Mark

19 September 2024 – 08:22 Central Euro Time

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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

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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

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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

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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”

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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

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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

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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

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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

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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

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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”

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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:

“Robust” indeed, given Gold’s firmly rising regression trendline.  “Cheerful” to be sure, as the last three red-dotted parabolic Short trends have been but three weeks apiece.  Thus “stodgy” as it may presently be (at the risk of using a “woke” adjective), “awareness” of Gold seems to be picking up, albeit we regularly read that almost nobody owns it.  Still, when ’tis time for “Old Yeller” to pay that looming U.S. debt bill, shall the Federal Reserve have to again turn the crank on the money mill?  Mind that Dollar Index as ’tis looking a bit ill, (your personally mitigating such by taking the Gold pill):

‘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!”

Let’s call it a week here with this monetary anomoly.

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

06 September 2024 – 08:12 Central Euro Time

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The Swiss Franc at present is the sole BEGOS Market outside (above) today’s Neutral Zone; session volatility is light, with StateSide August Payrolls in the balance for the Econ Baro. The Spoo (inclusive of today thus far) has made a fourth consecutive daily “lower low”: again as noted yesterday (and, too, as “X’d” [@deMeadvillePro]), the Spoo’s “Baby Blues” having dropped below the +80% axis (see Market Trends) points to still lower price levels; at Market Values, the Spoo is (in real-time) crossing beneath its smooth valuation line, also indicative of price further falling. ‘Tis been another somewhat stodgy week for Gold: more on that in tomorrow’s 773rd consecutive Saturday edition of The Gold Update.

05 September 2024 – 08:12 Central Euro Time

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At present, all eight BEGOS Markets are within their respective Neutral Zones for today, and volatility is quite light, within the context that most EDTRs (see Market Ranges) are well-elevated above their narrower levels of last Spring. By Market Trends, the Spoo’s “Baby Blues” of trend consistency yesterday confirmed having moved below their key +80% axis: there’ve been seven prior occurrences of such from a year ago-to-day, the median downside follow-through within 21 days being -48 points, but the average thereto -202 points. Looking at correlation amongst the five primary BEGOS components, the best currently is positive between the Bond and Euro. Today’s incoming Econ Baro metrics include August’s ADP Employment data and the ISM(Svc) Index, plus the revisions to Q2 Productivity and Unit Labor Costs.

04 September 2024 – 08:23 Central Euro Time

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The Swiss Franc is at present above its Neutral Zone for today, whilst below same are both Copper and the Spoo; BEGOS Markets’ volatility is light. The S&P 500 at the moment would open down another -0.5% “as the selling continues”: obviously foretelling all this have been weak earnings, unsupportive MoneyFlow and strained “textbook overbought” conditions. For Fib followers, from the S&P’s 05 August low to its 26 August high, and initial Golden Ratio retracement (-38.2%) would bring 5450 and such complete Golden Ratio retracement (-61.8%) 5324. In looking at Market Rhythms for pure swing consistency: on a 10-test basis we’ve both the Bond’s 6hr and 12hr Moneyflows, whilst on a 24-test basis are Silver’s 8hr Parabolics, the Yen’s (albeit not yet a BEGOS component) daily Price Oscillator, and Oil’s 1hr Price Oscillator. The Econ Baro awaits July’s Trade Deficit and Factory Orders. Late in the session brings the Fed’s Tan Tome.

03 September 2024 – 08:11 Central Euro Time

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The BEGOS Markets’ two-day session continues, wherein at present we’ve the Swiss Franc below its Neutral Zone, as are the elements of the Metals Triumvirate; none of the other components are above same, and volatility has expectedly moved to firmly moderate. Going ’round the horn at Market Values for the five primary BEGOS components: the Bond is essentially right on its smooth valuation line, as almost is the Euro; Gold is +53 points “high”, Oil -3.92 points “low” and the Spoo +132 points “high”. Were the StateSide stock market to open at this instant, the S&P 500 would drop -8 points to 5640, albeit just -30 points below its all-time high of 5670 (16 July). And for the Econ Baro we’ve August’s ISM(Mfg) Index and July’s Construction Spending.

02 September 2024 – 08:31 Central Euro Time

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The first of the BEGOS Markets’ two-day session (given the StateSide holiday) finds at present the Bond, Silver, Copper and Oil all below their respective Neutral Zones for today; none of the other BEGOS components are above same, and volatility is light-to-moderate, Silver notably already having traced 82% of its EDTR (see Market Ranges). The Gold Update points to last week as being the yellow metal’s second-narrowest trading week (percentage distance between high and low) year-to-date, and the bizarre notion of firm Q2 GDP growth even as the Econ Baro plummeted throughout that reporting period. The S&P 500 is now a dozen days “textbook overbought” on weak MoneyFlow, the futs-adj’d “live” P/E 40.7x and yield 1.304%; of note, the yield on the 3mo T-Bill has finally slipped sub-5% to 4.968%.

The Gold Update: No. 772 – (31 August 2024) – “Gold’s 2nd-Narrowest Week; GDP Defies Belief”

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The Gold Update by Mark Mead Baillie — 772nd Edition — Monte-Carlo — 31 August 2024 (published each Saturday) — www.deMeadville.com

“Gold’s 2nd-Narrowest Week; GDP Defies Belief”

2024’s second quadrimestre is now complete.  So let’s start with our title’s second phrase “GDP Defies Belief”.  For Q2’s annualized GDP growth rate was just raised from an improbable first estimate of +2.8% to now an impossible second estimate of +3.0%.

“Questioning the Bureau of Economic Analysis, mmb?”

Just doing the math, Squire.  Here’s the Economic Barometer from one year ago-to-date.  The puke-green portion of the Baro’s line is the May/June/July reporting period for Q2 data, (which for you WestPalmBeachers down there covers economic activity for April/May/June).  Does anyone actually believe this even approximates +3.0% GDP growth?

To be sure, the Econ Baro takes in some 50 metrics per month, whereas the StateSide Gross Domestic Product calculation is far more blunt, (true to the modern art form of throwing a few buckets of paint up against the barn wall and then seeing what happens).  Creativity aside, the GDP’s simplest form is merely the sum of both Private and Public Spending as offset by the Trade Deficit.  That’s it.

Thus given (as you regular readers know) the Baro provably has led (for some 26 years) the lagging conventional wisdom assessment of the economy, we’ve been ever so dubious over this reported Q2 GDP +3.0% growth pace.  And electioneering notwithstanding as regards Washington’s bureaucratic Bureau of Economic Analysis, ’tis purportedly an apolitical agency.  But quite obviously the numbers don’t add up.  “Got Gold?”

Which brings us to the first phrase of this week’s title “Gold’s 2nd-Narrowest Week”,  specific to the year thus far.  Indeed for 2024’s 35 trading weeks now in the books, the past five trading days missed being the narrowest weekly range by the tiniest of margins, (second only to that ending 23 February).  Measured by percentage distance between Gold’s high and low, last week’s range was 1.48%:  the average through the first 34 weeks was 3.31% … slow old Gold!  In settling yesterday at 2536, Gold’s net loss for the week was a scant -13 points.  In turn, this means we’ve yet to see a pullback of at least -100 points following price’s recent (albeit marginal) set of All-Time Highs.  Such -100-point pullbacks otherwise have been Gold’s wont on all prior All-Time High occasions earlier this year as we herein documented two missives ago.

“Well, mmb, that’s ’cause now we know the Fed is about to cut interest rates…”

Which they shall so do (but see our wrap’s Barron’s boo-boo) per the Federal Open Market Committee’s Policy Statement on 18 September.  And ’twill be by just one pip (from the present target range of 5.25%-5.50% to 5.00%-5.25%).  Oh to be sure, there are those parroting pundits looking for a two-pip dip.  But:  as noted a week ago ‘twould be poor optics for the Fed to so do, and — of course — we now know the U.S. economy is healthily growing at a groovy +3.0% annual pace.  Life is Goldilocks Great!  

Further, (courtesy in part from the same Bureau of Economic Analysis along with the Bureau of Labor Statistics), the Fed has successfully tamed inflation.  (You can tell, right?)  Gathering inflation data reported for July, here’s our updated table comprised of retail inflation (Consumer Price Index), wholesale inflation (Producer Price Index) and “Fed-favoured” Personal Consumption Expenditures.  Note the lower rightmost July annualized average:  a joyous below-target +1.8% for the Fed and The Nation!  “Celllll-a-Bration…” –[Kool and the Gang, ’80]:

As for Gold itself, we sense already well-priced in is a one-pip Fed dip.  So to Gold’s weekly bars we below go, their charted from one year ago-to-date.  Note the five rightmost closing pips all are above the present slope of the trendline and that the newest parabolic blue dot is nearly spot-on our forecast high for this year.  Indeed that 2375 level we view (as herein cited a week ago) to be mid-structural support.  Too, for you seat-of-the-pants traders, Gold’s six-hour Parabolics top the yellow metal’s segment on our Market Rhythms page:  nine of that study’s past ten Parabolic flips have followed through by at least 12 full points, the average moreover being 43 points … just in case you’re scoring at home.  ‘Course, in this business, cash management = account survival.  For as the “Triple-Negative Dept.” reminds us:  nobody (human nor algorithm) is never wrong.  Here are the weeklies:

Now let’s add in our set of key precious metals equities, again from a year ago-to-date.  And how ’bout that Agnico Eagle Mines (AEM):  +66%!  (‘Tis nice when your earnings improve +65% from the like quarter a year ago).  Then in descending order of improvement we’ve Newmont (NEM) +34%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +31%, Gold itself +29%, Pan American Silver (PAAS) +23%, the Global X Silver Miners exchange-traded fund (SIL) +22%, but still Franco-Nevada (FNV) -15%.  “Yet, ya luv it when the metal equities’ upside leverage kicks in!”

