Mark

The Gold Update: No. 712 – (08 July 2023) – Gold’s Downtrend Duly Dissed?  Stocks’ 10 Crash Catalysts!

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The Gold Update by Mark Mead Baillie — 712th Edition — Monte-Carlo — 08 July 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Downtrend Duly Dissed?  Stocks’ 10 Crash Catalysts!“

As worried as we are over the wildly overvalued stock market — our 10 crash catalysts itemized herein — let’s start with Gold as ’tis our mold. And from this week’s title we behold Gold’s downtrend for the present has instead gone on hold.  Thus to the yellow metal’s weekly bars and parabolic trends we straightway go:

And per that rightmost run of declining red parabolic Short dots, we see the trend is now seven weeks in duration.  Both the average and median durations of the prior 10 such Short trends are 13 weeks, which in such technical vacuum implies this current trend is now through its halfway mark in terms of time.  ‘Course, for the trend to officially end by the dots turning blue and thus ascend, price already need be well on the move upward.  And given Gold a week ago having precisely hit our selected low (futures 1901 per the wee green line, or spot 1893), this past week’s bounce to as high as 1943 suggests the Short trend is starting to lack sellers’ respect — indeed by current street vernacular — ’tis becoming “dissed”, perhaps a buying opportunity not to be missed, (lest we forget proper cash management should lower lows persist).

Too, in this current “Nuthin’ but Fed” trading environment (hat-tip “Depends Who’s Counting What Dept.”) this past week brought significantly disparate Payrolls’ reports for the month of June.  First on Thursday came ADP’s count of fabulous jobs data — the best in 17 months and more than double the consensus expectation — immediately sending all five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P) into swift plummet for fear that the Federal Open Market Committee shall vote to raise their Bank’s Funds Rate come the 25/26 July Policy Statement.  Second a mere 24 hours later came Labor’s survey indicative of the slowest monthly jobs creation since March, in turn sparking the BEGOS bunch to back up in belief of Fed benevolence.  So upon the dust settling yesterday (Friday), Gold closed at 1931 as we below see per price by the hour through this past week, furthering the notion that this downtrend is now being dissed:

Opposing job summations aside, for the Economic Barometer at large, the past week’s mix of 11 incoming metrics were of net benefit, notably from June’s lengthened Average Workweek and dip in the Unemployment Rate, along with the Institute for Supply Management’s increase to its Services Index, plus a reduction in the StateSide Trade Deficit for May.  But from the Fed’s view, good news is deemed as bad news especially given May’s stubbornly inflationary Core Personal Consumption Expenditures Prices.  And guess what arrives the day after the next Fed Rate Raise on 26 July?  The Chain Deflator for Q2’s Gross Domestic Product.  Economic growth by substance is a good thing; ’tisn’t if by inflation.  Here’s the Baro:

Next as promised from the “Worry Warts (and rightly warranted) Dept.” comes our assessment of the state of stocks as measured by our preferred gauge:  the S&P 500.  As egregiously overvalued as ’tis — our honestly calculated “live” price/earnings ratio having settled the week yesterday at 55.7x — the market is never wrong:  the herd has put price precisely where ’tis (S&P 4399); it cannot be “willed” to somewhere else.  Such is the present case, even as by universally used “textbook technical measures” the S&P just completed its 24th consecutive trading session as “overbought”.  Still by the website’s MoneyFlow page, the differential of inflow over price change remains firmly positive, supportive of substantive money being thrown at the market.   “When will they ever learn…” –[Pete Seeger, ’55].  

And yet, you can feel the market’s fragility.  Prior to the ADP reactive price plunge on Thursday, we’d earlier in the week graphically tweeted (@deMeadvillePro) the large price gap in the S&P Futures’ 10-day Market Profile, price then taking a -42-point hoovering (ironically its “expected daily trading range”) in just under three hours.  Yes, Virginia, it can go quickly.

Be that as it may, the broader fundamental picture certainly is scarier.  Just as we have our Investors’ Roundtable back in whatever’s left of SanFran, here in MC we’ve expanded by respectfully meeting with some very well-established, hardened investors:  and the bearishness is rife.  A long-time StateSide mate just passed through here bemoaning “I’ve lost so much money shorting the market”; another is “triple-short the S&P”; further are those multi-decade experienced analysts who’ve been anticipating it all going wrong for the S&P on scales from -25% to -50% … and yet it hasn’t happened.  All of this led to a discussion here last week of “What will be the catalyst that crashes the S&P?”  To that end… “Nice double-entendre there, mmb…” …oh merci, Squire, mon cher ami, we’ve put together a list of 10 S&P 500 crash catalysts as follows, in no particular order as all are viable, and have been cited in past missives:

  • This is the one nobody wants: a geo-political global disaster such as a nuclear incident in Ukraine, China seizing Taiwan, et alia;
  • The August implementation of a Gold-based BRICS currency, but does it take? And does the Dollar break?
  • Acknowledged lack of real earnings growth; ’tis obviously already in the aforementioned P/E of the S&P, and Q2 Earnings Season has just started;
  • As has happened in the past, XYZ Investment Bank announces a 20% reduction in clients’ exposure to equities;
  • The yield on the “everything to risk” S&P is 1.538%; for the riskless Three-Month U.S. T-Bill ’tis an annualized 5.213%;
  • “Hey Martha!  We need more money for the mortgage, the car, and Muffie’s skyrocketing tuition!”
  • Remember the recent banking crisis?  It came and went in a heartbeat.  So ’tis over, right?
  • The money doesn’t actually exist:  as of yesterday, S&P Market Cap = $38.4T, liquid M2 Money Supply = $20.7T … Oops …
  • Goofball headlines (last Monday):  “Amazon is the cheapest of the ‘Magnificent Seven’ Stocks” … it’s p/e per yesterday’s close is 309.6x;
  • The herd finally “hears” and in turn commences good old-fashioned fear.

Feel free to select any or all of the above as the Investing Age of Stoopid rolls right along.

Indeed speaking of rolling, we next turn to Gold’s two-panel graphic of its daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  Note the baby blue dots of linear regression trend consistency are trying to roll higher from just beneath their -80% axis:  and the rule “to follow the blues” upon clearing that hurdle is to anticipate high prices near-term.  Also per the Profile, price has nicely been rolling up the ladder:

Similar is Silver’s stance, her “Baby Blues” (below left) not having suffered as much downside consistency damage as have those for Gold, whilst in her Profile (below right) she again has taken better flight:

Thus with Gold poised to rise whilst the S&P faces demise, what better way to wrap than with this long-running graphic of The Gold Update, reflecting stocks’ truly inane earnings-less strain:

The ensuing week brings June inflation data at both the retail and wholesale levels, the respective headline numbers “expected by consensus” to be higher than those for May.  Yep, that means more Fed impetus to keep on raisin’ dem rates, (arguably a Gold negative, albeit we’ve herein proven otherwise).  But this is what you get when you flood the market with more Dollars to the tune of +31% in just three years: inflation!  Which is why too ’tis time to get Gold!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

07 July 2023 – 09:15 Central Euro Time

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Following yesterday’s significant leap in ADP’s Employment level, the BEGOS Markets are quiet, all eight components at present within their respective Neutral Zones for today, the Econ Baro awaiting Labor’s Payrolls data; thus, volatility is light across the board. Even as the S&P 500 recorded another down day, it still remains “textbook overbought”; for the Spoo, its “Baby Blues” (see Market Trends) are in real-time notably dropping lower thus far today; and by the Spoo’s Market Profile, much of its “gap” from 4485-4421 was hoovered yesterday on the heels of the strong ADP number, the obvious notion being the Fed shall continue to press the rate rise pedal. Mind our Earnings Season page as that for Q2 is now underway.

06 July 2023 – 09:18 Central Euro Time

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The Spoo is the only BEGOS Market at present outside (below) its Neutral Zone for today; volatility is again light-to-moderate; of note, whilst not yet a BEGOS component , the yen has already traced 95% of its EDTR (see Market Ranges for the BEGOS Markets). Even as the S&P 500 has showed some mild weakness, it nonetheless is now ” textbook overbought” through 22 consecutive trading days; by Market Values, the Spoo is (in real-time) +190 points above its smooth valuation line; and at Market Trends, the Spoo’s “Baby Blues” continue to creep lower. The Econ Baro’s busy day includes June’s ADP Employment data and ISM(Svc) Index, plus May’s Trade Deficit.

05 July 2023 – 09:10 Central Euro Time

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The BEGOS Markets’ two-day session continues, volatility now light-to-moderate. The following components are at present below their session’s Neutral Zones: the Euro, Swiss Franc, Silver, Copper and the Spoo; Oil is above same. In assessing Market Magnets, prices are essentially in sync with the entire bunch, save for the Spoo being some 58 points “high”. By Market Rhythms, on a 10-swing test basis the most consistent is Copper’s 8hr. MoneyFlow, whilst on a 24-swing test basis the leader is the Euro’s 15mn. MoneyFlow. The Econ Baro looks to May’s Factory Orders; late in the session come the FOMC’s Minutes from their 13-14 June meeting.

04 July 2023 – 09:12 Central Euro Time

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Given the StateSide holiday, today begins a BEGOS Markets’ two-day session for Wednesday settlement. At present, Gold is the sole component outside (above) its Neutral Zone for the session; overall, volatility expectedly is light. The S&P 500 pauses with its “live” P/E (futs-adj’d) at 56.1x and Q2 Earnings Season about to commence. By “textbook technicals” the S&P is now overbought through 21 consecutive trading days (i.e. one trading month); the Spoo has yet to succumb to its “Baby Blues” (see Market Trends) having broken below their +80% axis a week ago; and in real-time, the Spoo by Market Values is +229 points above its smooth valuation line. All components enter holiday trading halts starting between 17:00-18:30 GMT until 00:00 GMT.

