The Swiss Franc plus all three elements of the Metals Triumvirate are at present below today’s Neutral Zones; none of the other BEGOS Markets are above same, and volatility is pushing toward moderate. Maintaining an eye on the Market Values (in real-time) of the five primary BEGOS components: the Bond is basically trading at its smooth valuation line, the Euro is nearly +0.01 points “high”, Gold +156 points “high”, Oil -6.03 points “low”, and the Spoo +246 points “high”. Per Market Profiles for those five, the most heavily-traded prices of the last fortnight are: the Bond 125^00, the Euro 1.1160, Gold 2607, Oil 71.30 and the Spoo 5778. The Econ Baro concludes the week with metrics including August’s Personal Income/Spending and the “Fed-favoured” inflation read via Core PCE Prices.
Mark
26 September 2024 – 08:25 Central Euro Time
Both Copper and the Spoo are on the up-move, each at present above their respective Neutral Zones for today; Oil is below same, and BEGOS Markets’ volatility spans from light for the Bond to robust for Oil, the latter having already traced 131% of its EDTR (see Market Ranges). Oil is the sole component with a negative linreg (see Market Trends), albeit the consistency of such downside trend is waning as its “Baby Blues” are into their 11th session of rising; too, by Market Values in real-time, Oil (now 67.67) is -6.14 points below its smooth valuation line; and by Market Profiles, Oil’s two notably overhead volume price resistors are 69.70 and 71.30. Incoming metrics for the Econ Baro include August’s Durable Orders and Pending Home Sales, plus the final revision to Q2 GDP.
25 September 2024 – 08:11 Central Euro Time
We’ve weakness this morning in Silver and Copper, both at present below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is light. As to Market Rhythms, our leaders for pure swing consistency are currently (on a 10-test basis) the Bond’s 12hr Parabolics, the Euro’s 15mn Moneyflow, and the 2hr MACD for both Silver and the Swiss Franc; too (on a 24-test basis) we’ve the Bond’s 15mn MACD, the Swiss Franc’s 6hr MACD, and the non-BEGOS Yen’s daily Price Oscillator. The S&P 500 is now six days “textbook overbought” and the futs-adj’d “live” P/E 42.4x. The Econ Baro awaits August’s New Home Sales.
24 September 2024 – 08:10 Central Euro Time
Copper is the sole BEGOS Market at present outside (above) today’s Neutral Zone; however, overall volatility is pushing well toward moderate, and specific to the red metal, it already has traced 107% of its EDTR (see Market Ranges), plus (now 4.4145) price has moved up above its 10-day Market Profile, for which key volume-price supports therein are 4.3450 and 4.3000; too by Market Trends, Copper’s “Baby Blues” of trend consistency are smoothly rising. Looking at correlations amongst the five primary BEGOS components, the best currently is positive between Oil and the Spoo. The “live” P/E (futs-adj’d) of the S&P 500 is 42.2x. And today the week gets going for the Econ Baro with September’s Consumer Confidence.
23 September 2024 – 08:23 Central Euro Time
We start the week to find the Bond at present below its Neutral Zone for today; the other BEGOS Markets are within same, and volatility is light. The Gold Update highlights the yellow metal’s further flying to new highs, but does question the Fed’s -50bp rate cut versus our anticipated -25bp move; therein cited as well is the unsupportive monetary inflow of late into the otherwise record-setting S&P 500, (as too was “X’d” [@deMeadvillePro] this past Friday): mind the S&P 500 MoneyFlow page. Specific to the Spoo, in real-time ’tis +240 points above its smooth valuation line (see Market Values). The Econ Baro is quiet today ahead of the week’s batch of 11 incoming metrics, including the “Fed-favoured” gauge of inflation — Core PCE Prices — come Friday.