Speaking of love, everyone loves being Number One, which is exactly Gold’s year-to-date placement per our BEGOS Markets Standings by percentage change with eight months of 2024 now recorded.  ‘Tis a beautiful thing:

Let’s, too, go ’round the horn for all eight BEGOS Markets across their past 21 trading days (one month) in tandem with their baby blue dots of each grey trendline’s consistency.  A rather “Dollar-weaker” picture all told, and notably so for the metals, with Silver and Copper nearly identical by both price pattern and their respective “Baby Blues”:

From which we move to the precious metals’ 10-day Market Profiles for Gold on the left and Silver on the right.  The length of each horizontal bar equates to the contract volume traded for that price.  Thus for Gold, (presently 2536), the 2543-2551 area appears resistive.  As for Sister Silver (presently 29.25), her overhead line-in-the-sand is 29.95:

Toward this week’s wrap, with August behind us, here is our monthly view of the stratified Gold Structure from some 16 years ago-to-date.  And “more up” is always great:

And so we wrap we these three notes:

Note One:  ‘Twouldn’t be The Gold Update without a statement on stocks.  Our bailiwick for such is, naturally, the S&P 500, which month-after-month, indeed year-after-year, refuses to cave to an insanely high price/earnings ratio, our “live” reading at this writing 40.3x.  That is +59% higher than its inception in 2013 at 25.4x, (i.e. the earnings aren’t there).  Too, as we’ve been recently “X’ing”(@deMeadvillePro), the MoneyFlow relative to the S&P’s recent rally is weak.  Add to that, the S&P is now 12 days “textbook overbought”, bang-on-time for the start of September which — by conventional wisdom — is the stock market’s worst month of the year.  Shall you vacate the throng before it all goes wrong?

Note Two:  Nvidia (NVDA).  ‘Tis exceedingly rare that we get specific to a stock, simply because equities’ risk is too much for us to bear, (our preferring to rest easy in the sanctity, safety and serenity of the commodity futures markets).  But that said, ’twas impossible to hide from the hype ahead of Nvidia’s earnings report, even knowing in advance ’twas to be but a fraction of that earned a year earlier.  To wit:  whilst waiting for the bus (oh yes) a few days ago, a wanna-be athletically-clad gentleman walked passed us, excitedly going on his phone about Nvidia’s then still upcoming earnings report.  Elsewhere pre-report we heard as well “I just bought more Nvidia!”  Then came that report and the 70x earnings stock got its comeuppance (or in this case, comedownpance … yikes).  Then followed this opening to an opinion spanking courtesy of Dow Jones Newswires:  “The Dumb Money Poured into Nvidia Ahead of Its Results … Retail investors — known pejoratively as the ‘dumb money’ on WallStreet – loaded up on Nvidia ahead of the microchip maker’s poorly received results.”  Let’s face it folks:  paying $70 for something that earns $1 is pretty dumb.

Note Three:  Speaking of DJNw, did you catch yesterday’s Barron’s boo-boo?  In recent years we’ve on occasion referred to the “children’s writing pool” at the once highly-regarded publication.  But this piece was so off-the-mark that we think it was instead composed by “AI” (“Assembled Inaccuracy”).  Using our trusty tablet, we screen-captured the moment.  Here — unaltered — ’tis:

 

So don’t you boo-boo, lest get booed … ensure you’ve Got Gold in your brood!

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

 

30 August 2024 – 08:18 Central Euro Time

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At present we’ve Gold below its Neutral Zone for today, whilst above same is Copper; BEGOS Markets’ volatility is quite light. With Friday in the balance, Gold otherwise is putting in one of the year’s more narrow weeks; still, we’ll see where Gold stands overall in tomorrow’s 772nd consecutive Saturday edition of The Gold Update. As “X’d” (@deMeadvillePro) last evening, we remain wary of the S&P 500’s weak MoneyFlow (per its page) even as the Index has rallied through much of August: too, the S&P is now 11 day’s “textbook overbought”; and the “live” P/E (futs-adj’d) is now 40.8x. The Econ Baro wraps its week with metrics including August’s Chi PMI along with July’s Personal Income/Spending plus the month’s “Fed-favoured” inflation read of Core PCE Prices.

29 August 2024 – 08:26 Central Euro Time

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A reversal of what we saw ’round this time yesterday: now the Euro, Swiss Franc, Gold, Silver, Copper are all above today’s Neutral Zones; the other BEGOS Markets are within same, and session volatility is light-to-moderate. Looking at Market Profiles, the most dominantly-traded prices (mildly rounded) across the past 10 trading days are as follows: Bond 124^08; Euro 1.1130; Swiss Franc 1.1770; Gold 2543; Silver 29.950; Copper 4.2300, Oil 73.20; Spoo 5636. As to Oil, by Market Trends the linreg still has not rotated from negative to positive; that measure for all the other BEGOS components is positive. Incoming metrics for the Econ Baro include July’s Pending Home Sales and notably the second peek at Q2 GDP: our sense is the latter shall be revised lower given the significant plummet of the Baro throughout the Q2 reporting period (May/June/July) coupled with the “surprise” (not to us) decline in July’s Leading (i.e. “lagging”) Indicators.

28 August 2024 – 08:20 Central Euro Time

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A more robust start to the day for BEGOS Markets: we’ve the Euro, Swiss Franc, Gold, Silver and Copper all at present below their respective Neutral Zones for today; the balance of the bunch are within same, and volatility is moderate. By Market Rhythms for pure swing consistency, leading on the 10-test basis are the Bond’s 6hr and 12hr Moneyflows, plus Oil’s 30mn EMA and 1hr Price Oscillator; on a 24-test basis we’ve Oil’s 30mn and 2hr Parabolics, the Yen’s (not officially a BEGOS Market) daily Price Oscillator, and Silver’s 8hr Parabolics. Too for Silver, its cac volume is rolling from September into that for December, as is the case over the next day or so for the Bond. In terms of correlation amongst the five primary BEGOS components, the best is negative between the Euro and Oil. Nothing is due today for the Econ Baro.

27 August 2024 – 08:13 Central Euro Time

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Just as was the case ’round this time yesterday, Copper again is the only BEGOS Market currently outside (above) today’s Neutral Zone, with session volatility again light. The course of Market Trends throughout the Dollar’s recent decline has sported positive linregs for all the BEGOS Components, save for Oil: however, the latter’s”Baby Blues” of trend consistency are nudging up to the 0% axis such that in a day or two, all eight Markets may all be tilted to the upside, specific to the linreg metric. As well, by Market Values, four of the five primary BEGOS Components are above their respective smooth valuation line, with Oil just barely below same (-1.37 points with the EDTR by Market Ranges now 2.36 points). Too, Oil yesterday confirmed price having moved above its Market Magnet. For the Econ Baro today we’ve August’s Consumer Confidence.

26 August 2024 – 08:16 Central Euro Time

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Copper is the sole BEGOS Market at present outside (above) its Neutral Zone for today; session volatility is light and by Market Ranges, EDTRs (save for that of the Euro) continue to narrow, albeit are (in some cases) above average ranges looking back a year. The Gold Update addresses price by Market Values as being “high” (in real-time by +113 points); also noted are the Dollar’s demise post-Powell and the unsupportive MoneyFlow beneath the S&P 500’s recent rally, the Index also now seven days “textbook overbought”; the “live” futs-adj’d P/E is 42.0x, some +68% above its inception a dozen years ago. As well for Gold, should the “usual” post-All-Time High selling gather some momentum, the 2375 level — our forecast high for this year and essentially a center-piece of structural support — wouldn’t be an untoward landing area. Copper’s cac volume has rolled from September into that for December. The Econ Baro begins its week with July’s Durable Orders.

The Gold Update: No. 771 – (24 August 2024) – “Gold Gradually Grips as the Dollar Decidedly Dips”

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The Gold Update by Mark Mead Baillie — 771st Edition — Monte-Carlo — 24 August 2024 (published each Saturday) — www.deMeadville.com

“Gold Gradually Grips as the Dollar Decidedly Dips““

FedChair Powell’s “Friday Thunder” echoingly careened throughout the cascading heights of Wyoming’s Grand Tetons, across the nation and ’round the world.  “The time has come” rate cut quip resulted in a decided Dollar dip, Gold in turn getting the bid for a gradual grip to barely record a winning week in settling yesterday at 2549, (a scant +3 points above the prior Friday settle of 2546).  For ‘twould now appear the Federal Reserve’s Open Market Committee shall — come their 18 September Policy Statement — vote to reduce the Bank’s Funds Rate a pip.  Some surmise two.  Either way, “hip-hip”.

We say “decided“ for the Dollar, which from mid-year already has been selling off, Friday being the second-worst (on both a points and percentage basis) of the 163 trading days year-to-date for the Dollar Index.  And “gradual” for Gold as the post-Powell push wasn’t enough to make yet another yellow metal All-Time High, the most recent having been established this past Tuesday at 2570, (basis December futures).

