Summer’s first full day begins as the week ends wherein we’ve the Euro as the sole BEGOS Market at present outside (above) today’s Neutral Zone; volatility is quite light. Gold has relinquished its positive correlation with the Spoo and is now better teamed with Oil, both exhibiting uptrends these last couple of weeks, albeit Gold’s weekly technicals continue to suggest lower levels near-term: more on that in tomorrow’s Gold Update (No. 762); regardless, both Gold and Silver have broken above their respective weekly highs of the prior week, (even as by Market Trends their linregs remain negative). The Econ Baro, which has taken a terrific hit this week (indeed across the past two months), looks to May’s Existing Home Sales and Leading (i.e. “lagging”) Indicators, the latter potentially quite negative given the dive in the Baro itself.
Mark
20 June 2024 – 08:34 Central Euro Time
The two-day session continues for the BEGOS Markets: now we’ve the Bond below today’s Neutral Zone, whilst above same are Gold, Silver and the Spoo; session volatility expectedly has upshifted to moderate. Given the rise in the Spoo from Tuesday, the S&P 500 is poised to open (at this writing) above 5500 for the first time; its futs-adj’d “live” P/E is 42.1x and the yield 1.337%; (three-month U.S. dough pays 5.235%). By Market Trends, four components are in positive linregs (the Bond, Swiss Franc, Oil and Spoo), the other four being negative (Euro, Gold, Silver and Copper). Included today for incoming Econ Baro metrics are June’s Philly Fed Index, May’s Housing Starts/Permits, and Q1’s Current Account Deficit.
19 June 2024 – 08:43 Central Euro Time
Given the StateSide holiday, we’ve a two-day GLOBEX session in progress: at present, all eight BEGOS Markets are within their respective Neutral Zones for the session, and volatility is very light. Looking at Market Rhythms for pure swing consistency, on a 10-test basis the leader is the Euro’s 1hr MACD, whilst on a 24-test basis ’tis the Bond’s 1hr Moneyflow. The primary BEGOS components with the best recent correlation is one that is positive between Gold and the Spoo; however, by Market Trends, Gold is in a 21-day linreg downtrend whereas the Spoo’s is up; regardless, both markets are directionally higher from their lows of eight sessions ago The one metric due today for the Econ Baro is June’s NAHB Housing Index..
18 June 2024 – 08:44 Central Euro Time
Following another record-high day for the S&P 500 (the “live” fut’s adj’d P/E now 42.1x; and by our MoneyFlow page, dough continues to pour into this vastly overvalued Index), we’ve Oil at present the sole BEGOS Market outside (below) its Neutral zone for today; session volatility is mostly light. At Market Values, the insatiable Spoo is (in real-time) +285 points above its smooth valuation line; the other four primary BEGOS components are not trading excessively far from their respective valuation lines; of note therein, Oil yesterday moved above its valuation line, which by rule is a Long signal, whilst at Market Trends, Oil’s linreg looks poised to rotate from negative to positive. For the Econ Baro we await May’s Retail Sales and IndProd/CapUtil, plus April’s Business Inventories.
17 June 2024 – 08:20 Central Euro Time
As the week commences we’ve all eight BEGOS Markets in the red; six of the eight (save for the Swiss Franc and Spoo) are at present below their respective Neutral Zones for today, and session volatility is mostly light, expect for Copper having thus far traced 64% of its EDTR (see Market Ranges). The Gold Update remains remindful of the yellow metal’s near-term negative stance, the weekly MACD having confirmed a downside crossover at the conclusion of last week, price potentially en route to a test of the 2247-2171 structural support zone, (notably should the 2311 low of two weeks ago go). Cac volume for the Spoo is now on September; by its 10-day Market Profile, the Spoo’s most dominantly-traded handles (basis Sep cac) have been 5502, 5492, 5430, 5365 and 5350. 14 metrics come due this week for the Econ Baro, beginning today with June’s NY State Empire Index.
The Gold Update: No. 761 – (15 June 2024) – “Gold Firms; Fed Squirms”
The Gold Update by Mark Mead Baillie — 761st Edition — Monte-Carlo — 15 June 2024 (published each Saturday) — www.deMeadville.com
“Gold Firms; Fed Squirms“
First to Gold, then the economic mold (its detritus, all told).
As herein anticipated a week ago: Gold’s weekly MACD (moving average convergence divergence) has now confirmed crossing to negative, despite price’s +1.6% up week in settling yesterday (Friday) at 2348. We shan’t rehash all the math behind like instances as detailed per the prior missive, other than to reiterate price probably produces a down run from ’round here toward the center of the 2247-2171 structural support zone as below shown, notably with no space left for another parabolic Long trend blue dot, (barring Gold leaping from this spot):
‘Course the above analysis is purely a nearer-term technical read which has historically led to lower price levels. From a broader-term fundamental perspective –certainly so given inflation having just abruptly stopped — the Federal Reserve absolutely must cut its Funds Rate come 31 July, right? A Gold positive, to be sure. And in turn that puts to bed our year-to-date musings for a Fed hike, right? “Curiouser and curiouser!” cried Alice.
Toward economic mold (including more on the sudden absence of inflation), initially we’ve these two sentences from The Federal Open Market Committee’s Policy Statement of 12 June 2024:
- First paragraph, opening sentence –> “Recent indicators suggest that economic activity has continued to expand at a solid pace.
- Second paragraph, closing sentence –> “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”
So is the Fed sensing an economic inflection point?
But wait, there’s more: hat-tip Dow Jones Newswires from the ever-ebullient Ayahn Kose (who is the World Bank’s Deputy Chief Economist as everyone knows) came his 13 June prose –> “U.S. growth is exceptional”.
Your having thus absorbed all that parroted wisdom from on high, here’s the Economic Barometer, borne of the math beneath it all. Indeed, 
“Go ask Alice…” –[Slick/Jefferson Airplane, ’67]:
And yes, also go ahead and quote one John Patrick McEnroe: “You canNOT be SERious!!” For 29 April-to-date is the worst plunge for such time frame in the Econ Baro’s 26-year history!
To see the Econ Baro so plunge, one ought think the Fed — as it did under Chairman Greenspan pre-“911” both on 03 January 2001 and 18 April 2001 — make an emergency rate cut straightaway. For after all, along with this economic erosion, inflation within the one mere month of May just comprehensively went away! “Don’t delay, cut today!” Yet for some unforeseen reason, the Fed doesn’t see the Econ Baro; neither do CNBS, Bloomy nor Foxy. But in staying the “no inflation” proclamation:
- At the retail level, the Consumer Price Index showed no inflation (0.0%) for May, the 12-month CPI summation now +3.1% (and “core” +3.5%) … courtesy of The Bureau of Labor Statistics;
- At the wholesale level, the Producer Price Index showed deflation (-0.2%) for May, the 12-month PPI summation now +1.9% (and “core” +1.8%) … courtesy of The Bureau of Labor Statistics.
However, recall a week ago also courtesy of The Bureau of Labor Statistics: May’s unexpected upside explosion in Payrolls’ creation was accompanied by an inflationary doubling of the increased pace of Hourly earnings from +0.2% to +0.4%. So fortunately, there’s no inflation, (let alone stagflation), right?
“Well, it is an election year, mmb, and this is the Labor Dept…“
To be sure, ’tis said the Fed is typically “behind the curve”, indeed today in a state of squirm. For the Fed to opine (at best ‘twould seem) that “economic activity has continued to expand at a solid pace”, we’d say their analysis has (in Formula One lingo) “gone beyond the edge of adhesion and into the Armco!”
And as for the tumbling Econ Baro: ’twill be interesting to see just how negative for May the Conference Board’s Leading [i.e. “lagging”] Indicators shall be come next Friday (21 June). Economic mold, indeed.
Too, there’s earnings mold, our live price/earnings ratio for the S&P 500 settling the week at a historically unsupportable 41.4x. But until real fear hits, everything’s great, right? As is our wont to quip: marked-to-market, everybody’s a millionaire; marked-to-reality, nobody’s worth squat.
From such mold, back to firm Gold. Whilst price near-term may be a bit challenged, the broader picture remains most positive — perhaps technically too positive — but fundamentally there’s so much currency debasement ground to gain, (our opening Scoreboard valuation of 3690 versus Gold currently just 2348).
That noted, we go to Gold’s daily closes and 300-day moving average across the past 13 years, (the graphic still remindful of those tiresome 1200s-1400s during the prior decade). Therein, our green-line forecast high for this year (2375) has thus far held reasonably well, notwithstanding the brief, recent spike to 2454. And by this big picture, Gold’s sub-2000 days really do now appear permanently histoire, with an inevitable run to 3000+ in the balance “As time goes by…” –[Hupfeld ’31 … Wilson, Casablanca, ’42]:
Drilling down into the precious metals, here next we’ve their daily bars from three months ago-to-date with Gold on the left and Silver on the right. Their respective baby blue dots of trend consistency trace nearly identical patterns, suggesting that Sister Silver is aligned with Gold, adorned in her precious metal pinstripes rather than her industrial metal jacket when aligned with Cousin Copper; however, should you peek at the website’s Copper and/or Market Trends pages, you’ll find the red metal’s “Baby Blues” are not that dissimilar from those of the white and yellow metals. Thus for the Metals Triumvirate, all three are at present in linear regression downtrends, our precious two in this view:
As to the 10-day Market Profiles, both Gold (below left) and Silver (below right) have positioned themselves above last week’s lows … but given the near-term negative trends, we’ll simply have to see how it goes:
To close, yes the Econ Baro looks terrible, again in its worst plummeting streak we’ve ever recorded. However, perhaps there’s happier news on the horizon: of the 14 metrics scheduled to hit the Baro in the new week, 10 by consensus are expected to have improved period-over-period. ‘Course, to be factored in as well shall be prior period revisions with which to weigh one’s decisions.
But when it comes to increasing one’s Gold buying program, as Bogey said, “Play it again, Sam!”
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
14 June 2024 – 08:37 Central Euro Time
Gold is at present the only BEGOS Market outside (above) its Neutral Zone for today; still, barring a significant up day, Gold shall compete its week with the weekly MACD having confirmed going negative: more in tomorrow’s 761st consecutive Saturday edition of The Gold Update. Session volatility is light; of note however is the Yen (not yet a BEGOS component) having traced 128% of its EDTR (see Market Ranges for those of the other components). Cac volume for the Spoo is beginning to move from June into September with a whopping +65 points of additional price premium: that in turn finds the Sepember cac (in real-time) +259 points above its smooth valuation line (see Market Values). The Econ Baro looks to more inflation information via May’s Ex/Im Prices; too arrives UofM’s Sentiment Survey for June.
13 June 2024 – 08:35 Central Euro Time
Following the somewhat “stubborn-to-cut-Fed” (let alone our year-to-date musings instead about a hike), the Dollar’s furthering a bit of a bid today: at present below their respective Neutral Zones for this session are the Swiss Franc, Gold and Silver; indeed across the board, all eight BEGOS Markets are underwater, and volatility is mostly light, save for Silver having already traced 5% of its EDTR (see Market Ranges). Yesterday’s S&P surge to a record high (5447) without supportive earnings puts the “live” futs-adj’d P/E at 41.2x. Currencies’ cac volumes are beginning their roll from June into September. And at the wholesale inflation level, today’s incoming metrics for the Econ Baro include May’s PPI.