The Gold Update: No. 775 – (21 September 2024) – “Gold Flies as Dumbo* Whilst the Fed Goes Jumbo”
The Gold Update by Mark Mead Baillie — 775th Edition — Monte-Carlo — 21 September 2024 (published each Saturday) — www.deMeadville.com
“Gold Flies as Dumbo* Whilst the Fed Goes Jumbo”
Thursday’s Prescient Commentary opened as follows: “We were wrong about the Fed, it having cut its Funds Rates -50bp rather than by our -25bp assertion; and as is our wont, when we’re flat out wrong, we fess up…”
Wrong indeed. Through many-a-missive in this year’s early months, we went on about the Federal Reserve needing to actually make a further FundsRate increase, given the mathematical proof of inflation remaining well away from the Fed’s “preferred target” of 2%.
But then came the month of May and it all started to go wrong for the Economic Barometer. So damaged became the Econ Baro that come the Federal Open Market Committee’s 31 July Policy Statement, we asserted that they’d have to vote to reduce the FundsRate by -0.25% from the then 5.25%-5.50% range to 5.00%-5.25%. Yet instead, the FOMC surprisingly stood pat.
Now just came the FOMC’s most recent vote this past Wednesday. Contrary to the FinMedia’s fervoured anticipation of a “Jumbo Cut”, we adamantly put forth time and again ‘twould be a -0.25% cut rather than a mouth-foaming -0.50% cut (even as the latter was already priced into the FedFundsFutures) for three key reasons:
- Unexpected inflation pop: for August, the “core” inflation readings at both the wholesale (Producer Price Index) and retail (Consumer Price Index) levels came in at an annualized +3.6% pace vs. consensus for +2.4%; pop goes the wallet;
- Poor Fed optics: as herein penned back on 24 August: “Our case for a rate cut back on 31 July did not come to pass, which lends credence to a two-pip reduction on 18 September. But then the optics would be poor for the Fed being too slow, thus we think ’twill be but one pip they’ll go.” But no, ’twas instead “Jumbo”;
- Rate cut history: So far this century — save during times of extreme financial distress — rate cuts otherwise have always been in units of -0.25%. The three exceptional periods were 1) 911 and the DotComBomb; 2) the FinCrisis; and 3) COVID.
Such logic circumvented, as Squire would say, ’tisn’t about us. Simply stated we were wrong; so let’s move on.
“But hang on mmb, ’cause maybe the Fed now thinks ‘extreme financial distress’ is coming…“
Oh come now, dear Squire. With “Old Yeller’s” Treasury Trillions desperately coming due, an electorate bent on lack of so-called “Presidential timber” even as the civil society collapses, and the S&P 500 truly trading at 41.9x earnings with a market cap of $49.8T supported by s StateSide liquid money supply (M2) of “just” $21.1T, what could possibly go wrong? Nothing to see here. So again, let’s move on … to Gold! Here’ tis, flying as does Helen Aberson’s and Harold Pearl’s fabulous Dumbo from 1939, (*later to be trademarked by what today is Disney Enterprises, Inc.):
Suitable for framing is the above graphic of Gold’s weekly bars from one year ago-to-date. And yes, price having settled yesterday (Friday) at an All-Time Closing High of 2647, as therein noted ’tis still stunningly cheap relative to the debasement of the Dollar. Indeed per yesterday’s record intra-day high of 2651, Gold trades at a -29% discount to its 3727 debasement value, per the opening Scoreboard.
And then there’s Silver: per the graphic’s table, the Gold/Silver ratio of now 84.0x is well-above its century-to-date average ratio of 68.4x, so much so that were Silver to snap-adjust to such average, rather than priced today at 31.50, she’d be +23% higher at 38.67. Moreover, whilst Gold is at an All-Time High, Silver’s current 31.50 level is -37% below her own All-Time High of 49.82 recorded away back on 25 April 2011. Ad nauseum: “Don’t forget Sister Silver!”
Fortunately for the aforementioned Econ Baro, its multiple months (May into August) of nausea waves have morphed into somewhat blessed relief. Having bottomed one month ago to the day (on 21 August), the Baro has since been climbing out nicely. For this past week alone, nine of the Baro’s 14 incoming metrics improved period-over-period, notably including September’s New York State Empire Index and that for National Association of Homebuilders, plus August’s Housing Starts and Building Permits, as well as Industrial Production.