Indeed — as detailed in last week’s missive — we remain sensitive to Gold this year having habitually sold off following marginal All-Time Highs.  To wit, after achieving Tuesday’s 2570 level, price within two days plopped to Thursday’s low of 2506.  Such -64 points (-2.5%) of price erosion still pales in comparison to every year-to-date post-All-Time High three-figure drop per our prior piece’s table.  And in looking at Gold vis-à-vis our BEGOS Markets Value measure (that gauges Gold’s price changes relative to those of the four other primary markets which comprise BEGOS, namely the Bond / Euro / Gold / Oil / S&P 500), we below see that price today at 2549 is hovering +124 points “high” above the smooth valuation line:

‘Course as we regularly remind — courtesy of the “Keeping One’s Eyes on the Prize Dept.” — per the opening Gold Scoreboard we’ve the current price of 2549 a vast -31% below the yellow metal’s Dollar debasement value of 3706, (including honestly accounting for the increase in the supply of Gold itself).  And given history rhetorically repeats, price in due course shall reach up to such value, nearer-term declines en route essentially as noise within Gold’s broader climb.

“Well, careful there, mmb, as price’s 46% decline from Sep 2011 to Dec 2015 can hardly be called ‘noise’…“

And, (as Squire well remembers despite such devil’s advocate aphorism), ’twas leading into those days that we repeatedly wrote of Gold having “gotten ahead of itself”, following which came price’s substantial plummet.  However, today — courtesy of the “But Then Comes the Overshoot Dept.” — Gold clearly remains ever so low relative to rampant debasement, just as the S&P 500 is ever so high relative to impotent earnings.  To be sure, ’tis written:  “The market is never wrong, but it can be terribly misvalued”.  Which for you WestPalmBeachers down there implies (assuming one is properly positioned whilst incorporating prudent cash management) means reversion is a beautiful thing.

“They won’t get that at all, mmb…“

But “they”, dear Squire, are vital to taking the other side of the trade.  To which let’s segue to the trade of Gold by its weekly bars from one year ago-to-date.

And as therein confirmed, nearly a third of this year’s 34 trading weeks have recorded Gold All-Time Highs, indeed during four of the past six.  Note, too, the green line (our 2375 forecast high for this year): it nicely bisects the structural support zone constructed across the prior few months (for those of you scoring at home seeking a “buy on the dip” point).  Indeed from the current All-Time High of 2570, a run down to at least 2375 would be in line with the afore-referenced table from a week ago as to price pullbacks following marginal All-Time Highs.  As for the Gold/Silver ratio now 85.4x, ’tis at its lowest closing reading since this past 30 July, (albeit still well-above the century-to-date average of 68.4x).  “Don’t forget the Silver…”

Forgettable, however, remains the Economic Barometer, although it ticked higher into week’s end on improved Home Sales, both Existing and New.  Yet surprising to all who do not follow our Econ Baro, (i.e. six-figure analysts, the FinMedia, and parroting pundits) was the Conference Board’s report of  “Leading Indicators” having dropped -0.6% for July, twice as poor as experts’ “expectations” for only a  -0.3% demise.

But ’twas hardly a surprise to the wise who monitor the Baro, for ’tis been plainly bad, (which is why we regularly refer to said report as “Lagging” rather than “Leading”).  And for the Fed (as ’tis said) “being behind the curve”, clearly that is the case.  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.  Either way, as you know, the truth remains in the Baro:

More truth be told, the S&P 500’s August rally (from the 5th’s low of 5119 to the 22nd’s high of 5643, a 14-trading day gain of +10.2%) is quite vapid of supportive MoneyFlow, as we again “X’d” (@deMeadvillePro) this past Thursday.  Here below from the website is the MoneyFlow (regressed into S&P points) relative to the change in the Index itself for the past week, month and quarter.  Obviously the MoneyFlow’s leading characteristic portends this rally’s staying power as unrealistic:

Add in the fact that the S&P is now seven trading days “textbook overbought” along with a “live” price/earnings ratio of 41.5x and The Herd is facing GERD, (a little medical lingo there).  Healthy, however, is Gold, below for which we’ve the two-panel display of 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 are just now running out of puff, which coincides with the notion of near-term price pullback following this year’s marginal All-Time Highs.  Still by the Profile, there’s volume trading support from 2511-to-2493, (but we’ll see…):

But again using the same construct for Sister Silver, the picture remains a bit different, her having been carrying on of late with Cousin Copper.  Note in her daily bars (below left) the two encircled baby blue dots.  You regular readers and website followers already know the drill here, but as with the passage of time we pick up new folks, here’s how the leading attribute of the “Baby Blues” works:

  • When after having been above the +80% axis the “Baby Blues” confirm piercing beneath it, we view that as a “sell” signal.  And instead, ’tis a “buy” signal if eclipsing up through the -80% axis. 
    Reprise:  “Follow the Blues instead of the news, else lose yer shoes”:

Meanwhile by Silver’s Profile (above right) there’s quite a dearth of trading between 29.05 and 28.40; thus the white metal could readily slip through that zone, and certainly so should both the yellow and red metals endure some near-term decline.

In sum, Gold looks great even should anticipated decline near-term dominate.  And specific to the Fed, soon after the Chair’s remarks yesterday — our instead purely watching markets’ reactions — we internally messaged this notion:

“Haven’t a clue about Powell’s remarks (didn’t listen) but all eight of the BEGOS Markets are doing well, whilst the Dollar has made a nine-month low.  So … ‘guess’ is Powell gave relative assurance for an 18 September rate cut.  ‘Course, they’re not really supposed to ‘tip their hand’.  But a benign PCE is expected next week which would certainly lock in a rate cut.”

Thus a little deMeadville inside baseball there.  Or as was recently quipped:  “Ya can read deMeadville, or ya can wait for everyone else.”


“You tell ’em, mmb!”

‘Tis always a gradual team effort, Squire, leading off decidedly with Gold!

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

23 August 2024 – 08:17 Central Euro Time

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Silver and Copper are at present above today’s Neutral Zones; otherwise, BEGOS Market’s volatility continues as quite light, similar to that of the prior two sessions to this point. Looking at the five primary components vis-à-vis their Market Values (in real-time), we’ve the Bond nearly +4 points “high” above its smooth valuation line, the Euro +0.022 points “high”, Gold +102 points “high”, Oil -6.05 points “low”, and the Spoo +85 points “high”. The “live” P/E of the S&P 500 is 40.8x and the yield 1.332% vs. the 3mo T-Bill’s risk-free 5.025%; too, the S&P is now six days “textbook overbought”. Gold appears en route to completing a down week. albeit with FedHead Powell’s Jackson Hole address in the balance, on verra; more, of course, tomorrow in Gold Update No. 771. And simultaneous with the Chairman’s speech at 14:00 GMT comes the release of July’s New Home Sales for the Econ Baro.

22 August 2024 – 08:49 Central Euro Time

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At present, all eight BEGOS Markets are within today’s Neutral Zones, and volatility is again quite light. Gold, after having further achieved another All-Time High (2570) on Tuesday, is currently 2541 and, in fact, is mildly net lower to this point of the week; again the current edition of The Gold Update cites notable price pullbacks so far this year following All-Time Highs. Looking at Market Rhythms, for pure swing consistency on 10-test basis, topping the list is the Bond’s 12hr Moneyflow, whilst on a 24-test basis the leader again is Oil’s 2hr Parabolics. Today’s incoming metrics for the Econ Baro include July’s Existing Home Sales.

21 August 2024 – 08:31 Central Euro Time

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Just the Euro is at present outside (below) today’s Neutral Zone; BEGOS Markets’ volatility is quite light, and EDTRs (see Market Ranges) whilst elevated are nonetheless falling, (save for that of the Euro). Looking ’round the Market Profiles horn, save for Oil, the other seven BEGOS components are trading high relative to their pricing across the past fortnight. Too, by Market Trends, again save for Oil, the seven other markets are in positive linreg. And in turn, the Dollar has been continuing its slide since mid-year: the DX high thus far in 2024 is 106.380 (01 May) but today ’tis been traded as low at 101.163, (near the year’s bottom thus far of 101.030 set back on 03 Jan). The Econ Baro remains quiet; and the FOMC’s Minutes from the 30-31 July Meeting come due.

20 August 2024 – 08:21 Central Euro Time

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The Euro, Copper and Oil are all at present below their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility to this point of the session is light relative to yesterday ’round the same time. Our best correlation amongst the five primary BEGOS components is positive between the Bond and Euro. Oil’s Market Magnet is being pierced (in real-time) to the downside, suggestive of still lower levels: currently 72.98, Oil has made a home in the 70s through much of this year; 72-20-72.00 shows as near-term Market Profile support; price was briefly sub-70 this past 03 January; and Oil’s best Market Rhythm for pure swing consistency is (on a 10-test basis) its 2hr MACD and (on a 24-test basis) its 2hr Parabolics; thus 2hr Oil seems a reasonable study of which to take note.