12 June 2024 – 08:34 Central Euro Time
Oil is at present the sole BEGOS Market outside (above) its Neutral Zone for today; session volatility “ahead of the Fed” is very light. At Market Values, Oil is just a point or so below its smooth valuation line, the upside penetration of which by rule is a Long signal; and at Market Trends, whilst Oil’s linreg is negative, the “Baby Blues” of trend consistency are now into their third day of ascent; on a 10-test pure swing basis, Oil’s best Market Rhythm is the 1hr Price Oscillator; and for within swing profit-taking ’tis the 6hr MACD (as graphically detail on our Oil page). Late in the session we’ve both the FOMC’s Policy Statement, Powell presser and Treasury Budget for May, prior to which comes that month’s CPI.
11 June 2024 – 08:39 Central Euro Time
Gold, Silver and Oil are all at present below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility again is light. Leading our Market Rhythms for pure swing consistency on a 10-test basis are Silver’s 1hr Price Oscillator, the Spoo’s 8hr MACD, and Copper’s 30mn Price Oscillator; on a 24-test basis the leaders are the Spoo’s daily Parabolics, the Yen’s (not yet an official BEGOS Market) 30mn Moneyflow, and Silver’s 1hr MACD. The best correlation amongst the five primary BEGOS components continues to be positive between the Euro and Gold. The Econ Baro is again quiet today ahead of nine metrics due — including inflation measures at the retail, wholesale and ex/im levels — from Wednesday through Friday. The FOMC’s two-day meeting begins today with their Policy Statement and Powell presser due tomorrow.
10 June 2024 – 08:32 Central Euro Time
The back-loaded EconData week (plus the FOMC’s Policy Statement come Wednesday) at present finds the Bond, Euro and Swiss Franc below today’s Neutral Zones, whilst above same are both Silver and Copper; BEGOS Markets’ volatility is light. The Gold Update maintains its near-term negative price stance: of technical import thereto, Gold’s weekly MACD has now provisionally crossed to negative; (confirmation would arrive at week’s end); downside price follow-throughs of this study average some -90 points, which in this case would place Gold well-within its 2247-2171 structural support zone. The S&P 500 settled its week with the “live” P/E at 40.1x. And by Market Values (in real-time), the Spoo is +136 points above its smooth valuation line.
The Gold Update: No. 760 – (08 June 2024) – “Inflation’s Strain Remains Gold’s Bane”
The Gold Update by Mark Mead Baillie — 760th Edition — Monte-Carlo — 08 June 2024 (published each Saturday) — www.deMeadville.com
“Inflation’s Strain Remains Gold’s Bane“
We start with inflation. Year-to-date we’ve diligently documented that ’tis nowhere near the Federal Reserve’s sought 2% target. And not that you need be reminded, but with May inflation readings commencing next week, let’s briefly reprise April’s inflation summary as herein presented a week ago. The data speak for themselves:
Now a week hence, yesterday’s StateSide jobs report for May had “inflation” written all over it: per the Bureau of Labor Statistics, the pace of Hourly Earnings doubled from +0.2% in April to +0.4%; the net increase in Non-Farm Payrolls was the largest year-to-date and incorporates those higher wages; and yet (wait for it…) the rate of Unemployment nonetheless ratcheted higher from 3.9% to 4.0%! How does that happen? Cue the late great Bullet Bill King: “Holy Toledo!”
Query too, how does this happen? On Thursday, the Governing Council of the European Central Bank cut 25 basis points on each of its Deposit Facility, Main Refinancing Operations, and Marginal Lending Facility rates … even as the leader of their pack Mme. Christine “Risky” Lagarde stated that “domestic inflation remains high” despite increased confidence for a “disinflationary rhythm”, (which she shan’t find on our Market Rhythms page, but we digress…)
Still, the annualized pace of inflation on this side of the Pond increased from +2.4% in April to +2.6% in May. Regardless: the ECB cut, (following ten across-the-board rate hikes dating back to 27 July 2022).
The bottom line in our mind: the optics are the ECB cut rates not because ’twas the right thing to do, but rather because they’re expected to so do. Oooooh. And will that come back to bruise? Or shall the Fed dare follow suit? We think not (yet), but stayed tuned…
Still being bruised as anticipated is Gold: our near-term negative stance remains in force as it has been through the prior two missives. Per this week’s title “Inflation’s Strain Remains Gold’s Bane”, hardly can the Fed this coming Wednesday (12 June) release the rate reins. Moreover, that above table suggests — dare we say “obligatorily” — to tighten said reins. But then again, the Economic Barometer is getting comprehensively skewered. Near-term inflation may be restrictive for advancing Gold as it keeps any Fed rate cut on hold … but broader-term stagflation for Gold shall make its price bold! Cue Old Yeller: “Hey Jay? We need another Dollar mold!” To wit, the Econ Baro below:
For the week just past, the Econ Baro took in 15 metrics of which just five garnered period-over-period improvement. Indeed measuring the Baro from its most recent peak ’round the S&P 5000 level, ’tis the worst 30-trading-day drop since that ending nearly 12 years ago on 05 July 2012, following which the FedFunds rate effectively remained at 0% for better than three additional years. Does history repeat? Inflation back then was continuously sub-2%. Not now, given the current FedFunds target range of 5.25%-5.50% So cut the rate and really stagflate, inflation further not to abate! Got Gold?
Admittedly as noted, our Gold view near-term is negative: fundamentally so with the Fed still on hold; technically so per our weekly chart below. To be sure, the year-over-year dashed regression trendline remains positive. But the rightmost blue parabolic Long dot shall pop given price’s plop. Too, as a special addition to this week’s graphic, we’ve inserted Gold’s weekly MACD as it is now negatively crossing to the downside, price having settled Friday at 2311:
“And even if, like you say mmb, that ‘Shorting Gold is a bad idea’, these MACD signals usually work, right?“
Historically ’tis true Squire. From April 2018 through today there have been for Gold 12 negative weekly MACD crossovers, the average downside follow-through being -93 points. Strictly within that vacuum from here at 2311, that bodes for 2218 which is nearly the center of the depicted 2247-2171 structural support zone. Upon the parabolic flipping from Long to Short, the average fall from there across the past five years is similarly -90 points. No, we’d rather price not go there, but such lower excursions Gold on occasion does fare.
‘Course for the Gold bull, hope springs eternal; otherwise, hardly would we be penning these weekly pieces. So fragile now is the state of the economy, the state of the stock market (“ridiculously overvalued” per a mainstream FinMedia piece a week or so ago), and the state of the world in many respects. Therefore Gold is the place to be! Indeed specific to stocks, here’s our honest “live” P/E calculation for the S&P 500 on the trailing twelve month basis; (for you WestPalmBeachers down there, “live” means right now):
Not surprisingly however, upon querying AI for same, it replied: “The trailing twelve month Price-to-Earnings (P/E) ratio of the S&P 500 is currently 24.79.” More on such “Assembled Inaccuracy” in our closing wrap. Indeed contextually, the “live” P/E is now +58% higher that ’twas at its inception a dozen years ago. And for those of you scoring at home, you know “means reversion” always occurs. (Have a nice day).
Not having a nice day yesterday were Gold and Silver. First to the yellow metal which traced the entirety of its two trading weeks in a single session on Friday. High-to-low by both points (-103) and percentage (-4.3%), ’twas Gold’s worst trading day since last 04 December. ‘Tis why in Gold’s 10-day Market Profile (below right) every price bar is highlighted in Gold as they all traded. And with Gold’s “Baby Blues” of trend consistency now falling beneath their 0% axis (below left), this means the 21-day linear regression trend has confirmed rotating from positive to negative:
Second to the white metal, Sister Silver suffering Friday her worst high-to-low day (-2.45 points, -7.7%) since 02 February 2021. Below on the left are Silver’s daily bars from three months ago-to-date: her plunging “Baby Blues” (barring an unexpected upside Fed cut rocket shot) surely in the new week shall see her trend, like that already for Gold, also rotate from positive to negative. And below on the right is her 10-day Market Profile, price itself at the very base of the stack:
With the Federal Open Market Committee’s Policy Statement and Powell Presser due Wednesday, we’ll wrap with this from the “Retraction/Correction/Blew It Dept.” given reference to the aforementioned brilliance of AI.
In last week’s missive we performed quite the song and dance over how $34T might be “visualized”. And via proper math we concluded that $34T in One Dollar bills laid end-to-end essentially equated to 5.5x the distance from Earth to Neptune. However, we fell afoul of the cardinal rule not to depend on stoopid source material. Indeed, rather than scrounge round through a wallet-full of Euros in search of a stray One Dollar bill for our measuring tape, we instead queried: “How many One Dollar Bills laid end-to-end make one mile?” And now after further review following email spew, Assembled Inaccuracy didn’t have a correct clue. (So what else is new…)
Start with the wrong number … End with the wrong number! For the correct answer and proper use of brain function, we leave it to you StateSiders to get out a buck, your ruler, and do the math from there. And you’ll still find the number unfathomably impossible.
‘Course, near-term negativity notwithstanding, the one number to grab is Gold!
Cheers!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
07 June 2024 – 08:40 Central Euro Time
At present we’ve Copper as the only BEGOS Market outside (below) its Neutral Zone for today; session volatility is light with StateSide jobs data in the day’s balance. Curious to note yesterday’s ECB rate reduction despite the Governing Council’s outlook for increasing inflation. Going ’round the Market Trends page (21-day linreg basis and “Baby Blues” consistency): that for the Bond is up and reinforcing; the Euro up but weakening; the Swiss Franc up and reinforcing; Gold barely up and neutral; Silver up but weakening; both Copper and Oil down and worsening; and the Spoo up but weakening. The tumbling Econ Baro completes its busy week with May’s Payrolls data as noted, plus April’s Wholesale Inventories and (late in the session) Consumer Credit.
06 June 2024 – 08:35 Central Euro Time
The Swiss Franc, Gold and Silver all are at present above today’s Neutral Zones; none of the other BEGOS Markets are below same, and volatility is pushing toward moderate. Following yesterday’s record high, the “live” P/E of the S&P 500 is a futs-adj’d 40.5x and the yield 1.352%; three-month annualized U.S. T-Bill dough yields 5.240% without the risk of capital loss. An interesting Market Rhythm to mind is Gold’s 2h MACD: its last nine swings (both Long and Short) from 16 May-to-date have produced at least 12 points of signal follow-through ($1,200/cac); whilst the yellow metal both yesterday and today is having a recovery run, the weekly MACD is nearing a negative cross, in line with our recent writings being wary of near-term price retrenchment. Incoming metrics today for the Econ Baro include April’s Trade Deficit and the revision to Q1’s Productivity and Unit Labor Costs.
05 June 2024 – 08:01 Central Euro Time
The Bond and Swiss Franc are at present below their respective Neutral Zones for today; above same is Gold, and BEGOS Markets’ volatility is light. Gold’s weekly MACD is poised for a negative crossing, the last five of which over three years have led to lower prices of at least -30 points; The Gold Update cites specific lower levels of which to be aware following the “double-top” which formed across the past seven weeks; and price has been flirting with either side of its smooth valuation line (see Market Values). But that same metric, Oil (in real-time) shows as -7.83 points “low” and the Spoo as +123 points “high”, The Econ Baro looks to May’s ADP Employment data and the ISM(Svc) Index.