Still stumbling however (and not surprisingly so given the overall downward track of the Baro) was the Conference Board’s negative “lagging” indicator of Leading Indicators; (for you newer readers, we regularly refer to them as “lagging” given the Baro significantly leads them). Still, with the StateSide economy’s recent advance, add in the Fed’s “Jumbo” rate cut and what’ll we get? Renewed inflation? Yet if the economy resumes folding, indeed stagflation? (Right, we’re not supposed to go there…) Here’s the Baro:
‘Course, all the post-Fed excitement is over the stock market’s 
“Going to a Go-Go” –[The Miracles, ’65]. But as we “X’d” (@deMeadvillePro) last evening, the MoneyFlow of the S&P 500 — as regressed into S&P points — is vastly underperforming the Index itself. Be it by the latest weekly, monthly, or quarterly measure, the euphoric buying to a record high (5734) is at best thin as we below see per one of our favourite market-leading indicators. We thus anticipate lower S&P levels near-term; after all, ’tis the first day of “fall”; (write it down):
Specific to Gold, as does Dumbo, ‘twould be great to see it continue flying high in the sky. However price is getting somewhat stretched above its “smooth valuation line” relative to movements vis-à-vis those components comprising our five primary BEGOS Market (Bond / Euro / Gold / Oil / S&P 500). Per the panel at lower left, we see Gold denoted as presently being +134 points “high” by the oscillator (price less valuation). Obviously that is a near-term trading measure, given that Gold most broadly (as earlier noted) is better than -1000 points below its debasement value. Too, within this near-term trading vein, the panel at lower right is Gold’s EDTR (Expected Daily Trading Range), presently set for Monday’s session at 34 points. (Naturally, you can view all the daily updates to these metrics at the website):
Next let’s go to Gold’s two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. To be sure, the “Baby Blues” of trend regression consistency have been spot-on brilliant: as we on occasion quip: “Follow the Blues instead of the news, else lose yer shoes”. Meanwhile, the Profile clearly shows 2607 as Gold’s firmest near-term volume-supportive price:
Looking ever more similar to Gold is Silver by her daily bars (below left) and Profile (below right). Still, given Sister Silver’s wayward tendencies to go waltzing off with Cousin Copper, we’re not that confident about 31.00 holding as the denoted dominant near-term trading supporter, (albeit Copper has been firming through the past six weeks). But as we’ve said, whereas Gold broadly is still cheap, Silver remains super cheap(!) Here’s the graphic:
Having opened with the Fed, let’s close with same. Over here, financial friends with whom we spoke almost all agreed that the Fed’s rate cut would be -0.25% (as, in fact, voted FOMC member Michelle Bowman), although a case was made for -0.50%, if for no other reason than a shift from the prior 5.25%-5.50% target range to now 4.75%-5.00% wasn’t that material of a change, (whereas from say 1.50% to 1.00% would be quite significant). But again as earlier cited, should the economy be garnering some renewed strength with money now a bit easier by which to come, then shall inflation add to a higher sum? Better to not be a dumbo without Gold, but fly as Dumbo with that which you hold.
Which brings us to this cool view of Disney’s Dumbo 1/4oz. Gold coin:
Now that really is the only way to fly: Gold High!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
20 September 2024 – 08:22 Central Euro Time
The Swiss Franc along with the Metals Triumvirate are at present above their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light. The “live” (futs-adj’d) P/E of the S&P 500 is 42.6x (+68% above its inception a dozen years ago) and the annualized yield 1.286% vs. 4.593% on risk-less 3mo U.S. dough; in the last 10 trading days, the S&P has swung from being mildly “textbook oversold” to now moderately “textbook overbought”: indeed through the 181 trading days year-to-date, the S&P has completed 113 of them (62%) in some degree of being near-term technically overbought as excess post-COVID monetary infusion ($7T) continues permeates risk-full equities. The somewhat “recovering” Econ Baro is at highest oscillative level since mid-June.