03 July 2023 – 09:10 Central Euro Time

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The EuroCurrencies are the BEGOS Markets’ weak links to start the week, both the Euro itself and Swiss Franc at present below today’s Neutral Zone. The balance of the bunch are within same, and volatility is light-to-moderate. Despite Gold’s ongoing weekly parabolic Short trend, price has initially bounced precisely from our downside target (1893 by spot) as described in The Gold Update; too by Market Trends, Gold’s “Baby Blues” are (in real-time) giving the earliest suggestion of bottoming; and by Market Values, price (also in real-time) is -58 points below its smooth valuation line. The Econ Baro looks to June’s ISM(Mfg) Index and May’s Construction Spending. The Spoo’s session is abbreviated ahead of tomorrow’s StateSide holiday.

The Gold Update: No. 711 – (01 July 2023) – Happy Mid-Year Finds Gold Up a Gear

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The Gold Update by Mark Mead Baillie — 711th Edition — Monte-Carlo — 01 July 2023 (published each Saturday) — www.deMeadville.com

“Happy Mid-Year Finds Gold Up a Gear“

“Happy Mid-Year!”  indeed with Gold up a gear — specifically +5.3% year-to-date — in having settled out this past week yesterday (Friday) at 1928.

That stated, you regular readers well know we purposefully this year did not (as we’ve otherwise done in years past) forecast a high Gold price for 2023.  Rather, our only assumption continues to be that Gold shall record an All-Time High before this year is out, which it nearly did back on 04 May at 2085, falling just shy of the still existing record high of 2089 established on 07 August 2020.  (For those of you scoring at home, the U.S. Money Supply by “M2” back then was $18.2T versus today’s $20.8T, i.e. ’tis now +14% higher, even as Gold by the same stint is -8% lower).

Still, to predict how high beyond the 2089 landmark Gold shall rise this year, we’ve opted to leave that to the FEF (“Fibonacci Extension Fanatics”).  Oh to be sure per the above opening Scoreboard, we clearly value Gold today at 3737.  And whilst Gold historically reaches up and through prior high value levels (our adjusted highest value level being 4031 as of 14 April 2022, from whence the Federal Reverse has been shrinking the Money Supply), we generally don’t expect such magnitude of leap to occur within a single year.  For if it so did, we fear there’d be some seriously scary stuff afoot, (which already of course there is across the monetary/financial/geopolitical/leadership spectrum). 

But: barring the NVDA (+189% ytd, p/e 218x) / AMD (+76% ytd, p/e 467x) / CRM (+59% ytd, p/e 553x) / AMZN (+55% ytd, p/e 311x) / et alia herd suddenly shifting into Gold, 3737 is otherwise out of reach by year-end.  Indeed, Gold’s “expect yearly trading range” for 2023 is 346 points, such range here thus far at mid-year is 274 points.  Solely within that vacuum, assuming the year’s 1811 low is in place, the record high in waiting is 2157. On verra, but hardly is that remotely near the 3737 value level.  (Again, unless the NVDA/AMD/CRM/AMZN herd become boffed if not offed, by which time they may not have any dough left for a Gold trough).

Regardless, the stock market as measured by the S&P 500 remains up in goo-goo land, its “live” price/earnings ratio settling the week at 55.9x.  Thus inverted, the “implied” yield is 1.789% which is quite near the actual yield of 1.537%, with everything to lose.  Comparably, U.S. Secretary of the Treasury Janet Yellen’s riskless three-month Treasury Bill annually yields 5.153%. 

“But Gold has no yield, mmb…”

Gold needs no yield, Squire.  Present price (1928) to value (3737) is +94%:  ’tis 18x sweller than that from Old Yeller.  (…tick tick tick goes the clock clock clock…)

Now it being month-end, indeed both quarter and half-year end as well, ’tis time to bring the whole BEGOS Bunch into focus beginning with their year-to-date standings featuring Gold up a gear so far this year and still tucked in second place, sandwiched between the S&P 500 and Swiss Franc in rounding out the present podium:

Of precious metals’ note therein, whilst Gold is +5.3% ytd, poor ol’ Sister Silver is in near mirror opposition -5.9%.  Which stands to reason for today’s Gold/Silver ratio being at 84.7x versus having closed out 2022 at 75.7x.  The millennium-to-date mean?  67.6x, reversion to which puts Silver (today 22.76) +20% higher (at 28.52).  The last date upon which the ratio matched its mean?  18 May 2021 (at 66.3x).  Thus for you WestPalmBeachers down there, what does it all mean?  “Get Silver!”

Moreover for the leveraged-minded of you out there, one might consider Pan American Silver (PAAS).  From 2001-to-date, its average price relative to Silver is 123%:  today ’tis merely 64%.  So if Silver itself is 20% low relative to Gold, and PAAS is but half its typical price level relative to Silver, run those numbers on your HP-12c.  Rather riveting stuff, what? Either way, from one year ago-to-date, here are the percentage price tracks of Gold along with key of its equities’ brethren.  And save for Newmont (NEM), PAAS nearly is last:

As for the whole gang, from top to bottom we’ve got Gold itself and the VanEck Vectors Gold Miners exchange-traded fund (GDX) both +6%, Agnico Eagle Mines (AEM) +5%, Franco-Nevada (FNV) +4%, the Global X Silver Miners exchange-traded fund (SIL) -3%, PAAS -29% and NEM -31%.  Golden gifts, one and all!