19 August 2024 – 08:12 Central Euro Time

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The week begins finding both the Euro and Swiss Franc at present above today’s Neutral Zones; none of the other BEGOS Markets are outside of same, but volatility already may be deemed as moderate: again, mind the Market Ranges page to maintain context for current ETDR readings. The Gold Update acknowledges the yellow metal’s new All-Time High, indeed to up to 2550: characterized therein are the price pullbacks that have beset Gold upon making fresh highs thus far this year; and by Market Values (in real-time), Gold is +144 points above its smooth valuation line. Q2 Earnings Season has concluded with 70% of S&P 500 constituents bettering their bottom lines from Q2 of a year ago: that is a comparably above average performance; ‘course, the “live” P/E at 40.8x remains the unsustainable issue. ‘Tis a very quiet week for the Econ Baro with just four metrics due, beginning today with July’s Leading (i.e. “lagging”) Indicators.

The Gold Update: No. 770 – (17 August 2024) – “Gold Again Gains a Marginal All-Time High”

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The Gold Update by Mark Mead Baillie — 770th Edition — Monte-Carlo — 17 August 2024 (published each Saturday) — www.deMeadville.com

“Gold Again Gains a Marginal All-Time High““

As herein penned last Saturday:  “…Gold is well within range for a fresh All-Time High (above 2538 basis December) in the new week…”

And so it came to pass, the yellow metal (basis December) trading yesterday (Friday) to as high as 2548, an albeit rather scant +10 points above that contract’s prior All-Time High of 2538 set this past 17 July.  (To further confuse, ’twas +25 points above 02 August’s 2523 “FATH” [Faux All-Time High] per Gold’s “continuous contract”).

“Marginal” either way perhaps, but they all count.  Regardless:  for the 5,944 trading days so far this century, Gold has now essentially recorded an All-Time High on 274 of them (which for those of you scoring at home is once every 22 trading days, i.e. once per month on average).  ‘Course, the standard deviation of that is massive:  after 06 September 2011, Gold did not record its next All-Time High until 24 July 2020, a “high-less” 2,236-trading-day run of nearly nine years.

But here’s where it gets interesting.  Recall The Gold Update from back on 25 May entitled “Gold’s Marginal High and Habitual Cry“?  The latter two words therein refer to Gold typically — and oft swiftly –getting dumped following just such marginal All-Time Highs.  Therefore were history to ad nauseam repeat, Gold shall be met with selling next week.  To wit, Gold’s recording of All-Time Highs this year-to-date, followed by fallout as the near-term fate:

 

“But I’m thinking maybe it’s different this time, mmb…“

Well, dear Squire, ’tis always requisite that one takes the other side of the trade.  Thus if you could kindly come to market with some serious size, you can skyrocket the silly Shorts beyond their stops as you relentlessly drive Gold’s price up.

But truly to Squire’s point:  note in the above table a lessening of points lost after each All-Time High, in turn more swiftly and satisfyingly squeezing the Shorts.  Puts one in mind of Herbert Lom as Chief Inspecteur Dreyfus:  “I’m squeezing. And the more I squeeze, the freer I feel. I’m in ecstasy. And then suddenly, suddenly my problem is solv-ved.” –[The Return of the Pink Panther, UA, ’75]).

To be sure per the opening Scoreboard, Gold having settled the week at 2546 still finds it -31% below its Dollar debasement value of 3707.  But in assessing “The Now” and this recent hankering Gold has to pull back following fresh All-Time Highs, lets look to a nearer-term view of the yellow metal vis-à-vis its smooth valuation line.  Such line is borne of Gold’s price changes relative to those of the other four primary futures markets which comprise BEGOS (Bond / Euro / Gold / Oil / S&P 500).  Here’s the current year ago-to-date stance — appearing a bit stretched — as updated daily for the website:

Moreover, when markets breakout, obviously they deviate — on occasion significantly — from whatever mean by which they’re otherwise regularly measured.  So again per Squire’s notion, perhaps ’twill be different this time, (which for you WestPalmBeachers down there would mean Gold shan’t retract as has recently been its post-All-Time Highs wont).  En tout cas, on verra…

What we can presently see, however, are Gold’s weekly bars, again from one year ago-to-date, along with the dotted parabolic trends.   Per the graphic, Gold has better than 200 points of wiggle room between present price (2546) and the rightmost blue “flip-to-Short” dot at 2339.  Further, should price fall following this latest All-Time High, the 2300s in general look structurally safe for Gold:

But hardly does the Stateside economy look safe.  As we “X’d” (@deMeadvillePro) this past Tuesday:  “Econ Baro reaches its lowest oscillative level since 24 November 2009”, since slipping further still.  ‘Course if you don’t follow the Baro, you don’t see it; neither does the FinMedia nor Herd nor Fed.

However, we’re now told ’tis baked in the cake that not only shall the Federal Open Market Committee vote to cut its Bank’s Funds Rate come the 18 September Policy Statement, but that it may well be a double-pip cut of -0.50% as opposed to just -0.25%, the latter by the Economic Barometer saying they should already have so done on 31 July.  (Again, too bad the FOMC members don’t read deMeadville … a shameless plug perhaps, but most gratifying).  For here’s what they’re missing: 

Of the 19 metrics that came into the Baro this past week, ten were worse period-over-period:  thus nine improved.  But prior-period revisions hurt the overall performance of the mix, and down it went.  Our sense clearly is that most folks (including vaunted economic analysts) don’t see how poorly the economy is performing, (i.e. we actually do the math).  Amongst the “out to lunch bunch” came Dow Jones Newswires this past Thursday with “S&P 500 erases August losses as ‘irrational recession fears’ fade.”  But the day is lurking where ’twill suddenly whack ’em over the head and the U.S. shall once again regress.  Fortunately, however, per the above graphic:  folks stand to get all that “free stuff!”  And as just noted by DJNw,  just look at that stock market go up!  Life is great in the Investing Age of Stoopid.

Such statement bears our updating the following chart of the S&P 500 from better than 50 years ago-to-date.  You regular readers know the drill here:  the regression channel is based on the track of the S&P up to COVID’s arrival in March 2020 (vertical red bar), from which the channel is then extrapolated through now.  But came the Fed’s $6.9T infusion, all of which — as we’ve previously herein “proven” — basically found its way into the S&P 500.  Remember:  sans COVID, by the regression channel, the S&P would today be ’round 3000 and all therein invested would be happy as a clam.  Instead, we’ve the S&P’s “live” price/earnings ratio as shown at 40.7x versus its inception reading (in January 2013) of 25.4x.  Thus earnings indubitably haven’t kept pace with price.  And with the S&P today at 5554, to revert to such inception reading (which is inevitable upon it all going wrong) ‘twould place the Index down to 3466: 

Don’t think ’twill happen?  Look how weak the S&P’s recent “recovery rally” is from our MoneyFlow page.  “That can’t be good…”

“Or, mmb, earnings have to really take off…“

But hardly are they, Squire.  Indeed yesterday concluded Q2 Earnings Season.  For the S&P 500:  of the 433 constituents having reported, the good news is 70% of them bettered their bottom lines from a year ago, ranking the quarter as 10th best for individual constituent improvement from as far back as 2017.  Yet, the bad news is to get the P/E back down to 25.4x, earnings (cap-weighted to be consistent) need grow at an annualized 60% pace.  What was the pace for just completed Q2? 19%.  That’s it, (excluding 10 constituents that lost money).   But you still can get an annualized 5% risk-free pace from the three-month U.S. T-Bill.  Think about that.

Better still, think about Gold having just made a fresh All-Time High.  And notwithstanding near-term price reversion, one senses there are further levels up the Gold road with better than four months for this year remaining to unfold.   Too, there is so much on the table including uncertainties about global instability, StateSide politics, the endlessly overvalued stock market, and tons of $Trillions in debt due to be paid “Old Yeller’s” U.S. Treasury.  “Got Gold?”

But as we turn to the daily bars for the last three months of Gold on the left and Silver on the right, their correlation has morphed from positive to negative.  Indeed Sister Silver has suffered from casting off her precious metal pinstripes and donning her industrial metal jacket so as to hang with Cousin Copper, of whom as we noted a week ago has collapsed some -21% within the past three months, (see our Copper page).  Thus we’ve Gold at an All-Time High … but Silver (now 29.09) is an unconscionable -42% below her best level of 49.82 (25 April 2011)  You shan’t forget Sister Silver, shall you…

However by their 10-day Market Profiles, both Gold (below left) and Silver (below right) are at the top of their games with lots of lovely support levels as labeled:

Let’s therefore wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3707
Gold’s All-Time Intra-Day High:  2548 (16 August 2024)
2024’s High:  2548 (16 August 2024)
10-Session directional range:  up to 2548 (from 2406) = +142 points or +5.9%
Gold’s All-Time Closing High:  2546 (16 August 2024)
Trading Resistance:  none per the Profile  2341
Gold Currently:  2546, (expected daily trading range [“EDTR”]:  43 points)
Trading Support:  various per the Profile, but notably the 2511-2493 range
10-Session “volume-weighted” average price magnet:  2473
The Weekly Parabolic Price to flip Short:  2339
The 300-Day Moving Average:  2121 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

Following this past week’s onslaught of incoming economic data, that for next week is fairly subdued, highlighted on Monday (19 August) by The Conference Board’s lagging indicator of “Leading Indicators”, which quite rightly (duh!) will be a negative reading, given our Baro is leading.  Otherwise fundamentally, there’s so much on the plate, so much can change! 

So hang on to your change given more Gold highs within range! 