19 September 2024 – 08:22 Central Euro Time
We were wrong about the Fed, it having cut its Funds Rates -50bp rather than by our -25bp assertion; and as is our wont, when we’re flat out wrong, we fess up; (more on the Fed in Saturday’s upcoming edition of The Gold Update). At present, the three elements of the Metals Triumvirate, plus Oil and the Spoo all are above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility looks to be fully robust by session’s end. As to current correlation amongst the five primary BEGOS components, the most so is positive between Oil and the Spoo; (we view such correlations as important for hedging between two markets). The Econ Baro concludes its week today with metrics that include September’s Philly Fed Index, August’s Existing Home Sales and Leading (i.e. “lagging”) Indicators, plus Q2’s Current Account Deficit.
18 September 2024 – 08:21 Central Euro Time
We’ve at present the Swiss Franc above today’s Neutral Zone whilst below same are Silver and Copper; BEGOS Markets’ volatility is mostly light. Looking at Market Rhythms for pure swing consistency, there are four to currently highlight on a 10-test basis: Oil’s 2hr Price Oscillator, Silver’s 4hr Parabolics, the Bond’s 12hr Parabolics, and Gold’s 1hr MACD; for the 24-test basis, the one standout is the non-BEGOS Yen’s daily Price Oscillator. For the Econ Baro we await August’s Housing Start/Permits. And ’tis “Fed Day”, the FOMC releasing its Policy Statement at 18:00 GMT: our assertion is a -25bp FedFunds cut from the present 5.25%-5.50% target range to 5.00%-5.25%; similarly priced in for that now are the October FedFundsFutures.
17 September 2024 – 08:22 Central Euro Time
At present all eight BEGOS Markets are within today’s Neutral Zones, and volatility is quite light ahead of a bevy of incoming metrics for the Econ Baro, namely September’s NAHB Housing Index, August’s Retail Sales and IndProd/CapUtil, plus July’s Business Inventories. Going ’round the Market Values’ horn for the five primary BEGOS components, we’ve: the Bond better than +3 points “high” above its smooth valuation line, the Euro +0.12 points “high”, Gold +112 points “high”, Oil -5.11 points “low” and the Spoo +200 points “high”. The best current directional correlation amongst those five is positive between the Euro and Gold. Oil’s cac volume is rolling from October into that for November. And the FOMC begins its two-day meeting.
16 September 2024 – 08:16 Central Euro Time
The Euro, Swiss Franc, Gold and Silver all begin the week at present above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is mostly light. The Gold Update highlight’s the yellow metal’s fresh All-Time High and the comparably firmness of moneyflow into the Gold’s futures contracts year-to-date; wariness however is cited as the a dearth of trading volume leading to these most recent highs per the Market Profile; the Update also reiterates our sense that the FOMC on Wednesday shall vote for just a -25bp (not -50bp) FedFunds rate reduction, especially given the upticks in August’s inflation measures. The Spoo’s cac volume is rolling from September into that for December. And the Econ Baro awaits September’s NY State Empire Index.
The Gold Update: No. 774 – (14 September 2024) – “Fresh Gold Highs for Buyers Wise”
The Gold Update by Mark Mead Baillie — 774th Edition — Monte-Carlo — 14 September 2024 (published each Saturday) — www.deMeadville.com
“Fresh Gold Highs for Buyers Wise”
Seasoned supporters of Gold well remember the late, great Richard Russell (decd. 2015), who said, (as on occasion herein reprised): “There’s never a bad time to buy Gold.” Surely in his ascended state, his spirit veritably senses vindication of such declaration.
Indeed: Gold per the December contract settled yesterday (Friday) at 2606, its highest-ever closing price, en route having traded up to 2615, +45 points above the prior All-Time High recently recorded on 20 August at 2570. And thus The Gold Update’s nearly 15 years of querying “Got Gold?”, too, is being vindicated.