04 June 2024 – 08:26 Central Euro Time
BEGOS Markets’ volatility is lighter than ’round this time yesterday, all eight components having thus far traced less than 50% of their EDTRs (see Market Ranges). The Swiss Franc is at present above today’s Neutral Range, whilst below same is Oil. Yesterday was a sizable up day for the currencies, both the Euro and Swiss Franc moving to nearly two-month highs. At Market Trend’s, Silver’s “Baby Blues” of trend consistency confirmed dropping below their key +80% axis, suggestive of lower prices near-term: should yesterday’s low of 29.940 go, a test of 29.000 (10 May’s high) appears structurally reasonable; Silver’s Market Profile support is 30.650 to 30.500; note as well at on our page for Silver that its EDTR presently exceeds 1.000 (the actual reading being 1.155 points per day). April’s Factory Orders come due for the Econ Baro.
03 June 2024 – 08:36 Central Euro Time
The week begins with the Bond at present above its Neutral Zone for today; below same are Oil, Silver and Gold; volatility is moderate. The Gold Update still is slanted toward lower prices near-term following the yellow metal’s have created a notable “double-top” within the past seven weeks, such pattern generally leading to further downside. The best correlation amongst the five primary BEGOS Markets is positive between the Euro and Gold. Leading our Market Rhythms for pure swing consistency on a 10-test basis is again the Yen’s (not yet a formal BEGOS component) daily Parabolics, and on a 24-test basis ’tis Gold’s 1hr MACD; (as highlighted in The Gold Update, the yellow metal’s 12hr MACD is best for profit taking within swings). The Econ Baro starts a busy week with May’s ISM(Mfg) Index and April’s Construction Spending.
The Gold Update: No. 759 – (01 June 2024) – “Gold’s Double-Top Primes Price Plop”
The Gold Update by Mark Mead Baillie — 759th Edition — Monte-Carlo — 01 June 2024 (published each Saturday) — www.deMeadville.com
“Gold’s Double-Top Primes Price Plop“
Notwithstanding +23 points of fresh premium as COMEX Gold rolls from the June contract into that for August, there’s no mistaking price having formed a classic near-term double-top. Here ’tis:
The above chart tracks Gold by its 12-hour bars from nearly the beginning of this year-to-date. (The inset at lower right is by Gold’s daily candles specific to the August contract for the past two months). And stark thereon is the double-top (both being chronological All-Time Highs) achieved at 2449 on 12 April and again at 2454 on 20 May. The rationale for displaying the double-top per 12-hour bars is — that by price’s 12-hour MACD (moving average convergence divergence) — such study presently ranks as Gold’s best Market Rhythm for taking signals followed by profit. Green bars indicate price when the MACD is Long and red bars when Short, the latter as you know being a bad idea; (profitability results of this study are included on the website’s current Market Rhythms list).
The key point of course is that double-tops in major markets are prime for selling (be it by humans or algorithms), which — in spite of our being broad-based bullish on Gold — has been our near-term bearish analytical slant given the abrupt downtrend from that 20 May All-Time High at 2454. Indeed since then, Gold has dropped (basis the June contract) from 2454 to as low as 2321 (-133 points or -5.4% in just eight trading days). Now by the August contract having settled yesterday (Friday) at 2348, should 2309 go, the 21 March high of 2263 ought come into play … just in case you’re scoring at home.
More importantly, what’s coming into play in the words of Bloomy last Wednesday is “Revived Hike Chatter”. For some irrational reason, the FinWorld just seems to be figuring that out now. However, we’ve regularly herein been musing since the start of this year about the Federal Reserve ~~perhaps~~ having to raise rather than cut interest rates. The difference between “Us and Them” –[Pink Floyd, ’73] is simple: we do the math; the FinWorld parrot one another. And by the math, inflation remains on the move as below summarized in our April table:
Therein are the three major measures of StateSide inflation: the Consumer Price Index (CPI), Producer Price Index (PPI) and “Fed-favoured” Personal Consumption Expenditures Price Index (PCE), all listed with both their headline and attendant core readings. The left column is each category’s 12-month summation and the right column is April’s data annualized. Now look at the two averages, bearing in mind the Fed’s inflation target is 2%: for the 12-month summation ’tis 3.5%; but for April’s annualized paces ’tis 4.2%. Which for you WestPalmBeachers down there means: “We’re going the wrong way…”
So is the StateSide economy. Recall our penning a week ago: “…the Baro looks to be lower still in a week’s time as stagflation creeps ‘cross the nation…” Cue Tag Team from back in ’93: “Whoomp! (There It Is)””
‘Course, the FinMedia are all excited — assuming you neither eat nor drive — that the Fed-fawned-over Core PCE for April was only 0.2%, (i.e. the annualized 2.4% in the aforeshown inflation table). Nevertheless: the economy by the Econ Baro is fading, whilst living costs are rising. Stagflation. To be sure: “revived hike chatter” may lend to near-term Gold negativity on the notion the Fed could actually raise rates; but the emboldened “S“-word firmly lends to broad-based Gold positivity given the need to print dough to keep everyone whole … especially should U.S. Secretary of the Treasury Janet “Old Yeller” Yellen yet again be yelling she’s short of funds to pay interest on the nation’s $34T in outstanding securities, (riskless though they are, right?).
“So mmb, how can we visualize $34T?“
Simply by math, Squire. One Dollar bills lined up end-to-end take $2,276 to cover one mile. So, to line up $34T would cover 14,938,488,576 miles. The annual average distance from Earth to Neptune is 2,703,959,960 miles. Thus the “dollar distance” of $34T is 5.5x that distance to “Big Blue”; ’tis a lot of dollars.
Now it being month-end, we’ve still more graphic richness to present. And if memory serves, never have we seen the BEGOS Markets’ Metals Triumvirate dominate the Standings year-to-date: atop the framed podium — and ever-deservingly so — is Sister Silver, followed by Copper and then Gold. ‘Tis such a beautiful thing that we’re actually tearing up a bit:
Whilst in vein (but never in vain) with our BEGOS Markets, drilling down into the past trading month (21 days) here are their bars with the ever popular “Baby Blues” that depict the day-to-day consistency of the grey trendlines. To wit, save (barely) for Oil, the Blues ’round the horn are in descent. And “when money is coming out of everything”, ’tis anticipative of the oxymoron “Dollar Strength”. That in turn hints at higher interest rates, albeit upon the Federal Open Market Committee’s Policy Statement a week Wednesday (12 June), their sitting-on-hands likely continues. Regardless, here’s the “What’s happenin’ now”:
Specific next to Gold’s weekly bars, the rightmost one benefits from the aforementioned +23 points of August contract premium, (which over these next two months shall whittle away at a rate of about -0.5 points per trading day). Either way, this year ago-to-date “continuous contract” graphic is indicative of Gold having had a modest up week (+13 points) when in fact it had a modest down week (-10 points). But at the end of the day, given Gold’s EDTR (expected daily trading range) is now 36 points, that difference at best is noise. Note therein the blue-dotted parabolic Long trend (now 13 weeks in duration) shall flip to Short above the remindful 2247-2171 structural support zone:
Staying with the year ago-to-date theme, our pro-metals’ equities readers are finally getting some desired vindication. In recent month-end missives wherein this like graphic appears, Gold oft has been ahead of its equites brethren. Yet now, ’tis getting out-performed by a few of the crew. From least-to-best by their percentage tracks we’ve: Franco-Nevada (FNV) -15% (but in a recent uptrend), Newmont (NEM) +3%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +14%, Gold itself +19%, the Global X Silver Miners exchange-traded fund (SIL) +29%, Agnico Eagle Mines (AEM) +34%, and Pan American Silver (PAAS) +44%. Suffer by leverage, but live well by same:
Meanwhile, similar to what we saw a week ago, by their respective 10-day Market Profiles price remains low in the stack for Gold (calibrated to the August contract) on the left and for Silver on the right:
And as ’tis our wont to say, ‘twouldn’t be month-end without our big picture view of Gold’s stratified structure by the month across these past 16 calendar years:
To wrap: with each passing week, more and more internet information (or “bilge” if you will) builds toward financial end-times, part and parcel of which would include our “Look Ma, no money!” S&P crash. ‘Course this being big election years coinciding both on this side of the Pond (five-year Parliamentary) and StateSide (four-year Presidential), the hype of “Well, it’s the election, you know…” already is quite rife. But even were it not, the following macro-prudential fact remains: the S&P 500 is priced at nearly double its earnings support, whilst Gold is priced at nearly half its Dollar debasement valuation. And as we’ve demonstrated ad nauseum throughout 16 years of these weekly missives, price inevitably reverts to valuation. Therefore, near-term price plop or not: hopefully your Gold is well-guarded when sought!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
31 May 2024 – 08:16 Central Euro Time
The BEGOS Markets are fairly quiet ahead of “Fed-favoured” inflation data due for April: both the Euro and Swiss Franc are at present a bit below their Neutral Zones for today; otherwise the balance of the components are within same, and volatility is light. The Spoo’s “Baby Blues” (see Market Trends) confirmed closing yesterday below their key +80% axis: year-over-year there’ve been six prior such negative crossovers, price then averaging -96 points of downside within the ensuing 21 trading days (one month); and by Market Values (in real-time), the Spoo still is +81 points above its smooth valuation line; too, this past Wednesday, the Spoo crossed below its Market Magnet, also indicative of further near-term price fallout; there is some structural support for the Spoo in the 5154-5036 zone, (i.e. beginning some -90 points below present price). The Econ Baro looks to May’s Chi PMI, plus April’s Personal Income/Spending and Core PCE Prices.
30 May 2024 – 10:26 Central Euro Time
On the heels of yesterday’s declines across all eight BEGOS Markets, we’ve at present both the Bond and Swiss Franc above their respective Neutral Zones for today, whilst below same are Gold, Silver, Copper, Oil and the Spoo; session volatility is moderate. At Market Trends, save for Silver and Oil, the “Baby Blues” of trend consistency are falling for the balance of the bunch. Looking at Market Rhythms on a profit-taking (rather than pure swing) basis, the best study is the Spoo’s daily Price Oscillator: there have been 10 signals extending as far back as 20 December 2022 for which all 10 produced price follow-through of at least 44 points (i.e. $2,200/cac); the current signal has been Long since 08 May. Metrics for the Econ Baro today include April’s Pending Home Sales and the first revision to Q1 GDP.
29 May 2024 – 08:24 Central Euro Time
Gold picks up +23 points of fresh premium as cac volume moves from June into that for August; however, the yellow metal is lower today, at present below its Neutral Zone as is the Spoo; none of the other BEGOS Markets are above same, and volatility is light. Looking at Market Rhythms for pure swing consistency: on a 10-test basis our best three are the Yen’s (not yet an official BEGOS Market) daily Parabolics, Copper’s 5mn Moneyflow, and the Spoo’s daily Parabolics; on a 24-test basis, the top three are the Yen’s 4hr Moneyflow, Gold’s 2hr Parabolics, and Copper’s 1hr MACD. Our best correlation amongst the five primary BEGOS components is positive between Gold and Oil. No metrics are due today for the Econ Baro.