Specific to Gold, whilst as cited +5.3% year-to-date, ’tis -7.6% high-to-date.  Nonetheless we were (albeit perhaps premature) encouraged to see Gold’s lows this past week.  For the current “front month” August contract, Gold reached as low as 1901 whilst “spot” tapped 1893.  To wit, that which we herein penned on 27 May:  “…our lean is that …1893 … is the extent of adversity on this down run…” or even that from just a week ago “…(still with 10 points of price premium) we’d see 1903, or by spot, 1893…” Bingo.

‘Course, that doesn’t preclude Gold further slipping, as we turn to its weekly bars from one year ago-to-date.  Therein we see a sixth red dot of parabolic Short trend along with the green lines defining the oft-cited structural support running from 1975 to 1811, the mid-point being that 1893. So far, so good as it precisely has held.  But ’tis cash management risky to misapprehend trend:

Speaking of misapprehending, how’s that Economic Barometer workin’ out these days?  Talk about trendless across a year’s spectrum!  Moreover, what’s up (literally) with the +0.7% revision to Q1 Gross Domestic Product from +1.3% to 2.0%?  ‘Tis the second largest revision to “Final” quarterly GDP this century!  And yet per the below Econ Baro:  that broad purple line essentially defines the Q1 reporting period; looks fairly “unch” to us.  (One wonders what they’re “taking in” over there at the Bureau of Economic Statistics):

Meanwhile, FedChair Powell inferred (depending on one’s source) this past week that at least (maybe) two more FedFunds rate hikes are in the cards for this year, and further that inflation may take years to tame.   “Ain’t that a shame…” –[Fats Domino, ’55].  And the Fed-favoured inflation gauge of Core Personal Consumption Expenditures for May says ’tis so:  it came it at +0.3%, which annualized is +3.6% — the 12-month summation now +4.3% — still more than twice the Fed’s target of +2.0%.  As to the “elasticity” effect of FedHikes on the inflation rate, we’ll leave such to you brighter bulbs out there.  But clearly there’s more pain to gain.

As to BEGOS Markets’ pain, let’s next go ’round the horn for all eight components across the past 21 trading days (one month) by their daily bars and baby blue dots of trend consistency.  And as you can see, four of the grey trendlines are rising and four are falling; but in all eight cases, the “Baby Blues” are now in decline, certainly so those for Copper for which at the start of last week we so tweeted (@deMeadvillePro) in anticipating lower price levels.  All of this of course is a harbinger of higher interest rates and thus the Dollar leading The Ugly Dog Contest:

On to the precious metals’ 10-day Market Profiles, they appear a bit firmer than in recent weeks.  Below for Gold on the left we see a good amount of trading support built in from the labeled 1938 to 1916 zone, whilst similarly so for Silver on the right from the 23.00 level to 22.65:

Again it being month-end, we present the Gold Structure by price’s monthly bars across the last dozen years, their labeled strata therein along with our ever-subtle reminder that “triple-tops are meant to be broken”:

To close, the more this stuff comes up, the more bemused we find ourselves.  This time’ round over at an event hosted by the ever-regal Brookings Institution spoke one Graham Steele (Assistant Secretary of the Treasury for Financial Institutions), who stated “…Work on climate-related financial risk and the insurance sector is a top priority for the Biden-Harris Administration, the Treasury Department, and FIO…”  (Indeed throughout the Secretary’s address the word “climate” was mentioned 38 times, thus the thrust of it all).

But the phrase “climate-related financial risk” really hit home with us with respect to the extreme undervaluation of Gold versus the extreme overvaluation of the S&P 500.  This was discussed earlier today with a distinguished friend and colleague, who likened it to Publius Ovidius Naso’s character Icarus (8 A.D.) being the S&P as his bees-waxed featherings melted away upon approaching the sun, i.e. Gold:

So don’t find yourself head-over-heels when suddenly the S&P is “limit down”; rather, get some Gold!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

30 June 2023 – 09:09 Central Euro Time

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At present Copper is the only BEGOS Market outside (above) its Neutral Zone for today; session volatility is light, again save for Copper which has thus far traced 62% of its EDTR (see Market Ranges). Copper’s “Baby Blues” (see Market Trends) in breaking the below their +80% level have since seen price drop a full $0.10/pound, lending to why the Blues are a favoured signal; similarly however, those for the Spoo have yet to see price crack. Gold has (at least for the moment) bounced precisely off the 1893 spot low we cited some weeks ago; too, the current August cac has reached down to 1901: more in tomorrow’s 711th Edition of The Gold Update. The Econ Baro completes its week notably with May’s Personal Income/Spending, plus the Fed’s favoured inflation indicator: Core PCE Prices.