Since our first edition dated 21 November 2009, the price of Gold is +126% from 1151 to now 2606. Oh to be sure, the Great American Savings Account (aka The S&P 500, “Casino 500”, “Airhead 500” et alia) is across the like stint +415% from 1091 to now 5626, (plus all those dividends en route). Yet as we regularly caution from “The Means Reversion Dept.”, the S&P’s “live” price/earnings ratio today is 41.6x which is +70% above its inception (in 2013) at 25.4x, whereas Gold today at 2606 is -30% below the opening Scoreboard’s debasement level of 3726
“So why are you going on about all this, mmb?”
Because simply, Squire, were both Gold and the S&P to revert to such means at this instant, the yellow metal would instead be +224%, ahead of the “Casino 500” +215% (again, before dividends). Still, not much difference there, however means reversion eventually recurs and shakes emotive folks out of stocks, whereas Gold buyers do otherwise. (“Tick tick tick goes the clock clock clock…”)
And given the yellow metal’s recent run to these record high skies, Gold buyers clearly have been wise. The following chart is of Gold by the month from the year 2020-to-date. The key here is the region of the lower panel thus far in 2024. Each green bar is the month’s profit per Gold contract purchased. So thus far through the nine trading days of September, the height of the rightmost bar as noted is $7,020/contract, had you bought one at the month’s opening precise price of 2536.0. The gain to the current precise price of 2606.2 is +70.2 points which by the leverage of $100/contract yields that $7,020; (for you home-scorers, that is a nine-day gain of +60.8% given a per contract margin requirement of $11,550). But the point is: the year-to-date buying participation in Gold is the best ’tis been since COVID kicked in back in 2020. In fact, per the barely visible red bars since a year ago, for Gold ’tis been all monetary inflow:
‘Course, beyond the catalyst of currency debasement, ours is not to reason “why” Gold is getting the buy. In a sense, the Federal Reserve’s initial -0.250% FundsRate cut this next Wednesday (18 September) ought by now be “priced-in”. As to some degree, too, is further global instability per the pending StateSide election outcome. Let’s cue it again: “Got Gold?”
We’ve got Gold right here in turning to its weekly bars and dotted-parabolic trends from one year ago-to-date. And are the strings of blue dots ever one’s friend … barring your being one of those Smart Alec Shorts. Welcome to 2600:
Meanwhile, trying to un-squeeze itself is the Economic Barometer, it having received a boost these last few weeks. And given “the rising tide of inflation lifts all boats”, August’s newly reported levels thereto at both the wholesale (Producer Price Index) and retail (Consumer Price Index) levels on balance pipped back up a bit, notably in their “core” readings. This adds to our aforementioned assessment that — come Wednesday — the Fed shall only cut their FundsRate by 25 basis points rather than by 50, albeit the latter curiously is still sought per the FedFundsFutures. But let’s see if that trade unwinds as we work toward Wednesday. Here’s the Baro:
You tell ’em, Yellen; but more aptly by the Baro, it instead appears “deep into a recession”. (Just sayin’, but that’s Washington…)
Next we go back to the precious metals, the following two-panel graphic featuring on the left Gold’s daily bars from three months ago-to-date, with same on the right for Silver. For the yellow metal ’tis been “all on go”, whilst for the white metal — despite her recent rightmost up-kick — she’s been more aligned with red metal Copper these recent months. Further, Sister Silver by price continues to lag Gold: the century-to-date average Gold/Silver ratio is 68.4x … but the actual ratio at present is 83.9x. And yes, just as both Gold inevitably reverts to its Dollar debasement value and the S&P 500 to its average P/E ratio, so too does the Gold/Silver ratio revert to its mean: which with Gold today at 2606 in turn prices Silver +23% above her current 31.07 level at 38.08. Thus as we yet again ask “Got Gold?”, we in kind also reprise “Do not forget the Silver!” Here’s the graphic:
As to the respective 10-day Market Profiles, here they are for Gold (below left) and for Silver (below right). Whilst ’tis nice to see no overhead trading resistors, there are for both metals dearths of volume activity below current levels, which for you WestPalmBeachers down there means don’t expect these two markets to keep moving up in a straight line. Too, should you peek at the website’s Gold page, you’ll see that price by the “Market Value” metric is +114 points above its smooth valuation line (as therein described). Either way, these Profiles at present are pretty:
So with respect to fresh highs for Gold, let’s update the stack:
The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3726
Gold’s All-Time Intra-Day High: 2615 (13 September 2024)
2024’s High: 2615 (13 September 2024)
10-Session directional range: up to 2615 (from 2504) = +111 points or +4.4%
Gold’s All-Time Closing High: 2606 (13 September 2024)
Trading Resistance: none per the Profile 2341
Gold Currently: 2606, (expected daily trading range [“EDTR”]: 32 points)
Trading Support: nearby per the Profile 2605 / 2596 / 2582, then 2544-2526
10-Session “volume-weighted” average price magnet: 2545
The Weekly Parabolic Price to flip Short: 2415
The 300-Day Moving Average: 2159 and rising
The 2000’s Triple-Top: 2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
2024’s Low: 1996 (14 February)
The Gateway to 2000: 1900+
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
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
Thus into the new week we go, with 14 metrics due for the Econ Baro, plus of course the Federal Open Market Committee’s Policy Statement on Wednesday. More broadly, bear in mind that:
- Equities per the S&P 500 remain exceedingly (understatement) expensive given the lack of supportive earnings generation;
- Gold despite new All-Time Highs remains cheap relative to Dollar debasement;
- Silver relative to Gold remains super cheap!
And so to segue from those closing notes:
Indeed be buyer-wise with Gold (and Silver!) as the prize!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
13 September 2024 – 08:16 Central Euro Time
Gold both yesterday and today has recorded its first All-Time Highs since last so doing on 20 August (then 2570), the newest high now 2599. Gold at present is above its Neutral Zone for today, as is the Bond and Swiss Franc; none of the other BEGOS Markets are below same, and volatility is mostly light. By Market Values (in real-time) Gold is +102 points above its smooth valuation line; more of course in tomorrow’s 774th consecutive Saturday edition of The Gold Update. The S&P 500’s four-day rally (which would start toward a fifth day given at present the Spoo’s price vis-à-vis fair value) has pushed the “live” P/E up to a futs-adj’d reading of 41.7x. The Econ Baro concludes its week with September’s UofM Sentiment Survey along with August’s Ex/Im Prices.
12 September 2024 – 08:20 Central Euro Time
Gold, Copper and Oil are all at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. At Market Trends, the Spoo’s “Baby Blues” of trend consistency have (as anticipated in Tuesday’s note) confirmed dropping below their 0% axis, the linreg having rotated from positive to negative; similar is the case for the Euro, whereas that for Oil has been negative for some seven weeks. Looking at Market Profiles, the current prices of the Bond, Gold and Silver are all very near their most commonly traded levels of the past fortnight. And for the Econ Baro, today’s incoming metrics include August’s wholesale inflation via the PPI, plus the month’s Treasury Deficit.
11 September 2024 – 08:17 Central Euro Time
At present above their respective Neutral Zones for today are the Bond, Euro, Swiss Franc, Gold, Silver and Copper; below same is the Spoo, and volatility for the BEGOS Markets is firmly moderate. Oil yesterday traded down to a 16-month low (65.27). By Market Rhythms on a 10-test basis for pure swing consistency, we’ve for the Bond both its 6hr Moneyflow and 12hr Parabolics, plus the Swiss Franc’s 2hr Price Oscillator. Market correlations amongst the five primary BEGOS components have deteriorated such that currently ’tis “each market for itself” rather than any notable continuity pairings (positive or negative). The Econ Baro looks to retail inflation via August’s CPI.
10 September 2024 – 08:18 Central Euro Time
The Spoo is the sole BEGOS Market at present outside (below) today’s Neutral Zone; session volatility to this point across the BEGOS spectrum is quite light, with nothing due for the Econ Baro. With respect to yesterday’s +1.2% gain for the S&P 500, its MoneyFlow regressed into S&P points comparatively gained just +0.4%: such weakness ought bring further near-term selling for the Index itself. Too, the Spoo’s “Baby Blues” (see Market Trends) are in real-time down to teasing the 0% axis: confirmation of penetrating that axis to the downside shall mean the linreg trend having rotated from positive to negative. Today’s EDTR (see market Ranges) for the Spoo is 80 points. As for Market Rhythm pure swing consistency, currently the best for the Spoo on a 10-test basis is its daily MACD, whilst on a 24-test basis ’tis its daily Parabolics. The futs-adj’d “live” P/E for the S&P is 39.9x.