28 May 2024 – 08:37 Central Euro Time
The BEGOS Markets’ two-day session continues, all three elements of the Metals Triumvirate at present above today’s Neutral Zones, as are Oil, the Euro and Swiss Franc; within same are both the Bond and Spoo; volatility has expectedly widened, now mostly moderate-to-robust, Silver with the largest EDTR (see Market Ranges) tracing at 150%. The Spoo is (in real-time) +192 points above its smooth valuation line (see Market Values); by Market Profiles, the Spoo’s most commonly traded price of the past 10 sessions is 5333. The S&P’s MoneyFlow has been significantly skewed to the upside on further piling into NVDA; otherwise by the page’s quarterly measure, the trend had been in mild decline. The Econ Baro awaits May’s Consumer Confidence.
27 May 2024 – 08:35 Central Euro Time
The two-day session for the BEGOS Markets is underway, (for Tuesday settlement given the StateSide holiday). The precious metals are getting the bid, both Gold and Silver at present above today’s Neutral Zones; the other six BEGOS components are within same, and volatility expectedly is quite light: only Silver has thus far traced in excess of 50% (55%) of its EDTR (see Market Ranges). The Gold Update acknowledges the most recent All-Time High (2454) as being at best “marginal” and cites what have become “habitual” moves lower typically following such post-COVID highs. The S&P 500 settled Friday as 13 days “textbook overbought”: the futs-adj’d “live” P/E is 39.7x. The Econ Baro anticipates just nine incoming metrics as the week unfolds, including on Friday the “Fed-favoured” PCE for April.
The Gold Update: No. 758 – (25 May 2024) – “Gold’s Marginal High and Habitual Cry”
The Gold Update by Mark Mead Baillie — 758th Edition — Monte-Carlo — 25 May 2024 (published each Saturday) — www.deMeadville.com
“Gold’s Marginal High and Habitual Cry“
We start with this from the “Pat on the Back Dept.” Per the prior missive penned a week ago (“Another Gold All-Time High is Nigh”), ’twas therein stated that Gold (then 2420) was exhibiting sufficiently daily trading range such that one could reasonably expect a fresh All-Time High (above 2449) to occur as soon as last Monday … which is precisely what happened, the yellow metal trading up to 2454 … but that was it.
So let’s thus transit from that department to the “Pass the Hankie Dept.” as Gold’s new All-Time High was at best “marginal”. And All-Time Highs recorded by Gold since at least the COVID years-to-date have then — oft with promptness — seen price go through “habitual” selling. To wit: following Monday’s 2454 high, the yellow metal this past week hastily traded down -128 points to as low as 2326 before settling yesterday (Friday) at 2335. So yes, you may cry.
Yet we offer this broader-based solace. Century-to-date, Gold has amassed 5,887 trading days, of which All-Time Highs have been registered on 268 occasions. For those of you scoring at home, that means across these past 24 calendar years, Gold averages a fresh All-Time High every 22 trading days, which essentially is once per month, albeit that is far from linear: for the nearly nine-year stint from 07 September 2011 to 27 July 2020, nary an All-Time High was notched, price in that duration dropping as much as -46% down to 1045 on 03 December 2015.
‘Course more recently, not every incremental All-Time Gold High since the COVID outbreak in 2020 has then been swiftly sold off. And yet, an inevitably habitual pattern of selling certainly is made manifest by the following chronological table of just how far Gold — following a run of All-Time Highs — has then declined within one month:
And the low row in the above table reflects last Monday’s All-Time High at 2454. Note therein the decline with only four trading days having since passed, price already having come off by as much as -5.2%.
Now hardly are we bearish on Gold: but ‘twould not be untoward to see price glide lower still given Gold having just crossed below our Market Values “smooth valuation line” for the first time since 28 February. As you seasoned website followers know, eclipsing that line to the downside (be it for any of the five primary markets which comprise BEGOS, i.e. the Bond / Euro / Gold / Oil / S&P) regularly leads to further selling as we below show. Note this latest negative price crossover as encircled in red, (the lower panel oscillator being price less valuation):
Specific to the current crossover, ’twas confirmed as of Thursday’s close at 2331. Year-over-year, ’tis the ninth such downside crossover. For the prior eight, the average negative penetration within one month is -65 points, (the median being -56 points). Thus in that vacuum alone, we’d see Gold 2275-2266 over the near term. ‘Course, rarely is “average” reality: there is pricing congestion for Gold from 2364-2285 to at least initially limit any truly material downside from here (2335). Still, we’re again placing for perspective purposes the underlying structural support zone of 2247-2171 on Gold’s weekly bars graphic — the crybabies notwithstanding — from one year ago-to-date. (Note at lower-right an Investing Age of Stoopid intruder…):
“Yeah, it snuck right past me, mmb“
Well, Squire, they’ll do anything and everything to convince you to dump Gold for “GameFlop” (GME, p/e 950x). But true to ongoing form, such Investing Age of Stoopid continues to run its inevitably-ending course, the “live” price/earnings ratio of the S&P 500 (aka “Casino 500”) now 39.4x and yield 1.380% versus the U.S. annualized three-month rate of 5.245%. The S&P’s market-capitalization is now $46.3T supported by a liquid U.S. Money Supply (M2) of only $21.3T. ‘Course when you WestPalmBeachers are sufficiently shaken to sell along with the rest of the herd, your brokers shall all be good for the money, right? (Recall, too, the ten stock market crash catalysts itemized in Gold Update no. 712 from last 08 July: today, all ten remain firmly bona fide).
Speaking of crash catalysts, we’ve some good news as regards the StateSide economy. Incoming metrics this past week for the Economic Barometer were so sparse (just five inputs), that it suffered limited additional damage. Next week is again rather light as well with just nine metrics due, notably including the Fed-favoured inflation gauge of Personal Consumption Expenditures for April which is not expected to have slowed from March’s annualized pace of +3.6%. But net-net by consensus, the Baro looks to be lower still in a week’s time as stagflation creeps ‘cross the nation:
Hardly was Gold’s decline this past week at a crawl. The yellow metal’s net two-day drop (from Tuesday’s settle at 2425 to that for Thursday at 2331) was -94 points: that ranks ninth-worst by points for any two-day span century-to date; (the like -3.9% drop has been worse on many two-day occasions, the most extreme being -13.3% in mid-April 2013). Still, the week’s fallout was enough to drive price from nearly the top of its 10-day Market Profile toward the bottom per the below right hand panel. The left-hand panel of Gold’s daily bars from three months ago-to-date depicts the baby blue dots of trend consistency having just turned lower. Again as aforementioned, the 2364-2285 area is price-congestive, and thus for now, supportive:
As for Silver, her two-day (Tue-Thu) drop was -5.8%. But unlike Gold, hardly did she hoover her whole Market Profile, basically finishing in the center of that two-week stack (below right). Too, her “Baby Blues” have (yet) to lurch lower per the three-month stint (below left). Indeed ’tis heartening to see Silver Silver getting some degree of respect lately. Further, she remains quite cheap relative to Gold, even as the Gold/Silver ratio (as noted a week ago) has moved sub-80x. Today ’tis 76.5x … however the century-to-date average is 68.3x. So priced at that average with Gold at 2335 today, Silver would be +12% higher than her current 30.54 level at 34.21:
Our takeaway is: ‘twould be folly not to anticipate lower Gold prices near-term. In addition to price having just crossed beneath the aforeshown smooth valuation line, we’ve the following technical negatives: Gold’s daily Parabolics flipped from Long to Short effective yesterday’s open as did the MACD (moving average convergence divergence); the daily Price Oscillator is dwindling and the Moneyflow is nearing a cross from inflow to outflow.
Still, with prudent cash management always paramount — and acknowledging that “shorting Gold is a bad idea” — let’s wrap with the stack:
The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3769
Gold’s All-Time Intra-Day High: 2454 (20 May 2024)
2024’s High: 2454 (20 May 2024)
Gold’s All-Time Closing High: 2430 (20 May 2024)
10-Session “volume-weighted” average price magnet: 2385
Trading Resistance: various per the Profile from here at 2335 up to 2440
Gold Currently: 2335, (expected daily trading range [“EDTR”]: 38 points)
10-Session directional range: down to 2326 (from 2454) = -128 points or -5.2%
Trading Support: none per the Profile
The Weekly Parabolic Price to flip Short: 2263
Structural Support: 2247-2171
The 2000’s Triple-Top: 2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The 300-Day Moving Average: 2046 and rising
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
‘Course the bottom line is, regardless of its marginal high but then habitual cry, don’t miss out when Gold goes to the sky!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
24 May 2024 – 08:28 Central Euro Time
The precious metals are getting a grip, both Gold and Silver at present above their respective Neutral Zones for today; the other six BEGOS Markets are within same, and session volatility is quite light ahead of the StateSide long weekend. In recent years, Gold after recording All-Time Highs has habitually, indeed materially, pulled back somewhat swiftly: more on that in tomorrow’s 758th consecutive Saturday edition of The Gold Update; too, the yellow metal finally has returned to its smooth valuation line (see Market Values) for the first time since 28 February. At Market Trends, the Spoo’s “Baby Blues” of trend consistency have (in real-time) kinked lower (but not so much as to yet penetrate their key +80% axis); still the S&P itself technically remains “textbook overbought” and is overwhelming expensive given its cap-weighted lack of earnings support. The Econ Baro concludes its quiet week with metrics including April’s Durable Orders.
23 May 2024 – 08:34 Central Euro Time
Following what we’d now classify as Gold’s “marginal” All-Time High on Monday (at 2454), the yellow metal has since been in sell mode (at present 2364), and along with Silver (30.545) is below today’s Neutral Zone; the Spoo is above same, and BEGOS Markets’ volatility is light-to-moderate. Such selling has dutifully brought down the Market Value excess we’ve had for Gold for nearly three full months: price (in real-time) is now +20 points above its smooth valuation line; a month ago the deviation was +200 points. “Over-valued” too by such metric is the Spoo (+230 points) whilst “under-valued” we’ve Oil -5.78 points. Specific to our S&P MoneyFlow page, the three-month differential of Flow relative to the Index (per that page’s lower-right panel) has developed a detectably negative bent to it. The Econ Baro’s incoming metrics today include April’s New Home Sales.
22 May 2024 – 08:24 Central Euro Time
At present we’ve both the Bond and Copper below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is mostly light. Silver has quieted a bit relative to its ranginess into this week: indeed by Market Ranges, the white metal’s EDTR is now 0.99 points, (whereas last September ’twas as low as 0.46 points). The S&P 500 is now 10 consecutive days “textbook overbought”: the “live” (fut’s-adj’d) P/E is 40.4x and the yield 1.369% versus an annualized 5.240% on risk-free U.S. 3-month dough. One wonders for how much longer the investing herd shall continue seeking unrealistic capital gains rather than equities reasonably priced by earnings support: mind our S&P 500 Valuation and Rankings page. The Econ Baro awaits April’s Existing Home Sales; and the Fed releases the 30 Apr-01May FOMC meeting minutes.
