold_silver_dots

But problematic to the above bullish notion by the nearer-term narrative painted per the 10-Day Market Profiles for Gold (below left) and Silver (below right), there’s hardly a wit of underlying trading support. Of note therein, both Gold and Silver settled out the week smack on their most heavily traded prices of the past fortnight, (the two respective white horizontal bars):

121220_gold_silver_profiles

Now here’s the broader-based stack:

The Gold Stack

Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3612
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2020’s High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Weekly Parabolic Price to flip Long: 1942
The Gateway to 2000: 1900+
10-Session directional range: up to 1880 (from 1767) = +113 points or +6.4%
Trading Resistance: 1865 / 1869

Gold Currently: 1844, (expected daily trading range: 30 points)

Trading Support: here at 1844, then 1840 / 1813 / 1783 / 1775
10-Session “volume-weighted” average price magnet: 1833
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The 300-Day Moving Average: 1716 and rising
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf : 1454-1434
2020’s Low: 1451 (16 March)
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 close, did you read of oft first-to-move Fitch downgrading the city debt of New York? No surprise there, given it being the East Coast version of the San Francisco exodus. What with Goldman Sachs planning to move its asset management base to Florida, why stick around the Big Apple at all? ‘Course, that ought open up a lot front row seats at Yankee Stadium, and better so at reduced prices…

Not logically to be reduced however is the price of Gold. Get some, and you young rascals, too, can be “Groovin’ (with Gold) … on a Sunday afternoon …”–[Certified Gold: 13 June ’67]

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com