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

16 August 2024 – 08:23 Central Euro Time

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BEGOS Markets’ volatility is very light thus far with just the Euro at present outside (above) today’s Neutral Zone. The S&P 500’s recovery rally off of what had been a “textbook oversold” condition has been marred by weak monetary inflow per our MoneyFlow page and notably therein the 5-day and 21-day measures; too, the overall low level of earnings support now finds the “live” P/E of the S&P at a futs-adj’d 41.4x. Looking at Market Values, deviations which stand out (in real-time) are the Bond being nearly +5 points “high” above its smooth valuation line, the Euro nearly +0.02 points “high”, and Gold +103 points “high”, the latter putting in quite a narrow week (with today in the balance); more of course in tomorrow’s 770th consecutive Saturday edition of The Gold Update. The Econ Baro looks to August’s UofM Sentiment Survey, plus July’s Housing Starts/Permits. And ’tis the final day of Q2 Earnings Season, which has been above-average by year-over-year comparison, but as noted broadly is weak given the sky-high price of equities.

15 August 2024 – 08:19 Central Euro Time

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‘Tis a significant session for economic data, the Econ Baro due to receive 10 incoming metrics: thus ’tis not surprising to find all eight BEGOS Markets at present within their respective Neutral Zones for today with volatility to this point very light. Going ’round the Market Profiles horn, the most dominantly-traded prices for the past 10 trading days are: Bond 122^30, Euro 1.094, Swiss Franc 1.161, Gold 2490, Silver 27.20, Copper 4.040, Oil (Oct) 72.20, and Spoo 5369; note that Oil’s cac volume is rolling from September into that for October. The best correlation amongst the five primary BEGOS components is positive between Gold and Oil. And notable metrics for the aforementioned Baro include August’s NY State Empire Index and NAHB Housing Index; July’s Retail Sales, Ex/Im Prices and IndProd/CapUtil; plus June’s Business Inventories.

14 August 2024 – 08:23 Central Euro Time

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Copper is at present the only BEGOS Market outside (below) today’s Neutral Zone; session volatility is continues quiet given the hour. The S&P 500 yesterday fully unwound what had been a 13-session run of being “textbook oversold”, albeit in the process its “live” is now (futs-adj’d) 40.2x and the yield 1.348%; the 3mo U.S. T-Bill still yields an annualized 5.053%. Looking at Market Rhythms for pure swing consistency, topping the stack on both our 10-test and 24-test bases is Oil’s 1hr Parabolics; Oil’s trading range (closing basis) for at least the past three months is between 73 and 83, with present price of 78.94 measuring -1.43 points below its smooth valuation line (see Market Values). Gold yesterday came within 21 points of its All-Time High (2338 basis December): Gold’s EDTR (see Market Ranges) is 42 points. For the Econ Baro we’ve July’s CPI.

13 August 2024 – 08:25 Central Euro Time

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We’ve at present the Swiss Franc, Silver and Copper below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility again is relatively quite light given the recent expansion in EDTRs (see Market Ranges); for yesterday, the Spoo’s EDTR was 120 points, yet the actual range just 40 points, typical of the “norm” last Winter. The Spoo’s “Baby Blues” are (in real-time) curling up above their -80% axis, (mind those too for both Silver and Oil), the “rule” there being a “Buy” signal if confirmed by day’s end: specific to the Spoo, the mid-5400s to mid-5500s appear structurally resistive; the most consistent pure swing Market Rhythm for the Spoo has been its 12-hr Moneyflow, (for profit targeting, see too its currently being listing on the Market Rhythms page). The Econ Baro awaits July’s PPI.

12 August 2024 – 08:24 Central Euro Time

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We start the week with just the Swiss Franc at present outside (below) its Neutral Zone for today; otherwise, BEGOS Markets’ volatility is quite light, again within the context that by Market Ranges, EDTRs have notably expanded of late: for the Spoo, ’tis now 120 points. Too, by Market Values, the Spoo is (in real-time)-195 points below its smooth valuation line; the S&P 500 itself is “textbook oversold” through 12 consecutive trading days; the “live” P/E however remains exceedingly high at a futs-adj’d (i.e. in real-time) 38.8x. The Gold Update takes to task the hysteria of the “FinMedia & Herd”, specifically with respect to the selling of stocks a week ago: in the missive, the logarithmic chart of the S&P perfectly makes the point. The Econ Baro gets packed with 18 metrics this week, beginning today with July’s Treasury Budget; and this is the final week of Q2 Earnings Season.

The Gold Update: No. 769 – (10 August 2024) – “Hilarious Herd Hysteria; Gold Holds Its Area”

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The Gold Update by Mark Mead Baillie — 769th Edition — Monte-Carlo — 10 August 2024 (published each Saturday) — www.deMeadville.com

“Hilarious Herd Hysteria; Gold Holds Its Area““

Let’s start with stocks, notably citing the hilarity of the FinMedia & Herd hysteria.  Not that we need be reminded, however this past Monday’s (05 August) selling underscored the stock market’s otherwise quintessential condition of complacency since any or all of the following stages (make your choice), courtesy of the “We Never Go Down Dept.”:

  • Initial expectations during October 2023 that the Federal Reserve must cut rates (even as they’ve yet to so do) … but the market zoomed higher;

     

  • Digesting during October 2022 the RUS/UKR incursion as by then having become an endless, ongoing normal part of life … so the market zoomed higher;

     

  • COVID from March 2020 having resulted in the Fed’s “creation” of ultimately $6.2T (+39%), which we’ve on occasion mathematically demonstrated “all” ended up in the S&P 500 … i.e. the market zoomed higher.

Indeed from the S&P’s COVID bottom at 2192 on 23 March 2020, the mighty index has increased by as much as +159% to 5670 on just this past 16 July.

But specific to our point about Monday — because the S&P impossibly dropped a net -3.0% in just that one day — the FinMedia & Herd went hilariously hysterical!  And in this ongoing context of The Investing Age of Stoopid, oh how those world-ending  FinMedia headlines had us rolling in the aisles!

  • Business Standard:  “Stock Market Crash“;

     

  • Fortune:  “Share price bloodbath“;

     

  • CNEWS:  “Les actions en chute mortelle” (stocks in fatal fall);

     

  • CNBC:  Per Chicago FedPrez Austan “The Gools” Goolsbee on if (IF?) the economy deteriorates, the Fed will “fix it”;

     

  • Bloomy:  “Traders ramp up bets that the Federal Reserve will step in with an emergency interest rate cut”;

     

  • Et alia “ad infinitum”.

Now here’s the really hilarious part… Ready?

Monday’s stock market “carnage” was the 92nd (“ninety-second”) worst net trading day for the S&P 500 thus far this century.  What that means for you WestPalmBeachers down there is that from 02 January 2001, there already had been 91 days that were worse for the S&P than Monday’s -3.0% net drop (intra-day low -4.3%).  By comparative honesty ’twas thus nothing more than “noise”, especially per the following logarithmic chart of the S&P century-to-date.  The red line denotes the lowest to where the S&P reached (5119) last Monday.  And yet, ’twas “World Ends!” per the red arrow:

 

 

To be sure, the whole FinMedia & Herd insanity emphasizes the parroting that passes sadly for “informative news”, (which is why some three decades ago we stopped watching “CNBS”, et alia).  The optics are that news entities no longer do the math; rather they just follow right along with competing agencies’ reports whist trying to outdo each other’s adjectives.  Hence our presentation of the above chart.  And given that correct perspective, “The Sell” obviously was nothing, and further, the S&P has come all the way back up to the “pre-disaster” level, toward settling yesterday (Friday) at 5344.  But as noted in the chart, the circuit breaker “limit-down” days are coming.  Ensure you’ve plenty of popcorn to enjoy that FinMedia & Herd meltdown.

As to the current state of the S&P 500:

  • ‘Tis now 12 days “textbook oversold”, although just mildly so;

     

  • With a week to run in Q2 Earnings Season, 70% of companies have bettered their year-ago bottom lines, which is an above-average pace;

     

  • But the Index’s albatross ’round the neck remains its exceedingly high “live” price/earnings ratio, now 38.6x — with risk-free money still paying 5% — should you care to do the math:

“““Whoomp! (There It Is)” –[Tag Team, ’93]).

Returning to sanity, here is Gold per its chart of weekly bars and parabolic trends from one year ago-to-date.  Whilst ’tis holding its area, yes, in Thursday’s (08 August) Prescient Commentary we penned:  “…Gold’s daily MACD is provisionally crossing to negative: per the current Market Rhythms list, that study for the yellow metal has profited by at least $2,600/cac (regardless of signaling Long or Short) for nine of the past 10 such crossovers…”  ‘Tis why we stated “provisionally”, for by Gold’s continuous futures contract, the negative MACD (moving average convergence divergence) crossover did not (at least yet) confirm.  Either way, as below depicted, Gold is well within range for a fresh All-Time High (above 2538 basis December) in the new week:

Further drilling down into “The Now” for Gold, here next is our two-panel graphic of price’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  The premium gap from some eight trading days ago has since filled, albeit the baby blue dots of trend consistency are rather erratic.  As for Gold’s Profile (all December contract data), the pricing field remains significantly congested, the more notable volume supporters and resistors as labeled:

But in turning to same for Silver, the bad news clearly is her pricing track (below left) being far more feeble than that for Gold, (yes, blame it to an extent on collapsing Copper which from 20 May to yesterday’s settle has dropped -21%).  Yet therein, the good news is Silver’s “Baby Blues” are poised to curl up above her -80% axis, which as you website enthusiasts know is an outright (given prudent cash management) “Buy” signal.  Too, per the aforeshown graphic of Gold’s weekly bars, the Gold/Silver ratio is still historically high at 89.7x:  adjusted to the century-to-date average (now 68.4x), rather than priced today at 27.50, Sister Silver would instead be +31% above that at 36.14 … just in case you’re scoring at home.  However, her Profile (below right) is similarly congested to that of Gold:

‘Course, the week would not be complete without the state of the Economic Barometer, which plainly is not good.