29 June 2023 – 09:07 Central Euro Time

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The Bond, Euro and Swiss Franc all are at present below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is mostly light, save for the Euro which has already traced in excess of 50% of its EDTR (see Market Ranges). Gold has traded down to 1911 (Aug futs) which is toward the neighbourhood of how low we anticipate price may go (per recent editions of the Gold Update); on a spot basis, mind the 1893 level for support; by Market Values, Gold is (in real-time) -72 points below its smooth valuation line. Included in today’s metrics for the Econ Baro are May’s Pending Home Sales and the final revision to Q1 GDP.

28 June 2023 – 09:09 Central Euro Time

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The Euro at present is the sole BEGOS Market outside (below) its Neutral Zone for today; session volatility is light. Along with Copper yesterday, the Spoo also confirmed its “Baby Blues” (see Market Trends) settling below their +80% axis; again this leading indicator reliably points to lower Spoo levels near-term. For the S&P 500 itself, the “live” P/E (futs-adj’d) is 55.6x, and the Index has now been “textbook overbought” for 17 consecutive trading days; indeed by Market Values, the Spoo is 193 points (in real-time) above its smooth valuation line.

27 June 2023 – 09:03 Central Euro Time

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The Euro, Silver and Copper are at present above today’s Neutral Zones, the latter’s cac volume having moved from July into September, as shall that for the white metal these next two days. BEGOS Markets volatility is mostly light, save for that of the red metal which already has traced 73% of its EDTR (see Market Ranges): as anticipated yesterday, Copper’s “Baby Blues” have now provisionally dropped below their +80% level, which if confirmed at settle today suggest lower price levels in the offing. For the Econ Baro we’ve June’s Consumer Confidence plus May’s Durable Orders and New Home Sales.

26 June 2023 – 10:01 Central Euro Time

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The Bond, Swiss Franc, Gold and Silver are at present above their respective Neutral Zones for today; the balance of the BEGOS Markets are beginning the week within same, and volatility is light-to-moderate. The Gold Update cites price becoming more in sync with its ongoing weekly parabolic Short trend, with a test of the low 1900s, high 1800s in the offing. At Market Trends, mind Copper’s “Baby Blues” as they begin rolling over: a confirmation of them settling below their +80% level would suggest lower price levels to follow.

The Gold Update: No. 710 – (24 June 2023) – Gold Sinks in Sync with its Parabolic Short Trend

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The Gold Update by Mark Mead Baillie — 710th Edition — Monte-Carlo — 24 June 2023 (published each Saturday) — www.deMeadville.com

“Gold Sinks in Sync with its Parabolic Short Trend“

Five weeks have passed since Gold flipped its weekly parabolic trend from Long to Short, (effective the week ending 26 May).  And yet through these recent weeks, Gold really hasn’t seen much sink … until that just past as price is now finally falling from the brink.

That noted, in assessing the above Gold Scoreboard, seasonally this time of the year has typically brought sinking prices for Gold, the only line of exception therein being 2020’s grey one as Gold was getting the COVID bid ultimately toward the All-Time High of 2089 come 07 August of that year.

But today, given Gold’s present parabolic Short trend, price itself is now in downside sync, indeed having reached its lowest level (1920, last seen on 16 March) toward settling yesterday (Friday) at 1930.

Straightaway, here are the weekly bars and parabolic trends from one year ago-to-date.  Therein we’ve again placed the green bounds that form the Feb-Mar structural support zone.  The center green line is the midpoint, again suggesting that just sub-1900 can curtail further downside on this run.  ‘Tis thus dubbed “Support-ish” as by the current front month August Contract (still with 10 points of price premium) we’d see 1903, or by spot, 1893:

Still, as we next glance at the percentage performance of the five primary BEGOS Markets from one month ago-to-date (i.e. the last 21 trading days), Gold has more or less been an “also-ran” along with the Bond and Euro, whereas Oil has been the weakest and the S&P 500 the firmest (more later on that latter calamity-in-waiting).

Regardless, with all the up-and-down-and-up-and-down exhibited by our Economic Barometer, plus the Federal Open Market Committee pausing FedFunds rate rises before resuming them, and now vicissitudes verbalized by FedChair Powell this past week at his Humphrey Hawkins (indeed hawkish) Congressional testimony, there’s yet to be really much substantive markets’ reaction as we see here, the Bond market surprisingly being the least changed of the BEGOS bunch:

And hawkishly lending to the FedChair’s stance was some rebound this past week in the aforementioned Econ Baro as housing metrics ruled the roost:  of note, the National Association of Home Builders Housing Index for June recorded its highest level (55) since June a year ago; and more impressively, Housing Starts for May made their largest monthly leap (by 291k) in better than 17 years (since January 2006).  ‘Course, the bummer for the Baro was the negative measure of Leading Indicators (to which we refer as “lagging” because the Econ Baro actually leads them) that the Conference Board has not reported as positive since their March reading back in 2022.

‘Course as you regular readers and website users know, the red line in the above graphic is the track of the S&P 500 astride the Econ Baro from one year ago-to-date.  And even as the S&P has come off from its recent high (4448 on 16 June), the mighty Index nonetheless through yesterday’s close (now 4348, exactly -100 points off that high) remains to what we refer as “textbook overbought” using a series of near-term, widely-observed technical indicators.