09 September 2024 – 08:16 Central Euro Time
The week begins finding only Silver and Oil are at present within today’s Neutral Zones; below same are the Bond, Swiss Franc and Gold, whilst above are Copper and the Spoo; BEGOS Markets’ volatility is pushing toward moderate. The Gold Update notes the stodgy state of late for the yellow metal, but the broader outlook by trend firmly positive. Oil on Friday traded below (to 67.17) last December’s low (of 67.71): by Market Values, Oil (in real-time) is -9.01 points below its smooth valuation line, the lowest divergence in at least a year; too, Oil remains the sole BEGOS component with a negative linreg (see Market Trends), although — save for the Swiss Franc — the “Baby Blues” of trend consistency are falling for the six other markets. The Econ Baro starts its week with July’s Wholesale Inventories and Consumer Credit.
The Gold Update: No. 773 – (07 September 2024) – “Gold Stodgy; Stocks Dodgy”
The Gold Update by Mark Mead Baillie — 773rd Edition — Monte-Carlo — 07 September 2024 (published each Saturday) — www.deMeadville.com
“Gold Stodgy; Stocks Dodgy”
Per our prior missive on Gold having recorded its second-narrowest trading week of 2024 (by percentage distance between high and low), now this last week’s performance perhaps is best categorized as “stodgy”, which by the Oxford English Dictionary (for you WestPalmBeachers down there) in part is defined as “lacking in spirit or liveliness.” To wit, by entering this past trading week with an EWTR (“expected weekly trading range”) of 81 points, Gold’s actual range from low-to-high was just 70% of that at 57 points, price settling yesterday (Friday) at 2527, despite all the “Fed” this, and “Jobs” that, and stocks’ “Worst Week” in a year, suddenly replete with FinMedia fear.
In turn, that 2527 price level is (for those of you scoring at home) -32% below Gold’s Dollar debasement valuation of 3726 as above depicted in the upper panel of the Gold Scoreboard. Yes, we regularly harp upon such undervaluation if for no other reason than Gold historically catches up to its supply-adjusted debasement value (i.e. per the Dollar’s green “M2” money supply line) as shown in the Scoreboard’s righthand panel. Do not lose sight of that fact, lest you end up in the vast “woudda shoudda coudda” crowd who are without Gold once it justifiably really takes hold.
Still, stodgy as it seems, our broader graphic of Gold’s weekly bars from one year ago-to-date remains robust and cheerful. Here ’tis:
‘Course, the Buck’s upside pluck into September 2022 per the above weekly chart clearly came in tandem with the Fed raising its Funds Rate. But now that the Open Market Committee per its 18 September Policy Statement shall initially reduce said rate by -0.250%, the bang for the Buck is starting to wane. Yes, the nattering nabobs of Gold negativism love to swiftly point out that the yellow metal offers no yield. But given Gold’s aforementioned undervaluation of -32%, that “catch-up yield” by price alone looks excellent to us.
Meanwhile “catching-down” (if you will) is the “dodgy” stock market. ‘Tis always entertaining to read the FinMedia freak-out whenever the market puts in even just a pimple of a correction. “S&P 500 tumbles Friday to post worst week since 2023” trembles CNBS, (our being more precise, since that ending 11 March 2023). True, the S&P’s net loss for the past week was -4.2%. But let’s put that in context:
- from the year 2000-to-date — through the DotComBomb, FinCrisis, and CrazyCovid — this past week’s net loss for the S&P 500 was its 54th worst across those 1,288 weeks. “Oh dear!”