“Dare you instead say ‘stateless’, mmb?“

Nearly so there, Squire, our having had to rescale lower the Econ Baro’s axis (which we numerically never reveal, lest the world indeed truly end).  Regardless, ’tis ever so bleak.  However, the Baro’s saving grace is — its mathematically being an oscillator — that it can move upward as “things get worse more slowly” (to reprise Krugman from back in ’01).  And whilst this past week was very muted for incoming metrics (just five arrived), next week brings 18 reports for the Baro, which of course we update by the day per the website.  Again cue the BeaTles with “““Now and Then” –[’23]).

That’s right, Gools, you tell ’em, baby!  To which we wrap with rates.

As you valued regular readers know, given the Baro’s blow, we’ve been knowledgeably ahead of the deteriorating curve of the economy for better than three months now.  Admittedly, earlier in the year given the non-cessation of inflation, we mused over the Fed perhaps having to actually raise its rates.  But the with the economy’s demise in front of our eyes, through many a recent missive we’ve stated that the Fed must cut.  However, come the Open Market Committee’s Policy Statement just on 31 July, the Fed stood pat.  But then the stock market made its wee crack, and all of a sudden, FinMedia & Herd are proclaiming ’tis not just that the Fed must cut, but indeed so do now as an “emergency” measure, and moreover that it be a “double cut”.

“Well, mmb, a lot has happened in the last week and a half…“

Or better stated, dear Squire, nothing recently has happened because it already had happened. ‘Tis just that the FinMedia & Herd & Fed are all behind the curve.

But don’t you get thrown a hysteria curve…

…rather with Gold maintain your verve!

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

09 August 2024 – 08:28 Central Euro Time

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Both the Bond and Copper are at present above today’s Neutral Zones; none of the other BEGOS Markets are below same, and volatility is light. The rally in the Spoo nonetheless still finds it by Market Values (in real-time) as -223 points below the smooth valuation line; the S&P 500 itself is now 11 days “textbook oversold” even as the Index gained +2.3% yesterday. With one week remaining in Q2 Earnings season, 424 S&P constituents have reported of which 70% bettered their bottom lines of Q2 a year ago: that is a wee bit better than average year-over-year improvement; however, the big bane for the S&P is its excessively high P/E, the “live” (futs-adj’d) reading at 39.7x. Gold remains down for the week, although now at 2457, price is well off the intraweek low of 2404; by its Market Profile, 2435 is the yellow metal’s key trading support by volume; tomorrow brings our 769th consecutive Saturday edition of The Gold Update.

08 August 2024 – 08:15 Central Euro Time

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At present, none of the BEGOS Markets are below their respective Neutral Zones for today, whilst above same are the Bond, Euro, Swiss Franc, Silver and Copper; volatility is light-to-moderate in the context that EDTRs (see Market Ranges) have of late been expanding: indeed that today for the Spoo is 116 points. Gold’s daily MACD is provisionally crossing to negative: per the current Market Rhythms list, that study for the yellow metal has profited by at least $2,600/cac (regardless of signaling Long or Short) for nine of the past 10 such crossovers; by Market Values, Gold is (in real-time) +60 points above its smooth valuation line, whilst on Tuesday price moved below its Market Magnet; a move lower from here (2433) into the upper-to-mid 2300s wouldn’t be untoward. The Econ Baro concludes its quiet week today with metrics including June’s Wholesale Inventories.

07 August 2024 – 08:15 Central Euro Time

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Both the Euro and Swiss Franc are at present below today’s Neutral Zones, whilst above same is the Spoo; BEGOS Market’s volatility is moderate-to-robust, the Swiss Franc notably already having traded 115% of its EDTR (see Market Ranges). For the S&P 500, just as monetary outflow was relatively “thin” during the three-day selloff, so yesterday too was it “thin” for the rally: mind the MoneyFlow page. Looking at Market Rhythms, the recent erratic movements have brought a bit less pure swing consistency to our 10-test basis studies; however on a 24-test basis we’ve five standouts at present: Silver’s 8hr Parabolics, Oil’s 15mn Price Oscillator, the Spoo’s daily Parabolics, Copper’s 2hr Parabolics, and the Yen’s (not yet formally a BEGOS component) daily Price Oscillator. For the Econ Baro late in the session we’ve June’s Consumer Credit.

06 August 2024 – 08:14 Central Euro Time

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As is typically led by the MoneyFlow Page (see The S&P 500), were RTH to commence at this instant the S&P would open +74 points (+1.4%) as — despite the selling these past three sessions — the monetary outflow has not been as severe as the change in the Index itself; indeed, the S&P is now eight days “textbook oversold” despite it still being vastly overvalued by weak earnings, the “live” futs-adj’d P/E now 36.7x At present for today, we’ve the Bond, Swiss Franc and Metals Triumvirate all below their Neutral Zones, whilst above same is the Spoo (and hence by “fair value” the notion of that “up” opening). At Market Values given components flailing about, here are the real-time deviations from their respective smooth valuation lines: the Bond shows as nearly +6 points “high”, the Euro +0.014 points “high”, Gold +68 points “high”, Oil nearly -8 points “low”, and the Spoo -301 points “low”. The Econ Baro looks to June’s Trade Deficit.

05 August 2024 – 08:30 Central Euro Time

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The Spoo is sufficiently lower (-2.7%) such that were RTH to begin at this moment, the S&P itself would open -3.1%. BEGOS Markets’ volatility is robust, with at present the Bond and Swiss Franc above today’s Neutral Zones, whilst below same are the Metals Triumvirate, Oil and Spoo. The Gold Update points to the yellow metal as last week having made a “FATH” (Faux All-Time High) resulting form the August-to-December cac roll: by the latter, the All-Time High per December is now 2538 (17 July). Looking at Market Trends, the “safe-haven” BEGOS components of the Bond, Swiss Franc and Gold are in 21-day positive linreg; the other five markets are in negative linreg. ‘Tis a very quiet week for the rather decimated Econ Baro: just five metrics are due beginning today with July’s ISM(Svc) Index.

The Gold Update: No. 768 – (03 August 2024) – “Gold Makes a ‘FATH’; Stocks Take a Bath”

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The Gold Update by Mark Mead Baillie — 768th Edition — Monte-Carlo — 03 August 2024 (published each Saturday) — www.deMeadville.com

“Gold Makes a ‘FATH’; Stocks Take a Bath““

We’ll explain Gold’s “FATH” in the next paragraph.  But by now, we ought well be getting used to this.  Futures contacts — far and away the most liquid non-physical form of Gold trading purely by price — regularly “roll” from one expiry month to another, (but not consecutively), the current leap per this past Wednesday being from August to now volume-dominant December.  And given this lengthy five months of storage et alia costs to hold your Gold for delivery in December — but at today’s price — Gold futures per this new “front month” pack a lot of premium, inclusive too of the conventional wisdom perception for future lower interest rates/higher Gold levels.  Indeed assuming your having read last Monday’s “Prescient Commentary”, you already are aware that this time ’round Gold garnered +47 points of fresh December premium.  So combine that with price having recorded an up week (even sans premium), and Gold thus made a “FATH”.

“Meaning, mmb?“

Meaning, Squire, — with such +47 points of December “front month” premium — Gold made a “FATH”:  Faux All–Time High, per the so-called “continuous contract” indeed eclipsing the much sought milestone of 2500 toward trading as high as 2523 before settling out the week yesterday (Friday) at 2486.  “‘Tis a beautiful thAng!”

‘Course, specific to this December contract, 2523 was not its All-Time High — hence the “Faux” pricing notion.  (For those of you scoring at home, December’s contract high already was 2538 as traded on 17 July).  But reaching up to 2523 this past week was fairly near.

Still, per the yellow metal’s “continuous contract” which is used for broad time frame analysis, here below we see the rightmost “FATH” along Gold’s weekly bars’ path:

 

As therein noted, Gold’s weekly gain was a très cool +100 points, which includes the +47 points for December contract premium.  But that does erode away a little each day.  And even ex-premium, we’ll relish a weekly percentage gain of +2.2% every time.  Further, the blue-dotted parabolic Long trend gained a bit of breathing room, the “flip-to-Short” price of 2317 now a comfy -169 points below today’s 2486 actual price.