Further, as we tweeted (@deMeadvillePro) on Thursday with respect to the S&P Futures:  “Spoo (4410) daily parabolic flipping Short: last 10 Shorts “averaged” -100 points; so test of Market Profile 4319 apex is reasonable.”  Also this past Thursday, the VIX quietly reached its lowest level of complacency (12.73) since pre-COVID January 2020.  (That courtesy of the “What, Me Worry? Dept.”)

And yet just a week ago, from one FinMedia source to the next we read ’twas nothing but “The next bull market is just underway!” they say.   “Ya gotta be in it to win it!” they say.  “S&P targeting 5000!” they say.

But now just four trading days hence (give the StateSide holiday), a 180° turn took sway. Dow Jones Newswires just ran with this headline as tipped by J.P. Morgan:  “U.S. stocks head for punishing selloff as ‘unknown unknowns’ could drag market lower…”  Oh no, say it ain’t so!  Make up yer mind already!

Moveover, now comes this from the childrens’ writing pool over at the once-brilliant Barron’s:  “Here’s how to know when to start worrying about the market.”  Heck, we’ve been addressing that ad infinitum, as ’tis the easiest query with respect to equities (hat-tip to one Mike Holland from many years ago that “…at the end of the day, stocks are valued by earnings…”).  Ready?  Per yesterday’s S&P 500 close:

‘Tis not actually that bold of a statement; just the do the math.  Still, the parrots cling to “twenty-something”.  And given means-reversion, in due course we shall actually — indeed mathematically — revisit a true “twenty-something”.  Or to coin a phrase from Madison Avenue:  “Watch this space.” 

Watch as well from the website our daily updating of these Gold panels.  On the left we’ve price’s daily bars from three months ago-to-date.  The most recent days highlight the downtrend picking up steam, the blue dots of trend consistency as well curling southward, for which you know the quip:  “Follow the blues instead of the news, else lose yer shoes.”  On the right is Gold’s 10-day Market Profile with its dominant overhead trading resisitors as labeled:

Ever so similar is the same drill for Sister Silver.  And you’ll recall she’d be firming up better than Gold of late only to now negatively rotate.  Just two weeks back, the Gold/Silver ratio was 81.0x; today ’tis 86.0x.  And be it by her daily bars and Baby Blues (below left) and/or her Market Profile (below right), poor ol’ Sister Silver is hardly her true self:

Looking ahead, as if we’ve not had enough of the Fed planted in our head, comes their favoured inflation gauge:  Core Personal Consumption Expenditures, due Friday, 30 June.  “Happy Mid-Year!”

Recall for April the annualized Core PCE pace came in at +4.8% (the 12-month summantion being +4.3%).  Now for May, “expections” are for a month-over-month dip from +0.4% to +0.3%.  Should that be the case, the annualized pace becomes +3.6% and the 12-month summary still +4.3%.  Either way, both are still well above the Fed’s inflation target of +2.0%, their “pause” notwithstanding.

Still, in fervent anticipation, our FinMedia friends are out to keep us educated:  “What is inflation?  And why for so long? And why so high?”

“Well, hardly is it ‘high’, mmb…”

Exactly right Squire.  But a lot of these folks weren’t around in the Carter years.  We recall seeing a rate sheet barely pre-Reagan away back in our banking days in early ’81 declaring the best customers could borrow “at prime” for 22.5%.  That’s nearly triple today’s 8% rate.  And it hasn’t been for very long at all.

‘Course for you WestPalmBeachers down there as to what really is inflation, ’tis simple:  the more there is of something (i.e. Dollars) the less they’re worth and thus the more of ’em it takes to buy the same thing.  Or per the famous Santitas example, the less you receive for the same number of Dollars:

And remember:  regardless of trend, shorting Gold is a bad idea; so hang on to your Gold!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

23 June 2023 – 09:53 Central Euro Time

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The Bond is at present above its Neutral Zone for today; below same are the Euro, Swiss Franc, Copper, Oil and the Spoo; volatility already is moderate-to-robust, the Euro thus far having traced 145% of its EDTR (see Market Ranges). The Spoo’s daily Parabolics have confirmed flipping from Long to Short; the last dozen such ShortSide runs have “averaged” down moves of -100 points, suggestive that by the Spoo’s Market Profile we can see a test of the 4319 apex, (current price is 4399). And again in checking the Spoo versus its Market Value, price in real-time is +222 points above the smooth valuation line. The Econ Baro has concluded its winning week.

22 June 2023 – 09:23 Central Euro Time

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Silver is again (per this time of day) below its Neutral Zone, as is the Spoo; none of the other BEGOS Markets are outside of same, and volatility is light ahead of FedChair Powell’s stint in front of the Senate Banking Committee. Even as the S&P finally is coming off exorbitantly high levels, it nonetheless remains “textbook overbought” now throughout the past 13 trading sessions. And specific to the Spoo, it (in real-time) is +227 points above its smooth valuation line (see Market Values). Too, the Euro is nearly +0.02 points above same. Today’s incoming metrics for the Econ Baro include Q1’s Current Account, plus May’s Existing Home Sales and Leading (i.e. lagging given our leading Econ Baro) Indicators.