21 May 2024 – 08:39 Central Euro Time
All three elements of the Metals Triumvirate as well as Oil are at present below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate, again save for Silver which today already has traced 153% of its EDTR; quietest is the Spoo with just a 10% tracing and nothing due for the Econ Baro. Following Gold’s new All-Time High yesterday (2454), price has backed off: still per Market Values, the yellow metal is (in real-time at 2419) +79 points above its smooth valuation line. Gold’s best Market Rhythm for pure swing consistency is (on a 10-test basis) its 12hr Parabolics and (on a 24-test basis) its 30mn Moneyflow; on a profit-taking basis, Gold’s daily Parabolics have reached follow-through of $2,700/cac in nine of the past 10 swings as listed on the Market Rhythms page; that, too, is the Rhythm featured on the Gold page.
20 May 2024 – 08:40 Central Euro Time
Gold has recorded another All-Time High this morning: The Gold Update mused it could happen as soon as today, and so it has, the intra-day high at present 2454, with price above its Neutral Zone as ’tis too for both Silver and the Euro; the other BEGOS Markets are within same. Session volatility is moderate, albeit specifically robust for Silver which already has traced 139% of its EDTR (see Market Ranges). Q1 Earnings Season has completed: for the S&P 500, 64% of reported constituents bettered the bottom lines over Q1 of a year ago, a somewhat sub-par performance given improvement (ex-COVID quarters) averages 69%; whilst the “live” P/E of the S&P was reduced from 46.1x, the current (futs-adj’d) 40.0x remains a dangerously high level. ‘Tis a very quiet week for the otherwise plunging Econ Baro: just five metrics are due, none until Wednesday.
The Gold Update: No. 757 – (18 May 2024) – “Another Gold All-Time High is Nigh”
The Gold Update by Mark Mead Baillie — 757th Edition — Monte-Carlo — 18 May 2024 (published each Saturday) — www.deMeadville.com
“Another Gold All-Time High is Nigh“
One week ago we herein opened with this query: “Is Gold’s near-term correction completed?” Given the yellow metal’s upside price action since then, we can now answer in the affirmative, (which for you WestPalmBeachers down there means “Yes”).
As for employing the word “Another” in this week’s title, ’twasn’t that long ago in milestone missive No. 700 (15 April 2023 with Gold then 2018) we wrote “Gold: The Next All-Time High is Nigh“, which of course obviously came to pass, indeed on 16 daily occasions since then. Now Gold is merely on go to do it again.
Our Mighty Metal settled at an All-Time Weekly Closing High yesterday (Friday) at 2420, just -29 points shy of the most recent All-Time Intra-Day High of 2449 this past 12 April. Further, given Gold’s “expected daily trading range” (per the website’s Market Ranges page) is 36 points, price is within such range of reasonably reaching above 2449 as soon as Monday, (just in case you’re scoring at home).
True, a week ago — at least technically — we were reserved about Gold’s then imminent direction, price having completed a perfect Golden Ratio retracement, from which at 2386 it swiftly sank in the new week to 2338. To wit as we penned in Wednesday’s Prescient Commentary: “…until the former clears … the Golden Ratio retracement … the recent near-term correction would technically remain in place…” But having then since risen higher still, there’s really not that much pricing congestion now between here (2420) and there (2449).
“And so the question becomes ‘How high is high?’, right mmb?“
That is a critical knowledge point there, Squire. To be sure, Gold has already surpassed our forecast high for this year upon achieving 2375 this past 09 April; (recall such prognosis having been made last 30 December in “Gold – We Conservatively Forecast 2375 for 2024’s High”).
Yet to Squire’s query as to “How high is high?” — at least fundamentally — we can see per the opening Gold Scoreboard that by Dollar debasement (even accounting for the annual increase in the supply of Gold itself), we’ve the yellow metal’s value at 3767, or +56% above today’s “lowly” price at 2420.
But given this ceaseless Investing Age of Stoopid wherein — save for central/sovereign banks — Gold is considered “passé”, determining the inevitable “when” for 3767 (and beyond) is subjective. The art of designing Fibonacci retracements per our prior missive may be one thing: but, the art of future Fibonacci extensions we leave to you “seers” out there.
Either way, ’tis a pleasant gaze at the past via this view of Gold’s weekly bars from one year ago-to-date, again the rightmost nub being an All-Time Weekly Closing High. Indeed through these first 20 trading weeks of 2024, this past one ranks fifth-best by both points (+53) and percentage (+2.2%) gains. As for the more skeptical amongst you — and price is arguably “too high” above the rising dashed regression trendline — we’ve again depicted the green-bounded 2247-2171 structural support zone, within which is the current “flip to Short” price of 2236. (But let’s not go there…)
And no, that Gold/Silver ratio at the foot of the above graphic is not a typo: 76.2x champions Silver’s stellar week wherein price rose +3.27 points (+11.5%), the white metal’s best weekly gain by both measures since that ending 07 August 2020. ‘Tis why we oft quip: “Don’t forget Sister Silver!”
Whilst speaking of metals, surely you saw Copper having reached its own All-Time High at $5.128/pound this past Wednesday, which may give further boost toward Gold’s next All-Time High. For be it lore, or substantively more, ’tis said the red metal leads the yellow metal. Here are their respective daily percentage tracks decade-to-date: just one of those things that makes you go “Hmmmm…”
But next we go to something guaranteed to make you go “Ugghh…”: the stagflating StateSide Economic Barometer. Its outright dump just in this past week is the worst for such stint since April a year ago. Moreover: for the nearly 26 calendar years that we’ve maintained the Econ Baro, such five-day fall ranks in the 99th percentile of worst plunges. Here’s the year-over year view:
‘Course, this can make Gold quite happy, for now the Federal Reserve must be forced to cut its Bank’s Funds rate … except that April’s just-reported inflation numbers belie that notion. First at the wholesale level (Producer Price Index) the 12-month summation is spot-on the Fed’s +2.0% target … except that April’s pace annualized was +6.0%. Second at the retail level (Consumer Price Index), it slowed by one percentage pip … except that the 12-month summation is well above target at +3.2% (and +3.7% core), with April alone annualized at +3.6%. And by now you well know the formula:
- Inflation + Shrinkage = Stagflation
“But mmb, is it really fair to say the economy is actually shrinking?“
As opposed to its growth merely slowing, Squire? We shan’t see the Bureau of Economic Analysis’ first read of Q2 Gross Domestic Product until late July. And already per their initial Q1 read, the annualized pace fell from +3.4% to just +1.6%. As well, the Conference Board’s “U.S. Leading Economic Index” (which we regularly quip is in fact “lagging” given the Econ Baro is always well ahead of it) has reported only one month of growth (for February of this year) since March of 2022(!) Is it any wonder the broad tilt of the above Baro is negative? No, ’tisn’t.
However, we sense what “is” is a fresh Gold high soon nigh. Let’s go to the two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and same for Silver on the right. Therein per the baby blue dots of trend consistency, our thought is that present upside price momentum can pull the “Baby Blues” for both precious metals up above their respective +80% axes. Again, “Follow the Blues…”:
Also we’ve the two-panel graphic of the 10-day Market Profiles for Gold (below left) and Silver (below right). Whether marching or looking up toward higher highs, ’tis what our analysis implies:
Let’s wrap with our assessment of Q1 Earnings Season. As just ended “by the calendar”, for the S&P 500 — which also set a record high on Thursday at 5325 — we count 439 constituents having reported. Of those, 64% improved their bottom lines over Q1 of a year ago, (meaning that 36% did not so do). Excluding the four COVID quarters of 2020, the average year-over-year improvement runs ’round 69%: thus this past Earnings Season might be couched as rather sub-par. Yet upon its start back on 08 April, the S&P was 5204 and its “live” price/earnings ratio 46.1x. Today they are respectively 5303 and 39.9x: so some relative progress was made there in getting the p/e down a bit. Yet by any historical yardstick — especially in this positive interest rate environment — the p/e of 39.9x remains treacherously (understatement) high.
‘Course, ’tis made all the more complicated by this, (hat-tip Hedgeye’s hilarious Bob Rich):
Cheers!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
17 May 2024 – 08:16 Central Euro Time
‘Tis a fairly quiet start to Friday on the heels of a heavy week of incoming metrics for the Econ Baro, itself in a rather severe plunge. At present, just Copper is outside (above) today’s Neutral Zone, and BEGOS Markets’ volatility is mostly light, the red metal being the only component having thus far traced in excess of 50% (55%) of its EDTR (see Market Ranges). Going ’round the Market Values horn for the five primary BEGOS components (real-time readings): the Bond is nearly +3 points “high” above its smooth valuation line, the Euro +0.02 points “high”, Gold +56 points “high”, Oil -3.6 points “low”, and the Spoo +205 points “high”, the S&P itself having extended its “textbook overbought” stance through a seventh consecutive trading day. The Econ Baro completes it significantly down week with April’s Leading (i.e. “lagging”) Indicators. And today is the final day of Q1 Earnings Season, which for the S&P 500 has been somewhat sub-par by year-over-year growth.
16 May 2024 – 08:29 Central Euro Time
Following all-time highs yesterday for both Copper and Spoo (including the S&P 500 itself), we’ve at present all eight BEGOS Markets inside their respective Neutral Zones for today, ahead of another heavy round of incoming EconData; volatility is moderate. For the S&P, the combination of a new high and below-par Q1 Earnings Season growth has pushed the “live” P/E back above 40x, the futs-adj’d level now 40.5x; the Index is now at an extreme “textbook overbought” reading. As to the Euro, recall from earlier in the prior week our having noted per the Market Values page the currency’s having crossed above its smooth valuation line such that price by that leading indicative method could make a run toward the 1.10s: then ’twas in the 1.07s, having since traded up into the 1.09s. As for the Econ Baro, amongst today’s metrics are May’s Philly Fed Index, April’s Housing Starts/Permits, Ex/Im Prices, and IndProd/CapUtil.
15 May 2024 – 08:36 Central Euro Time
Copper is the sole BEGOS Market at present outside (above) today’s Neutral Zone; the red metal continues to be in play, having already traced 146% of its EDTR (see Market ranges); otherwise, session volatility for the other components is light with a bevy of EconData in the day’s balance. Looking at Market Trends we’ve only two with negative linregs: Gold and Oil; until the former clears at least 2385 (the Golden Ratio retracement cited in the current edition of The Gold Update), the recent near-term correction would technically remain in place; Gold at present is 2362 and its EDTR is 35 points. The Econ Baro’s busy day looks to May’s NY State Empire Index, Business Inventories and NAHB Housing Index, plus April’s reads on retail inflation (CPI) and Retail Sales.
14 May 2024 – 08:25 Central Euro Time
Both Silver and Copper are at present above their respective Neutral Zones for today; the other BEGOS Markets are within same, and volatility pre-StateSide inflation data is very light. Of the 405 Market Rhythms we test nightly, Copper (on a 10-test swing basis) is leading for consistency by its 30mn MACD; second-best is Gold’s 12hr Parabolics; too (on a 24-test swing basis) Copper’s 1hr MACD leads for consistency, followed again by its 30mn MACD. As well, Copper is the only BEGOS Market for which its EDTR (see Market Ranges) widened yesterday both day-over-day and week-over-week: thus vis-à-vis the whole bunch, Copper is most in play. And as noted, today the Econ Baro awaits April’s inflation at the wholesale level (PPI).