Thus it being month-end (plus a couple of days into August’s wend), ’tis time, too, for the key precious metals equities’ year-over-year view.  So as below shown, leading the percentage track pack is Agnico Eagle Mines (AEM) +55%,  followed by Pan American Silver (PAAS) +34%, Gold itself +29%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +25%, the Global X Silver Miners exchange-traded fund (SIL) +22%, Newmont (NEM) +19%, and yet Franco-Nevada (FNV) -10% post-Panamanian mining disruptions.  Still, the chart exemplifies the increase from percentage leverage of the equities beyond Gold itself, certainly so from March-to-date:

Again as ’tis just past month-end, here next we’ve the BEGOS Markets year-to-date standings.  And oh does a “little” Gold premium go a long way, the yellow metal thus leading the list +20.0%.  Were it not for the December contract premium, price would still be +17.7%, slotted in second spot just behind Sister Silver’s +19.4% performance.  Either way, seeing the two precious metals atop the stack means they’re well in the black.  And rounding out the podium in third spot is the S&P 500 +12.1% despite its sorely lacking substantive earnings support:  our “live” price/earnings ratio is now 37.8x, a whopping +49% above its conception at 25.4x back in 2013.  But such is life in this “Estimates are Everything Era”.  To the table we go with a big “Thumbs Up” for Gold:

In fact, ’tis to laugh:  with respect to the S&P’s taking a bit of a bath, recall this from last week’s missive?  “…the Associated Press referred to the intra-week selling as a ‘wipeout’.  Honestly … they … don’t know what a ‘wipeout’ is…”  Well folks, the “somehow still surviving” CNN jumped on the same band wagon just this past week with (get ready):  “Why the stock market is suddenly freaking out”.  How’s that for journalistic professionalism?  So the S&P’s weekly loss was -2.1%; (remember the first intra-day circuit breaker isn’t even instituted until -7%).  Across the last 52 trading weeks (which for you WestPalmBeachers down there is since this time a year ago), the S&P 500 has actually recorded six worse weeks than that just past.  “Who knew?”  The FinMedia may be frantic over natural market pullback (remember that when stocks go down, so do viewership ratings); but we nonetheless offer this ad nauseam reprise: ““You ain’t seen nothing yet…” ” –[BTO, ’74]).

Thus in seguing to that which very few are seeing, here is the Economic Barometer from one year ago-to-date along with the comparatively wee drop in the S&P.  But as to the Econ Baro, of last week’s 15 incoming metrics, 11 were worse period-over-period, notably in the Payrolls arena:

Given the recent months’ significant fallout in the Baro, we still remain somewhat flummoxed as to Gross Domestic Product (per the U.S. Bureau of Economic Analysis from the prior week) having advanced at an annualized +2.8% pace for Q2.

“But as you noted last time, it is an election year, eh mmb?“

So ’tis, Squire, but we’re really not supposed to go there, especially given the “Bureau” is purportedly politically-neutral.  Still, there are two pending revisions to the number (respectively due 29 August and  26 September).  But as we look into the current stance of Q3 — especially as the Baro leads — that next quarter’s GDP shall be interesting to see.

Meanwhile, let’s go ’round the horn for all eight BEGOS Markets across their last 21 trading days (one month) along with the “Baby Blues” which depict the consistency of the grey regression trendlines.  Notice the three positive trendlines are for the “safe haven” components of the Bond, Swiss Franc and Gold, whilst the balance of the bunch are negative … as (obviously) is the aforeshown Econ Baro.  And (hat-tip Dow Jones Newswires), a Federal Reserve yield-curve indicator suggests a 70% chance for economic recession.  (Did we mention the Econ Baro leads?  Why, indeed we did.)  Here are the markets and their respective recent trends:

Next let’s go to the precious metals’ 10-day Market Profiles, their more dominantly-traded prices as denoted for Gold (all December price-based) on the left and for Silver on the right.  In both cases there’s comprehensive trading congestion throughout the Profiles:

And of course as we glide into August, here is Gold’s structure by the “continuous contract” monthly bars for some 15 years.  Therein again (per our opening) we’ve acknowledged the “FATH”, but ’tis not really an issue given Gold’s expected monthly trading range is presently 139 points.  Thus the wee 15-point difference between the Faux All–Time High (2523) and true December All-Time High (2338) is immaterial.  Still, “more is better”:

To close, let’s briefly revisit the S&P 500.  Hysteria aside, the mighty Index (whilst fundamentally hyper-overvalued) is now seven consecutive trading days “textbook oversold”.  More importantly, should you make a brief trip to the MoneyFlow page, last week’s selling stint was actually not as negative by monetary outflow as was the change in the Index itself.  (We tend to notice little things like that, especially as they generally lead price).

That noted, keep thy eyes upon the precious metals:  for “FATH” or otherwise … (as crooned Alpheus back in ’07) … Keep the Gold Faith!

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

02 August 2024 – 08:40 Central Euro Time

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The S&P 500’s intraday high-to-low percentage loss yesterday of -2.8% was its worst since 02 November 2022; the session’s -164 intraday points loss was the worst since 05 May 2022; whilst the Index is now five days “textbook oversold”, it remains vastly overvalued per the “live” (futs-adj’d) P/E now 37.7x. At present we’ve the Euro and Metals Triumvirate all above today’s Neutral Zones, whilst below same is the Spoo; volatility is moderate. Specific to the Spoo by Market Values, ’tis (in real-time) -161 points below its smooth valuation line. Gold has recorded another “faux” All-Time High (2513) by the so-called “continuous contract” which is now that for December (see yesterday’s Commentary). And the Econ Baro looks to July’s Payrolls data and June’s Factory Orders.

01 August 2024 – 08:31 Central Euro Time

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Gold by its “continuous front month” cac has reached 2500 to an All-Time High so far in this session of 2503: again this incorporates the robust additional premium per the rollover from the August cac to that for December, (for which 2538 would become a “true” ATH). Meanwhile at present, we’ve the Bond below its Neutral Zone for today whilst above same is the Spoo; BEGOS Markets’ session volatility is moderate. By Market Ranges, the Spoo’s EDTR is 80 points, its highest reading in better than a year. Post-Fed, the “live” P/E of the S&P has moved back above 40x. And today’s Econ Baro incoming metrics include July’s ISM(Mfg) Index, June’s Construction Spending, and the initial read of Q2’s Productivity and Unit Labor Costs.

31 July 2024 – 08:31 Central Euro Time

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The final day of this month brings the FOMC’s Policy Statement (18:00 GMT release): were the Fed to react to the steeply falling Econ Baro, they’d cut; rather to the “oblivious” GDP, they’ll stand pat. At present we’ve the Metals Triumvirate, Oil and Spoo (+1.2%) all above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is firmly moderate. Looking at Market Rhythms for swing consistency, leading the 10-test basis is the Yen’s (not yet officially a BEGOS component) 2hr MACD; on a 24-test basis ’tis instead the Euro’s 2hr MACD. For the Econ Baro ahead of the Fed are July’s ADP Employment and Chi PMI, June’s Pending Home Sales, and Q2’s Employment Cost Index.

30 July 2024 – 08:29 Central Euro Time

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Both the Swiss Franc and Copper are at present below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. Q2 Earnings Season is not quite halfway completed for the S&P 500 constituents: of the 191 reports thus far, 69% are better than a year ago, which (ex-COVID quarters) is average for year-over-year improvement; ‘course the overall “live” S&P P/E of 39.8x remains significantly under-supported by the overall level of earnings, especially given the risk-free 5.147% 3mo T-Bill yield. At Market Trends, save for the “safe-haven” Bond and Swiss Franc, the “Baby Blues” of trend consistency for the other six BEGOS components all are falling. For the Econ Baro we’ve July’s Consumer Confidence. And the FOMC begins its two-day meeting toward tomorrow’s Policy Statement.

29 July 2024 – 08:49 Central Euro Time

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The week is underway with at present both Oil and the Spoo above today’s Neutral Zones; volatility is moderate. The Gold Update cites the new parabolic Long trend as having struggled through its first two weeks: when this has happened historically, it does not fare well for the yellow metal over the near term; presently 2390, Gold is just +16 points above its smooth valuation line (see Market Values); we think the 2300s ought hold their ground, however the weekly parabolic flip to Short would come (per this week) at 2308; note as well that Gold’s August cac volume is moving into that for December, with +47 points of fresh premium. The Econ Baro is quiet today ahead of 14 metrics due as the week unfolds, plus we’ve the FOMC’s Policy Statement come Wednesday.

The Gold Update: No. 767 – (27 July 2024) – “Gold Gets Gut-Punched … Again”

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The Gold Update by Mark Mead Baillie — 767th Edition — Monte-Carlo — 27 July 2024 (published each Saturday) — www.deMeadville.com

“Gold Gets Gut-Punched … Again“

On the heels of last week’s piece “Another Gold Pop n’ Flop”, now we’ve “Gold Gets Gut-Punched … Again” But be thee not at ends, dear friends.  For as we’ll herein see, Gold’s weekly parabolic trend remains Long, which reinforces our “buy on the dip(s)” notion, albeit rewarding results may take quite some time, (i.e. weeks if not months).  Regardless, as Gold falters even though said trend is Long, one justifiably queries ““What’s going on…” ” –[Marvin Gaye, ’71]

Cue Q2 Gross Domestic Product:  the StateSide number as calculated by the Bureau of Economic Analysis came in at +2.8%.  That annualized pace equaled the average of the 12 prior quarters (from Q2 ’21 through Q1′ 24), and belies the now three-month boffing of the Economic Barometer, which we’ve documented as so severe that a negative GDP might actually appear.  But have no fear, as in this election year there’s no need to cry in one’s beer.

For from the “Credit Where Credit is Due Dept.” — stepping down as he is — U.S. President Joseph Robinette Biden, Jr. was described (with positive inference) this past week by Speaker Emerita Nancy Pelosi as “one of the most consequential Presidents in American history.”  And the (if believable) +2.8% GDP annualized growth rate to an extent proves her point.