21 June 2023 – 09:12 Central Euro Time

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Only Silver is at present trading below its Neutral Zone for today; the other BEGOS Markets are within same, and volatility is light. Whilst the S&P 500 yesterday slipped a bit (-0.5%), its MoneyFlow equivalent gained a full +1.0%, the differential across our three time frames as noted on the MoneyFlow page. June’s strong housing data as reported on both Monday and Tuesday works in the FOMC’s favour to vote for another rate hike come their 26 July Policy Statement. By Market Rhythms, the most consistent on both the 10-swing test and 24-swing test basss is Oil’s 15-min. MACD. FedChair Powell commences his semi-annual Humphrey Hawkins testimony today before the House Financial Services Committee.

20 June 2023 – 10:07 Central Euro Time

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The two-day session for the BEGOS Markets continues with all eight components in the red, including at present both the Swiss Franc and Silver below today’s Neutral Zones; volatility has ramped up to moderate across the board. The S&P 500 (amongst the overvaluation citings herein mentioned of late as well as in The Gold Update) has been “textbook overbought” these last 11 trading days, and “extremely” so for the past four sessions. The futs-adj’d “live” P/E of the S&P is 54.7x and the yield 1.538%; (the U.S. three-month T-Bill yield is 5.065%). Specific to the Spoo by its Market Profile, there is trading support at 4416, and then failing that, in the 4334-4319 range. At Market Trends, save for Oil, the balance of the linreg trends all are positive. The Econ Baro looks to May’s Housing Starts/Permits.

19 June 2023 – 09:10 Central Euro Time

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Silver is the sole BEGOS Market at present outside (below) its Neutral Zone for today; session volatility is expectedly light given StateSide physical bourses being closed. The Gold Update highlights the yellow metal as essentially going nowhere, which given the weekly parabolic trend being Short may deemed as mildly bullish, albeit the low 1900 area remain viable; moreover, the missive reinforces the dangerously high/overvalued level of the S&P 500 both fundamentally and technically. Indeed by Market Values, the Spoo is (in real-time) 310 points above its smooth valuation line, the last such extreme being in last August upon which the S&P 500 then swiftly fell 700 points from 4300 to 3600. The Econ Baro starts its week with June’s NAHB Housing Index.

The Gold Update: No.709 (17 June 2023) – Fed Doing Cruise Control; Gold Doing Donuts; S&P Doing Wheelies!

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The Gold Update by Mark Mead Baillie — 709th Edition — Monte-Carlo — 17 June 2023 (published each Saturday) — www.deMeadville.com

“Fed Doing Cruise Control; Gold Doing Donuts; S&P Doing Wheelies!“

The title to this week’s missive pretty much puts it all in perspective.  And to the extent this week’s closing bit spooks you from stocks is your own cash management decision.  Nonetheless, let’s start with this triple-shot:

The Fed:  As tweeted on Wednesday (@deMeadvillePro) we were wrong in anticipating the Federal Open Market Commmitee would raise their Bank’s Funds Rate this past Wednesday by +0.25% in accordance with their favoured inflation gauge (“Core PCE Index”) having registered on 26 May an annualized pace of +4%.  Instead, the FOMC unanimously voted to “pause” in cruise control at the 5.00%-5.25% FedFunds target range previously established back in their 03 May Policy Statement.  And again, “unanimously”?  To us, that was an even bigger surprise than the “pause”, as FOMC interviewees in the weeks leading up to this most recent meeting clearly indicated dissent amongst their ranks.  Yet at the end of the day toward emphasizing unity, these birds of disproportionate feather flocked together.  Or as one very wise chap would remind us:  “Don’t listen to what they say; look at what they do.”  And thus 4% inflation has become the new targeted 2%.

“Except they’re gonna keep raising anyway, mmb…”

Indeed as so inferred, Squire.  Let’s see what actually happens given the Economic Barometer has suddenly resumed freefall as we’ll herein install.

Gold:  Obviously the yellow metal is doing donuts. ‘Round and ’round goes Gold without going anywhere.  For a fourth consecutive week, the 1986-1955 range (by the current August contract) was therein traded.  Price then settled its week yesterday (Friday) per the above Gold Scoreboard at 1971, such level first achieved nearly three years ago (28 July 2020) as COVID unfolded.  Since then, the U.S. Money Supply (“M2”) has increased by as much as 22% … but not so Gold.  And as we’ll below see, the weekly parabolic trend remains Short.