Hardly ho-hum, but the fear elicited through the FinMedia was both formidable and (for us) fun. And it shows just how complacent have become the “youngsters” of modern-day Wall Street. Let’s again reprise BTO from ’74 with “You Ain’t Seen Nothing Yet”
“Well, it is September, mmb…”
So ’tis, Squire, and yes, across the 54 years from 1970 through 2023, by average net monthly percentage change, September does rank as the year’s worst month for the S&P 500, followed by February; the best two months are April (surprise!) and November. (The once highly-vaunted month for the “January effect” ranks fourth-best of the 12 all told).
But in support of Squire’s point, September is the notorious month of so-called tax-loss selling season and fiscal year-end for many a mutual fund.
Yet today, the S&P 500 more broadly refuses to be severely shaken. The ongoing “out-of-sight, out-of-mind” level of our “live” S&P 500 price/earnings ratio eternally living in the 30s and 40s remains inanely uncanny. Again remindful of one J. B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.” However: that for the summation of the 503 S&P constituents settled yesterday at 38.2x (price ÷ trailing twelve-month earnings x market cap weighting, with earning-less stocks ascribed a P/E of their stock price).
‘Course the culprit supporting it all is the $7T COVID monetary injection essentially (as we’ve mathematically proven) having ended up in the stock market. And ’tis still there, refusing to go anywhere: thus the bubble. Risk-free debt is boring and doesn’t work well in showing off at cocktail parties. As for all those talking marked-to-market millionaires … one day they’ll morph into head-hanging thousandaires. ‘Tis only fair … but beware: the next P/E means reversion shan’t be a happy excursion.
However, fairing a bit better of late is the Economic Barometer. In just the past holiday-shortened StateSide week, of the 13 incoming metrics for the Econ Baro, nine improved period-over-period, the notable standouts being July’s Factory Orders, Q2’s revision to Productivity, and for August both Hourly Earnings and The Institute of Supply Management’s Services Index.
Noted however, was the really rotten ADP read on August’s Employment: for the past post-COVID 36 months, the average monthly jobs gain had been 278,000; this time ’round the number was just 99,000, some -34% below consensus, not to mention the July reading being revised lower as well. But “Labor’s” number (dare we say “of course”) improved, as on balance did the Baro:
So does all such stalwart economic improvement ward off recession? From the “Dept. of Say It Ain’t So, Joe” we’ve this (hat-tip Dow Jones Newswires): “The bond market just flashed a reliable recession signal.” Glad to see them just now figuring this out. The Econ Baro’s been portraying such for the past half year … (but as you know, it leads everything else). “Fuses as usual in the white security box.” –The RAF’s unnamed Air Vice Marshal, “Thunderball”, ’65]
Still, anything but thundering is stodgy old Gold. In below viewing our two-panel graphic, on the left with price’s daily bars from three months ago-to-date we’ve Gold’s baby blue dots of trend consistency dropping off, not even have achieved the key +80% axis, whilst on the right in the 10-day Market Profile, the 2540-2560 zone shows as overhead volume resistance. As noted in recent missives, our forecast high for the year of Gold 2375 we now view as mid-structural price support:
Silver’s drill is similar, albeit with a weaker bent. Like those for Gold, Silver’s “Baby Blues” (below left) are falling, whilst her Profile (below right) depicts major volume resistors at 29.15, 29.90 and then the 30.30-30.45 zone. And with the Gold/Silver ratio now back up to nearly 90x (presently 89.4x), what can one say other than “Poor ol’ Sister Silver!”
We earlier mentioned the stock market’s buoyancy given the presto-chango $7T post-COVID money supply injection, indeed there being so much dough sloshing to and fro that — save for stocks — there’s ostensibly no where else for it to go in this Investing Age of Stoopid à go-go. But then, too, is the stark reality of S&P 500’s market cap having settled yesterday at $47.3T supported by a liquid StateSide money supply (M2) of “only” $21.1T, i.e. not nearly enough dough! Whoa! And yet, you’d love to see your kid become a Wall Street pro? Oh pity the poor floor specialist, don’t you know…
Better instead, buddy-boy, go buy some Gold!
Cheers!
…m…
www.TheGoldUpdate.com www.deMeadville.com and now on “X”: @deMeadvillePro