13 May 2024 – 08:37 Central Euro Time
The week begins with Gold at present below its Neutral Zone for today; the balance of the BEGOS Markets are within same, and volatility is light. The Gold Update inconclusively questions as to whether or not the yellow metal’s recent correction off its All-Time High (2449 on 12 April) has run its course: Gold’s rally this past week went precisely up to the perfect Golden Ratio fib retracement at 2385 (from the correction’s low [thus far?] of 2285), but has since pulled back (now 2358); too, by Market Values, Gold (in real-time) is +54 points above its smooth valuation line, and by Market Trends, the linreg remains negative. Whilst the Econ Baro is quiet today, a very busy week awaits with 18 metrics due, including those for April’s wholesale (PPI) and retail (CPI) inflation. As well, this is the final week of Q1 Earnings Season, which by year-over-year comparison has been rather mediocre (and thus is why the P/E of the S&P remains treacherously high, the “live” reading 39.2x).
The Gold Update: No. 756 – (11 May 2024) – “Gold Garners a Groovy Golden Ratio Retracement”
The Gold Update by Mark Mead Baillie — 756th Edition — Monte-Carlo — 11 May 2024 (published each Saturday) — www.deMeadville.com
“Gold Garners a Groovy Golden Ratio Retracement“
Is Gold’s near-term correction completed? If so, it lasted 16 trading days spanning from the recent All-Time High of 2449 (12 April) down to 2285 (04 May), a loss of -164 points or -6.7%.
Moreover, renewed buying interest in Gold did not even let price reach down to test the 2247-2171 structural support zone, (which of course remains a viable consideration). But Gold buyers clearly came to the fore these past few days as COMEX contract volume recorded its fifth-most substantive week in well over a year, (indeed going back to that ending 20 March ’23).
So after two consecutive losing weeks, Gold scored a winner in settling yesterday (Friday) at 2367, its highest weekly close since that ending 19 April (then 2414), where upon we straightaway penned “Gold Fit to Pull Back a Bit” which it so did lickety-split. (That courtesy of the “We Hate It When We’re Right Dept.”)
As for the entitled “…Groovy Golden Ratio Retracement”, ’twas quintessentially Fibonacci perfection for Gold on Friday. Now as you long-time advocates of The Gold Update know, hardly do we ever dwell upon nature’s pristine paragon of numerical sequencing as uncovered by Leonardo Bigollo “Fibonacci” Pisano away back into the turn of the 13th Century. Yet on occasion, that infamous 61.8% Golden Ratio as determined by The Fibster can elicit astonishing precision for markets’ price reversals.
Simple stated for those of you scoring at home, as noted, Gold’s All-Time High is 2449 and the low since then 2285. The 61.8% Golden Ratio retracement from that low back up toward the high is 2386: ’twas the precise high Gold reached on Friday before settling at the classic 50% retracement price of 2367. Perfection personified. To wit, look at the rightmost candle per this view of Gold’s daily bars from March-to-date, yesterday’s high at the 0.618 label and the close at the 0.500 label. A worthy tool to keep under your cash management hat:
‘Course, the question then remains: has the near-term downside Gold correction run its course? Or is the perfect Fibonacci Golden Ratio retracement and subsequent same-day pullback signaling the resumption of such downside? To be sure, Gold’s daily “textbook technicals” (MACD, Price Oscillator, Moneyflow) — which a week ago were leaning lower — are just now bending up a bit. And yet per both the website’s Market Values and Gold pages, price is still +69 points above its smooth valuation line, (it has not been below same since 28 February). Also fundamentally, in a week almost completely bereft of incoming metrics for the Economic Barometer, save for some arguably “hawkish” FedSpeak to end said week, there’s really not that much upon which to critique. Yet as we all know, “the trend is your friend”, and as we next go to Gold’s weekly bars from a year ago-to-date, both the rising dashed linear regression trendline and blue-dotted parabolic Long trend look great. Warily however, prior to Gold next scoring a fresh All-Time High at 2450+, it may be a bit premature to start dancing to The Chipmunks “Funky Monkey“:
Speaking of the Econ Baro, here ’tis by the day from one year ago-to-date along with the obscenely overvalued “Casino 500” (red line), the honestly-calculated “live” price/earnings ratio for which is now 39.1x and the yield 1.404% versus the U.S. Three-Month T-Bill’s annualized yield of 5.243%. But since fee-churning is everything to your investment banker, “Stocks are where it’s at, baby!” (Friendly reminder: lock-limit down for the S&P 500 futures is -7%, the last three such occurrences coming astride COVID back in March 2020):
Oooh, and guess to what word the financial community is finally awakening? “Stagflation”. Thus far in 2024, we first mentioned it ten missives ago on 02 March with “Gold Grabs Center-Stage as Stagflation Starts to Rage”. But in this age where no one does the math to be properly informed, it takes awhile for “stagflation” to get parroted up to the higher echelons of the FinMedia. To wit yesterday, (hat-tip Bloomy): “S&P 500 Runs Out of Steam Amid Stagflation Chatter.”
As for running out of steam (really?), the S&P has gained better than +4% in just the past seven trading sessions, (yes, it has again become “textbook overbought”). And with but a week to run in Earnings Season for Q1, growth hasn’t materially improved (which for you WestPalmBeachers down there means in this case hasn’t “lowered”) the aforementioned P/E of the S&P. “Stagflation” indeed: coming to an economic squeeze near you. Further, with 18 metrics due in the new week for the Econ Baro, we’ll know more on the staging of “stagflation”.
Clearly staging a rally into week’s end was Gold. To our two panel graphic we go featuring on the left Gold’s daily bars from three months ago-to-date and on the right price’s 10-day Market Profile. Note the sudden up-lurch in the “Baby Blues”, (and you know the drill: “Follow the Blues… else…”). Meanwhile by the Profile, Gold’s fattest volume support price is 2324:
With the like graphic for Silver, her “Baby Blues” (at left) already have been lurching higher, with present price just tucked in there above the 28.35 Profile bar (at right). As earlier noted in the graphic of Gold’s weekly bars, the Gold/Silver ratio is now 83.4x versus the century-to-date average of 68.2x, i.e. Silver comparatively remains El Cheapo, (and Gold markedly so by currency debasement, in turn making Silver Super Cheapo). So don’t you be a Cheapo by forgetting Sister Silver!
Toward the wrap, let’s go to the stack:
The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3765
Gold’s All-Time Intra-Day High: 2449 (12 April 2024)
2024’s High: 2449 (12 April 2024)
Gold’s All-Time Closing High: 2391 (11 April 2024)
10-Session directional range: up to 2386 (from 2285) = +101 points or +4.4%
Trading Resistance: 2374
Gold Currently: 2367, (expected daily trading range [“EDTR”]: 37 points)
Trading Support: various from 2333 to 2298, most notably therein 2324
10-Session “volume-weighted” average price magnet: 2328
Structural Support: 2247-2171
The Weekly Parabolic Price to flip Short: 2213
The 2000’s Triple-Top: 2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The 300-Day Moving Average: 2028 and rising
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
“So, mmb, we got your closer ready to go!“
And thank you, Squire, ’tis as rich as they come. We’ll spare (to benevolently save embarrassment) such pundit’s identity, but here we go. Ready? Hat-tip Dow Jones Newswires from last Monday:
- “Gold is overvalued now and won’t help you beat inflation in coming years.”
(Even the “doggy” can’t believe that one!)
Cheers!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
10 May 2024 – 08:37 Central Euro Time
The Metals Triumvirate is on the move this morning as Gold, Silver and Copper are getting the bid, all at present above today’s neutral Zones; the other BEGOS Markets are within same and volatility is mostly light, the exception being Copper having already traced 73% of its EDTR (see Market Ranges). Gold appears on track for a positive weekly close for the first time since that ending 20 April; in real-time, the yellow metal still is +70 points above its smooth valuation line (see Market Values); and at Market Trends, Gold’s linreg remains negative, however the “Baby Blues” therein have today lurched to the upside, and the “textbook technicals” have begun turning positive; more on it all of course in tomorrow’s 756th consecutive Saturday edition of the Gold Update. In a day replete with FedSpeak, the Econ Baro concludes its week with May’s UoM Sentiment Survey and April’s Treasury Budget.
09 May 2024 – 08:31 Central Euro Time
At present we’ve the Bond below its Neutral Zone for today, whilst Silver is above same; BEGOS Markets’ volatility by this hour remains quite light, again in a week with little incoming EconData. Looking at Market Rhythms for pure swing consistency, on a 10-test basis our leader is Copper’s 1hr MACD; on a 24-test basis ’tis the Swiss Franc’s 30mn Moneyflow. By Market Trends, when just recently Copper was sporting the only positive linreg, positive too now are those for the Bond, Euro, Swiss Franc and Spoo; ’tis indicative for Fed rate cut expectations. Our best correlation amongst the five primary BEGOS components is positive between the Bond and the Euro. Simply today for the Econ Baro arrives last week’s Initial Jobless Claims.
08 May 2024 – 08:38 Central Euro Time
Both Copper and Oil are at present below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is again light. The Euro has yet to respond to its positive crossing of the smooth valuation line (see Market Values); still (in real-time), the Euro’s “Baby Blues” are now rising above their 0% axis, (see Market Trends) the linreg having turned positive; Market Profile support for the Euro is 1.07000; too, the Euro’s Best Market Rhythm (see the Euro’s page) is its daily Price Oscillator which appears poised to turn positive: 7 of the past 10 Price Oscillator crossings for the Euro (in either direction) have generated follow-through of at least 0.02000 points ($2,500/cac). Today for the Econ Baro we’ve March’s Wholesale Inventories.
07 May 2024 – 08:35 Central Euro Time
Both the Swiss Franc and Silver are currently below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. We’re minding the Euro, as Friday (by Market Values) the currency confirmed a positive crossover of price above its smooth valuation line: the average follow-through of such crossings from a year ago-to-date is some 0.019 points, which from Friday’s settle at 1.07815 “suggests” the Euro reaching up toward the 1.10s; (the Euro is at present 1.07745); obviously “average” hardly is forward reality, however as “Fed rate cut” expectations are renewing, that has taken some puff out of the Dollar. Late in today’s session the Econ Baro looks to March’s Consumer Credit.
06 May 2024 – 08:24 Central Euro Time
The Swiss Franc is currently below today’s Neutral Zone; above same are the Metals Triumvirate and Oil, and BEGOS Markets volatility is mostly moderate, even as a week with little incoming EconData begins: just five metrics are due through Friday. The Gold Update muses over the “seasonality” of bank failures, noting (per Fitch) that 7% of U.S. banks are “stressed”; otherwise, Gold’s near-term technicals continue to appear negative despite a bit of a price bounce to start the week. Meanwhile, the S&P 500 has unwound its “textbook oversold” condition; and with about 75% of Q1 Earnings Season complete for the S&P, 65% (somewhat below average) have thus far improved their bottom lines from Q1 a year ago; the “live” (futs-adj’d) P/E is 38.2x and the yield 1.417%; the annualized three-month U.S. T-Bill yield is 5.235%.