Thus with the economy in satisfactory shape, the Federal Reserve can justifiably maintain The Bank’s 5.25%-5.50% FedFunds rate range come the Open Market Committee’s vote this next Wednesday (31 July).  So whereas Gold was seeking upside impetus from a downside rate, ‘twould now appear the yellow metal shall have to wait.

Admittedly with respect to the interest rate level of FedFunds, year-to-date we’ve been all over the place:

  • We began this year that — despite all the parroted bilge for multiple FedFunds rate cuts — inflation remaining well above target (+2%) was such that the Fed instead ought put the rate up;

  • But then the leading ramifications of the Econ Baro’s decline had become so extreme, we put forth that come 31 July, the FOMC would basically be “forced” to cut;

  • Yet now — given the Fed appears oblivious to the Econ Baro’s dropping like a stone — that “happy” +2.8% GDP pace gives the FOMC space to delay any cut toward assessing their next economic case (18 September), which is ‘natch what the FinMedia is mandating the Fed do in this race.

Moreover, let’s review inflation for June, our table updated as follows.  And as you regular readers know, those readings with red backgrounds are running above the Fed’s +2% target:

 

The alarming number therein is “PPI-Core” in the June Annualized column:  +4.8%.  As such wholesale inflation gets passed on to retail inflation, July’s “CPI-Core” may become more, (just in case ’tis at home you score).  And with respect to Gold, inflation lingering “above target” may restrain rate relief, thus keeping further material price rises in the yellow metal at bay … at least that’s what monetary theories say.

The bottom line is:  with GDP proceeding at an acceptable pace, the parroted assumption of no imminent rate relief, and inflation not (yet?) really ’round the Fed’s desired +2% target, Gold is taking a bit of a hit … plus not to overlook her, Silver took a helluva hit.  Since Gold’s 2488 All-Time High just this past 17 July, its price has fallen as much as -5.5% (to 2352) toward settling yesterday (Friday) at 2386.  But Silver across the same stint has dropped -13.0% (from 30.80 on 17 July to 27.56 this past Thursday).  

Encore:  “Poor ol’ Sister Silver!”  And as we turn to Gold’s weekly bars from a year ago-to-date, at the foot of the graphic is the Gold/Silver ratio now 85.0x, its highest reading since 03 May, (following which the white metal firmly rallied from the 26s up into the 32s:  do not forget the Silver!)

To be sure, Gold has recorded a second parabolic Long trend blue dot.  But:  price therein has dropped for both weeks.  And yes, that does hold some historical significance, (not that it must repeat).  Either way, century-to-date (which for you WestPalmBeachers commenced 01 January 2001), Gold has initiated 51 weekly parabolic Long trends:  but this is just the fourth one wherein at the start of the trend price has fallen for two successive weeks.  In the prior three cases, Gold did not fare well over the near-term.

‘Course this conflicts with that penned a week ago:  “…the fresh parabolic Long trend “ought” see yet another All-Time-High, shall we say, “sooner than later”.  Across the past ten Long stints, the “median maximum” price increase for Gold is +6.5%, which (in that vacuum) from here would bring 2559…”

“But, ‘It’s different this time’, right mmb?“

Squire, your duly appreciated optimism may well ring true.  And ’tis not just given geo-political issues from the U.S. right ’round the world having run amok, nor the non-existence of money to cover that which folks consider they’re worth, (i.e. “print print print” when it all goes wrong), but the most important fact that by Dollar debasement per our opening Scoreboard, Gold today at 2386 is priced -36% below its 3708 valuation.  “Got Gold?”

As to the aforementioned eroding Econ Baro,  here ’tis:

Such dichotomy to behold!  ‘Tis parroted here, there and everywhere that economically all is well, even to the extent of some +2.8% growth in GDP.  And yet to mathematically run the 50+ monthly incoming metrics which create the Baro, ’tis terrible!  Just his past week alone, slower than May were June’s readings for both New and Existing Home Sales, slower was growth in both Personal Income and Spending, and shrinking were Durable Orders.  Reprise:  “We’re going the wrong way!”  And whilst we’ve not uttered the “S” word in our most recent missives, given the aforeshown summary of inflation for June, dare we remind you of stagflation?

And what about the stock market?  Prior to Friday’s relief rally from a mildly “textbook oversold” S&P 500, the Associated Press referred to the intra-week selling as a “wipeout”.  Honestly folks, they (along with other elements of the FinMedia) don’t know what a “wipeout” is:  rather, this is mere noise.  Indeed last Wednesday, the S&P dropped -2.3%:  the first “circuit breaker” halt via the S&P Futures doesn’t even kick in until -7%.  Elaine Garzarelli’s induced “Black Monday” (19 October 1987) saw a single-day drop in the S&P of -21%.  Yet in today’s Investing Age of Stoopid, a -2.3% pullback is considered a “wipeout”?  Good grief.  Folks’ lack of market history, knowledge and valuation is stunning.

Just remember (yes, ad nauseum) when it comes to the stock market:

  • The “live” price/earnings ratio of the S&P 500 now stands at 39.7x, a ridiculously high level given ’twas just 25.4x at its inception 11 years ago, made all-the-more overwhelmingly risky today considering back then U.S. T-Bills essentially had zero yield whereas today they return 5%;

  • The market capitalization of the S&P 500 settled yesterday at $47.7T supported by a U.S. liquid money supply (“M2” basis) of just $21.0T.  Ask your investment banker if they’ve started printing their IOUs.  (They probably won’t get it).

Or as we on occasion quip:  “Marked-to-market, everyone’s a millionaire; marked-to-reality, nobody’s worth squat.”

Still always worth at least a peek is 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 clearly have turned tail:  upon their passing down through the 0% axis, such trend shall have rotated from positive to negative.  As far as trading support and resistance, we’ve the former notably at the Profile’s 2374 apex, whilst the latter’s levels are as labeled above current price:

Ever so similar is the like graphic for Silver, albeit her regression trend by the “Baby Blues” (at left) already has rotated to negative; meanwhile (at right) her Profile’s support/resistance trading volume apices are as cited.  And with earlier reference to the Gold/Silver ratio now at 85.0x, were the white metal priced today by that metric’s century-to-date average of 68.3x with the yellow metal now 2386, Sister Silver would instead be +24% higher at 34.92:  that price has not traded since 05 March 2012:

And so into Fed Week we go, replete with 15 more metrics for the Econ Baro including Payrolls data for July.  But don’t be shy.  True, Gold may be punched about a bit through these ensuing weeks.  However:  even as Gold hovers ’round our 2375 forecast high, hardly would we rule out price exceeding 2500 before this year is out.  So rather than pout, ensure you have Gold throughout!

Cheers!

  …m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”:  @deMeadvillePro

26 July 2024 – 08:24 Central Euro Time

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Only the Spoo is at present outside (above) its Neutral Zone for today, and BEGOS Markets volatility is pushing toward moderate. The S&P 500 concluded yesterday as mildly “textbook oversold”, albeit its massive overvaluation vis-à-vis earnings remains the ultimate concern (the futs-adj’d “live” P/E is 39.3x). Still, by Market Values, the Spoo (in real time) is -107 points “low” per its smooth valuation line. Gold’s weekly parabolic trend looks to conclude its second week as Long even as both weeks have been net down for the yellow metal: more on that in tomorrow’s 767th consecutive Saturday edition of The Gold Update. And the Econ Baro rounds out its week with metrics including June’s Personal Income/Spending along with the “Fed-favoured” inflation gauge of Core PCE Prices.

25 July 2024 – 08:31 Central Euro Time

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At present above their respective Neutral Zones for today are the Bond and Swiss Franc, whilst below same are Gold, Silver, Oil and the Spoo; BEGOS Markets’ volatility is moderate-to-robust, the two precious metals already having traced 100% or more of their EDTRs (see Market Ranges). The -2.3% decline in the S&P 500 yesterday was the Index’s weakest session since 15 December 2022; however per our leading indicator Moneyflow, the selling to a degree lacked the change in the Index, (suggestive of -1.8% change rather than -2.3%); regardless, the S&P remains vastly overvalued vis-à-vis its earnings generation, the “live” futs-adj’d P/E now 39.5x. Today’s incoming metrics for the Econ Baro include June’s Durable Orders, plus the first peek at Q2 GDP, which — given the stark decline in the Baro — may be worse than consensus.

24 July 2024 – 08:20 Central Euro Time

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Gold is the sole BEGOS Market at present above its Neutral Zone for today, whilst below same is the Spoo; session volatility is moderate; (of note, the non-BEGOS Yen has traced 112% of its EDTR, which for our other components you can see at Market Ranges). The best current correlation amongst the five primary BEGOS Markets is positive between the Bond and Euro. Leading our Market Rhythms for pure swing consistency are (on a 10-test basis) still Gold’s 1hr Price Oscillator, and (on a 24-test basis) the Euro’s 2hr MACD. The Spoo gapped down -17.25 points at today’s open: that is (on a points basis) its largest opening down gap since 09 October of last year, following which over the ensuing few weeks price fell further by some -200 points. Thus far for the S&P 500, Q2 Earnings Season is running sub-par based on year-over-year bottom line improvement. The Econ Baro awaits June’s New Home Sales.