The Gold Update: No. 755 – (04 May 2024) – “Own Gold with Reason into Bank Failure Season”
The Gold Update by Mark Mead Baillie — 755th Edition — Monte-Carlo — 04 May 2024 (published each Saturday) — www.deMeadville.com
“Own Gold with Reason into Bank Failure Season“
Not to overly dwell — let alone predict — by subject title, however if we search our recollect (thank you Ken Starr), was it not by this time a year ago that we’d witnessed a few banks go? Whilst not first, First Republic failed. And now a year hence, Republic First has failed. How palindromic its that? Or from the “What’s in a Numerological Name Dept.” ought we now be concerned about Old Second National, or dare we say, Fifth Third? (Not to panic as both those two institutions appear quite solvent, whereas New York’s Fourth National went defunct 110 years ago, but we digress…)
Regardless, we read this past week with interest (get it?) of a report wherein Klaros Group — their having analyzed some 4,000 StateSide banks — deduced that 282 (7%) of them are “stressed”, (the word of a co-founder and partner of noted consulting firm, albeit he qualified that hardly is insolvency an imminent issue). Still, Fitch’s Christopher Wolfe (Managing Director and Head of North American Banks) said per a mid-week CNBC(S) piece: “You could see some banks either fail or at least … dip below their minimum capital requirements…” Just something upon which to chew rather than Gold eschew, (which one ought never do), even as its near-term down move looks to continue.
That noted, Gold now through 18 weeks in 2024 recorded for just the third time back-to-back down ones in settling yesterday (Friday) at 2310. And given Gold’s near-term technicals are tilting more negatively, ‘twould appear the 2247-2171 structural support zone as herein cited a week ago can more realistically come into play. Indeed Gold’s EDTR (“expected daily trading range”) is now 44 points and the weekly measure 75 points: so from today’s 2310 ’tis not that far down to at least tap 2247.
And so to Gold’s year ago-to-date weekly bars we go, upon which we’ve placed the green-bounded 2247-2171 support zone. ‘Course that area may be moot should an otherwise waiting trading community get fired up over the next bank default:
“But as you say, mmb, the technicals remain down, eh?“
Near-term that is the case, Squire. In fact, per our linear regression math, the 21-day trends for both Gold and Silver this past week rotated as we anticipated from positive to negative. You can see it “in motion” per the following animated graphic of the precious metals’ respective 21-day trading days (one month) as they progressed from one week ago to now. Again as we’ve oft said: “Follow the Blues instead of the news, else lose your shoes” as clearly depicted here, the trendlines turning negative as the “Baby Blues” fall through their centered 0% axes:
And as you core followers know such that you can keep track, the stance of the “Baby Blues” for all of our markets are updated daily at the website. Too, toward assessing Gold’s negative technical bent, let’s also update price vis-à-vis its smooth valuation line. As we next look below on the left at Gold from three months ago-to-date, the excess of price above its smooth valuation line (borne of price changes relative to those of the five primary BEGOS Markets: Bond / Euro / Gold / Oil / S&P 500) has eroded from more than +200 points now to just +50 points. In this same construct, on the right we’ve the S&P 500, which you sharp-eyed readers shall recall we deemed some two weeks ago as having become “textbook oversold”, when also ’twas certainly low vis-à-vis its smooth valuation line:
Still, whilst Gold near-term (i.e. the trader’s view) had become “too high” and the S&P “too low”, we all (hopefully) know that broadly (i.e. the investor’s view) Gold by currency debasement remains vastly undervalued whilst the S&P 500 by earnings generation continues as immensely overvalued. Oh to be sure, this Q1 Earnings Season for the S&P has thus far reduced its “live” price/earnings ratio from the mid-40s to now 37.7x: but given the low-20s as an “acceptable mean” — especially in this 5% risk-free interest environment — the potential fallout for equities remains massive. Remember: had COVID (and all of its attendant money printing) not occurred, the S&P 500 today by its 50-year regression channel would be ’round the 2900 area, and the investing world very pleased with that level. But priced today at 5128, the “Casino 500” is that namesake. And throughout the S&P’s history as dated from its creation in March 1957, the P/E always reverts to its mean, (hint hint, nudge nudge, wink wink, elbow elbow). Or ad nauseam reprising J. B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.” Again, we’re now basically double that.
In the midst of all this, the Federal Open Market Committee on Wednesday released their expected “do-nothing” Policy Statement, following which FedHead Jerome Powell said: “I think it’s unlikely that the next policy rate move will be a hike … I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time. That’s not what we think we’re seeing.”
Here’s what we’re seeing, having herein ruminated since New Year that the Fed potentially need raise rates. Our following updated table summarizes StateSide inflation now through all of the key March measures of the Consumer Price Index (CPI retail inflation), Producer Price Index (PPI retail inflation), and Personal Consumption Expenditures (PCE Fed-favoured inflation). Be it by 12-month summation and/or March itself annualized, red indicates inflation running well ahead of the Fed’s 2% target:
‘Course we all understand that ’tis the Fed’s notorious tradition to be “behind the curve”. And the above table proves it. But the Fed maintains significant credibility, as it is watched, read and parsed word-by-word. The FinMedia suck it all in. The folks managing your money suck it all in. Moreover, ’tis oft thought the Fed is desperate to keeping the stock market from crashing. Also, consider the plight of those aforementioned “stressed” banks, (“No, thanks!”)
But let’s look at what’s happening: Chair Powell desires inflation receding down to “2% over time”; FedFunds have been in the 5.25%-to-5.50% target range since last 26 July: that’s more than nine months ago; how much “over time” is being considered? Or is the sudden, abrupt downturn in the Economic Barometer bang-on-time to aid the Fed’s stead?
This past week, 16 metrics came into the Econ Baro, of which a mere four improved period-over-period. And the cost of labour is on the move: not only did Q1’s Employment Cost Index increase, but Unit Labor Costs — which were flat back in Q4 — lurched +4.7% in Q1. Is it any surprise Payrolls’ growth really slowed in April, Unemployment ticked higher, and the Institute for Supply Management’s Services Index crossed from expansion in March now to contraction? No, ’tisn’t. (Then there’s the “S”-word: stagflation. … but we’re not supposed to say that).
Neither is it a surprise to note all the overhead pricing resistance for the precious metals. Here (below left) is the 10-day Market Profile for Gold with same (below right) for Silver. Volume-dominant price apices are as labeled:
To wrap, we mentioned earlier with respect to the Fed those who fawn over every word, which may well include they who manage your money, i.e. the “pro” you know. But wait, there’s more: hat-tip Bloomy from just over a week ago when the “Casino 500” was weathering a minor correction: “Wall Street Humbled as Fast-Reversing Markets Confound the Pros.” Is that not oxymoronic? Any “pro” worth his or her salt ought hardly be “confounded” by anything the market does, certainly so when it declines from these ridiculously overvalued levels. Certainly stated: rather than “confounded”, a true “pro” ought be “expective” of significant (understatement) downside risk. Right? What are they missing?
“Math skills, mmb?“
Oh Squire, you’re just too good. But be it rate uncertainties, debased currencies, bank failures, “stoopid” equity values, geo-political jitters or the “confounded pro” whose hands are on your money…
…maintain sound reason and your wealth domain with Gold!
Cheers!
www.TheGoldUpdate.com
www.deMeadville.com
and now on “X”: @deMeadvillePro
03 May 2024 – 08:18 Central Euro Time
We’ve the Swiss Franc at present above its Neutral Zone for today; the seven other BEGOS Markets are within same, and volatility is again light. Our top three Market Rhythms on 10-test swing basis are the Spoo’s 1hr MACD and daily Parabolics, plus the Swiss Franc’s 15mn Parabolics; on 24-test swing basis they are Gold’s 15mn Moneyflow, Copper’s 8hr Moneyflow, and the Swiss Franc’s daily Parabolics. Looking at Market Values, Gold — which in recent weeks had been better than +200 points above its smooth valuation line — is now (in real-time) “just” +46 points above it; Oil is better than -4 points below same, and the Spoo -101 points by same; the Euro looks poised for the ensuing week to cross above its valuation line, which by rule would be a Long signal. The Econ Baro concludes its week with Aprils’ Payrolls data and the ISM(Svc) Index.
02 May 2024 – 08:19 Central Euro Time
At present we’ve both the Bond and Spoo above today’s Neutral Zones, whilst below same is Silver; BEGOS Markets’ volatility is light. The FOMC’s stance as anticipated was a fairly do-nothing non-event, notably as little has changed on the inflation front, (save for it not really slowing). At Market Trends, the “Baby Blues” of trend consistency are curling upward for the Bond, Euro and Spoo, even as the Fed (subtly or otherwise) is de-emphasizing the word “cut” without specifying “raise” (yet?); ‘course, we’ll continue to mid the math thereto. ‘Tis a busy inflow of metrics today for the Econ Baro, including March’s Trade Deficit and Factory Orders, as well as the initial look at Productivity and Unit Labor Costs for Q1.
01 May 2024 – 08:45 Central Euro Time
Save for the Swiss Franc, at present below today’s Neutral Zone, the seven other BEGOS Markets are within same, and volatility is very light, albeit in the context that some EDTRs (see Market Ranges) have been expanding of late, notably so that for the Spoo which is now measured at 74 points. As anticipated, in real-time the linregs for both Gold and Silver have now rotated to negative, leaving Copper as the only positive linreg BEGOS component. With better than half of S&P 500 companies having thus far reported earnings, the “live” P/E has favourably come off a bit, now 38.3x, but still extremely expensive by any historical earnings yardstick. The Econ Baro looks to April’s ADP Employment Data and ISM(Mfg) Index, plus March’s Construction Spending. 18:00 brings the FOMC’s Policy Statement and then Powell’s Presser.
30 April 2024 – 08:37 Central Euro Time
The final day of the year’s first quadrimestris finds early on all eight BEGOS Markets in the red; therein, the elements comprising the EuroCurrencies and Metals Triumvirate are all at present below their respective Neutral Zones for today, (the Bond, Oil and Spoo within same, albeit down). At Market Trends, both Gold and Silver appear within a day or two of their linregs rotating from positive to negative, which would leave Copper as the sole remaining component with a positive linreg; Gold remains above its smooth valuation line (see Market Values) in real-time by +78 points; still thus far today, the yellow metal already has broken below key Market Profile trading support (2342), current price now 2331. For the Econ Baro we’ve April’s Chi PMI and Consumer Confidence, plus Q1’s Employment Cost Index.
29 April 2024 – 08:32 Central Euro Time
A bit of Dollar weakness to begin “Fed Week”, the Euro and Swiss Franc (non-BEGOS Yen too) at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is already is moderate-to-robust, the Swiss Franc having traced 108% of its EDTR (see Market Ranges). The Gold Update “apologetically” takes credit for price’s demise last Monday; further downside purely by near-term technicals is anticipated toward structural support in the 2247-2171 zone, (Gold currently is 2342). Thus far in Q1 Earnings Season, 64% of S&P 500 constituents have bettered their bottom lines from a year ago (a decent Earnings Season is at least 70% improvement), but the excessively high level of the Index hasn’t lowered the “live” P/E a wit (45.5x futs-adj’d). Given historical reversion to the P/E mean, the S&P remains, dare we say, dangerously high.
The Gold Update: No. 754 – (27 April 2024) – “Gold Falters, Treads Water”
The Gold Update by Mark Mead Baillie — 754th Edition — Monte-Carlo — 27 April 2024 (published each Saturday) — www.deMeadville.com
“Gold Falters, Treads Water“
Per a tongue-in-cheek note this past week to our StateSide Investors’ Roundtable, we apologized for single-handedly having “crashed” the precious metals’ markets with last Saturday’s missive (“Gold Fit to Pull Back a Bit”) following which on Monday — directly out of the chute — the yellow metal suffered its third-worst intraday high-to-low loss (-2.7% or -$62/oz.) in better than 14 months…
Too, Sweet Sister Silver’s simultaneous stint saw a -5.7% slam. Damn!
We nonetheless plead innocent for merely going with the math, a valued leading science which few anymore seem to do. For recently we’d written ad nauseum: “…near-term Gold is very over-extended; but broad-term Gold remains very undervalued…” And for you WestPalmBeachers down there, “near-term” plays out prior to “broad-term”, the former being exactly what Gold is now enduring, (i.e. ’tis going down). Or for those you scoring at home: mere math + historical repetition = leading knowledge. Hardly the “holy grail”, but given prudent cash management, ’tis on balance beneficial to one’s trading account. “Try it, you’ll like it!” –[Alka-Selzer, ’72].
Oh to be sure, Gold through just the first third of this year has already achieved our forecast high of 2375, indeed reaching up to 2449, albeit price settled yesterday (Friday) below both of those levels at 2350. And whilst we’re on record to not upwardly re-forecast a revised target, we’d be surprised should Gold not trade higher still as the year unfolds, even if the Federal Reserve raises rates. ‘Course, you regular readers know we’ve be musing since the start of this year over the Fed actually needing to again raise rates, contra to the non-math parroting crowd’s having called for as many as three rate cuts during 2024, (such expectations having lately been reduced to just one cut toward the end of the year).
But even should the Fed dutifully raise, such move — as we’ve in the past shown — wouldn’t automatically deter Gold from moving higher. Recall the three-year stint from 2004 through 2006: the FedFundsRate rose 425 basis points … and Gold rose +69%.
Thus whilst Gold is positioned just fine (thank you very much), when it comes to the stock market, it seems as if we’re in a constant state of hand-holding. On days when the S&P 500 rises +1%, FinMedia responses range from neutral to happy. But toss in a -1% down day, and many-a-headline goes catastrophic:
- “Markets Roiled by FedSpeak!”
- “Markets Plunge on Powell!”
- “Markets Tumble on Earnings Trouble!”
Good grief. The telling optics are that the FinMedia folks today have no concept of “Roiled”, “Plunge” nor “Tumble”. They weren’t around in ’87, ’02, ’09, et alia. Reprise The Temptations from ’66: “Get Ready”.
And although we’re not predicting what would be a third -50% “correction” in just this century for the S&P, by math (oh-no, say it ain’t so) the setup is sitting there:
- Neither earnings nor yield are supportive of price;
- Twice as much money is invested in the S&P than exists (by “M2”); and
- Risk-free dough pays triple the S&P’s yield.
Back in “our day”, a stock was purchased to benefit from a methodically rising price based on earnings generation — plus for high-quality companies — a dividend yield. Today, stocks are purchased on expectations of their quickly quadrupling. ‘Tis why we regularly term this “The Investing Age of Stoopid”. Have a nice day.
Meanwhile, although April has been a losing month for the S&P, ’tis been a good month for Gold, as you know price having reached an All-Time High of 2449 (at precisely 07:15 GMT on the 9th). And with but two trading days remaining in April, ’tis close enough to month-end to bring up our BEGOS Markets Standings essentially through this year’s first quadrimestris. Therein, red-hot metal Copper –which a month ago had been sixth in this stack — is now leading the pack (a sign of continued inflation expectations), having even surpassed Oil, with Gold still on the podium scantly ahead of what is undoubtedly a pouting Sister Silver, just one-tenth of a percent behind in fourth:
Too, from the “Gold Plays No Currency Favourites Dept.” note that despite the Dollar Index being +4.9%, Gold nonetheless is +13.4%. (Just because “That can’t happen”, ’tis).
And as Gold indeed is “What’s Happenin’!”, let’s go to the weekly bars from one year ago-to-date, wherein we see the blue-dotted parabolic Long trend now eight weeks in duration. Moreover, in spite of last Monday’s price falter, Gold has since tread water by closing well off the week’s low (2304) per the closing nub (2350) on the rightmost bar:
Here comes the however: the near-term “math” suggests we’ll see lower levels still. For instance, we’ve the following two-panel display. On the left is a graphic with which by now you’ve become quite familiar: ’tis our BEGOS Markets near-term valuation (smooth line) for Gold based on its price movements relative to the other four primary BEGOS components (Bond, Euro, Oil, S&P). And at present per the lower left section, price is still better than +100 points above valuation. On the right we’ve Gold’s daily “candles” for the past 21 trading days (one month) wherein we find the parabolics having flipped to Short (per the red-encircled dot of last Monday). Such flip was anticipated in last week’s missive — (“Too from the technical tent, Gold…is approaching a flip of the daily parabolic measure from Long to Short”) — and so it came to pass:
In terms of how far further Gold may fold from here, the 2247-2171 zone appears structurally supportive, (i.e. a drop from here of another -100 points wouldn’t be untoward). And that technically trues up nicely per the above graphic wherein price is just over +100 points above valuation. See how easy this is? (Hopefully we’re wrong and Gold simply zooms back up the road).
Meanwhile: “How ’bout ‘dem miners!” Long overdue to get on the move, so have they been doing of late, albeit they too shall deflate should Gold near-term further slip from “Great!”. Indeed here’s our usual month-end chart of Gold’s year-over-year daily percentage track along with those of its key equities brethren. From worst-to-first we’ve: Franco-Nevada (FNV) -19%, Newmont (NEM) -9% (but sporting a very robust, earnings-induced up move this past week), the VanEck Vectors Gold Miners exchange-traded fund (GDX) +4%, the Global X Silver Miners exchange-traded fund (SIL) +7%, Pan American Silver (PAAS) +12%, Agnico Eagle Mines (AEM) +17%, and Gold itself +18%. As we go to the graphic, let us — for the equities — appropriately cue “The Agony and the Ecstasy”, –[Heston, Harrison, 20th Century Fox, ’65]:
Next we go ’round the horn across the past 21 trading days for all eight BEGOS components. The “Baby Blues” therein reflect the day-to-day consistency of each market’s respective grey trendline. And as noted in yesterday’s Prescient Commentary, there’s the old adage “Follow the Blues instead of the news, else lose your shoes”, which specific below to both Gold and Silver is yet another technical case for further price fallout near-term. But does that in turn mean we buy the Euro, its dots curling upward? Given the Federal Open Market Committee’s pending “do nothing” Policy Statement and Powell Presser (on Wednesday, 01 May), any “hint” of a rate cut delay (if not outright suggestion of a rate hike), ought only serve to further strengthen the Dollar:
Moving on to the 10-day Market Profiles for the precious metals, we’ve Gold (at left) and Silver (at right). Simply per this construct, there is quite a bit of overhead volume resistance with which to deal. Those prices levels of volume domination are as labeled:
And of course it being month-end (save for two trading days), here we’ve Gold’s structure across the past 16 years. Note the forecast high (2375) having been achieved (and then some), followed by price’s pullback. Still, we’ve added scaling space up toward 2600, just in case, (wink wink, nudge nudge…):
As for the StateSide Economic Barometer, the two most eyed items of the past week were the first peek at Q1 Gross Domestic Product and March’s Personal Consumption Expenditures. First to the GDP: its annualized nominal Q1 growth rate was +4.7% … but … +3.1% of such growth was pure inflation so the … net … real GDP growth was at best a tepid +1.6%. Again, can you state “stagflate“?
Second to the “Fed-favoured” PCE for March: both the headline and core readings maintained their +0.3% February paces, which when annualized comes to +3.6%, (nearly double the Fed’s targeted +2.0%). Can you say “raise“? Nevertheless, March’s Home Sales (both New and Pending) improved, as did Personal Income and Durable Orders, the Baro in turn getting a boost:
Notwithstanding our ever-ongoing aforementioned misgivings about the terrifically overvalued stock market as measured by the S&P (aka “Casino”) 500, note in the Baro the “live” price/earnings ratio is now 45.0x (by trailing twelve months) which as we near the half-way mark of Q1 Earnings Season hasn’t — on a cap-weighted basis — declined a material wit, (’twas 46.1x at the start of Earnings Season).
Yes, some 64% of S&P constituents have thus far reported year-over-year earnings increases: but that impossibly supports a P/E of such level, indeed nearly double that of a dozen years ago. Also, the “all-risk” Casino’s yield is now 1.413% versus the “no-risk” annualized U.S. three-month T-Bill’s 5.238%. And yet the week was replete with such FinMedia headlines as (hat-tip Bloomy) –> “Magnificent Seven Roar…”, “Big Tech Surges…” and “AI Craze Powers Best Week…” Thus the great game of “Equities Chicken” continues.
Oooh, and we shan’t then close without mentioning this from the “Which Came First? The Chicken or the Egg? Dept.” (Hat-tip NewsMax) –> Engineers from The University of Colorado “Go Buffs!” at Boulder have conclusive research that folks over the age of 65 tend to slow down as it takes more energy to move than it does those younger. Which has us seriously considering a new career in the field of such paid-for research of obvious conclusion.
Either way conclusively, don’t you be a chicken: use our weekly research to buy and hold Gold!
Cheers!
www.TheGoldUpdate.com
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26 April 2024 – 08:37 Central Euro Time
Both the Bond and Copper currently are above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is mostly light. Of note: the change in the Spoo at this time (5127.25, -4.50) belies the change in the S&P itself at the open given a material rise the Spoo after stocks had closed: at that present Spoo level, the S&P would open higher by some +46 points (+0.9%). Cac volume for Silver is moving from May into July: after Monday’s fallout for the precious metals, Gold and Silver have basically been treading water: however by Market Trends, their respective “Baby Blues” of trend consistency continue to drop, our old adage being “Follow the Blues instead of the news, else lose your shoes.” Widely followed today for the Econ Baro are March’s Personal Income/Spending and “Fed-favoured” Core PCE Prices.
25 April 2024 – 08:27 Central Euro Time
The EuroCurrencies (Euro and Swiss Franc) are at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. Amongst the five primary BEGOS components, the best correlation is negative between the Bond and Gold. As for the five’s Market Values in real-time: the Bond is better than -6 points “low” vis-à-vis its smooth valuation line, the Euro -2.16 points “low”, Gold +96 points “high”, Oil right on its valuation line, and the Spoo -215 points “low”, (the S&P 500 itself now eight days “textbook oversold”, however fundamentally by earnings still catastrophically overvalued, the “live” P/E 43.6x). Incoming metrics for the Econ Baro today include March’s Pending Home Sales plus the first peek at Q1 GDP.