S&P 500:  Be it fundamentally and/or technically, this mighty “best of the best” stock market index is so vastly overvalued we could compose an entire multi-chapter tome through which to comb.  Yet in this new paradigm of “earnings” no longer being relevant — and as further boosted by the market-friendly FinMedia proclaiming the new bull market has just begun — ’tis stock wheelies all the way, day after day.  (Or rather, might it be doomsday per that presented toward this missive’s finale…)

Thus with your attention aroused, ’tis on to the vetting, beginning with the current state of the Econ Baro and its frustrations being foisted on the Fed:

As herein penned a week ago “…it appears the Baro may further take a bit of a dip…”  And now with the benefit of hindsight the word “whack” would have been more appropriate.  The Baro was hit this past week with a whopping 16 metrics.  Period-over-period, 10 were worse, including those for June’s Philly Fed Index — which has now been negative for 10 consecutive months — May’s Retail Sales, Capacity Utilization, and Industrial Production — the latter actually having shrunk — and a bloating of April’s Business Inventories.  The only two notable positives were June’s New York State Empire Index going from a strong negative reading to one mildly positive, and The University of Michigan’s “Go Blue!” Sentiment Survey — the latter sporting its second-best year-to-date reading — and thus indicative that everything’s misinformedly great again.  (P.S. How’s that “live” S&P 500 price/earnings ratio now 54.8x gonna work out for ya?  Do keep reading…)

Meanwhile specific to Gold, its still refusing to be bold finds it in fairly stuck mode.  Here are the weekly bars from one year ago-to-date.  Given that the red-dotted parabolic Short trend is now four weeks in duration, the good news is that price has not (yet?) succumbed.  Again, we’re warily eyeing the low 1900s on this run, (indeed by spot ’round 1893), but we’ll gladly accept avoiding such downside spree.  (Jeepers, Squire, did you have to go with the red glaze?)

More broadly, we next go back to view Gold’s daily closing price through this tried-and-true graphic extending back a dozen years astride the 300-day moving average.  And again at right from 2020-to-date is that infamous triple-top temptingly awaiting transcendency:

Next let’s go more to The Now with Gold’s two-panel graphic featuring the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  And with respect to Gold’s “Baby Blues” of regression trend consistency, they’ve recovered up to their 0% axis meaning that price across the past 21 trading days (i.e. one month) has essentially been trendless.  That fits well in thus describing Gold as doing donuts, indeed to reprise one of our favourite musical analogies  “Goin’ Nowhere” –[Chris Isaac, ’95].  As to the Profile, price at present is up against more trading resistance than underlying buoyancy:

Too for Silver — and similar to that which we saw a week ago — she’s been modestly outpacing Gold to the upside, her “Baby Blues” (below left) indicative of a mild uptrend, whilst her Profile (below right) is a bit more supportive in appearance than for Gold’s like panel.  Indeed with the Gold/Silver ratio today at 81.2x, were it instead at its century-to-date average of 67.6x (with Gold at the present 1971 level), Silver would now be +17% higher than her current 24.27 level at 29.17.  Do not forget Sister Silver:

Now in saving the best — or arguably the worst if not the most frightening — for last, we again turn to the S&P 500.  To say it is “overbought” is formidably understated.  ‘Tis terrifyingly so.  To wit:

First fundamentally:  in this Investing Age of Stoopid where earnings as aforementioned are comprehensively disregarded, money is nevertheless being thrown at the stock market, (see the website’s MoneyFlow page).  ‘Tis the Pavlovian Response of this go-go era, where “‘Tis always up and nothing but!”  After all, as duly noted, we’re told the new bull market is just underway.  So why does the S&P feel to us as if we’re back on 25 August 1987 or 20 July 1998 or 24 March 2000 or 11 October 2007 or 19 February 2020?  (Warning:  if you lack firm intestinal fortitude, do not go back and look at the S&P from those dates).  We’ve already mentioned the accurately and honestly calculated “live” p/e of the S&P is now 54.8x.  Yet since today’s parrots are apparently inept at performing mathematics, they just say “‘Tis 20-something”.  (And many of them may be managing your money).  A couple of critical examples:  the fourth-largest stock in the S&P 500 is Nvidia; its p/e is 220.4x. What that means for you WestPalmBeachers down there is that today for this “must have AI stock” you’ll effectively pay $220 for something that earns $1.  How about for the S&P’s third-largest stock:  ’tis called Amazon.  Its p/e is 299.5x, meaning today you’ll effectively pay $300 for something that earns $1.  “Yeah, ya gotta own ’em.”  We’d rather cover the dozens and columns at the roulette wheel:  ’tis just safer, as is the risk-free (for now) U.S. T-Bill’s annualized yield of 5.065%.

Second technically:  the following graphic is scary, so if ya can’t suck it up, ’tis best move on from this page.  As you valued website perusers know, we’ve a page at the website called Market Values born of that referred to as BEGOS (Bond, Euro, Gold, Oil, S&P 500) and their critically important price-leading valuations.  Ready?  At this writing, the S&P 500 Futures contract (4459) settled yesterday an unconscionable +329 points by the green line above its smooth valuation line as shown here:

The last time we had such an extreme deviation?  ‘Tis right there in August of a year ago.  And quick as  a wit, the S&P plummeted in mere weeks from 4300 to 3600 (-16%) by September’s end.

But wait, there’s more:  upon our “live” p/e of the S&P reverting to its mean (as historically has always happened) given there being hardly any growth in real earnings (“What are those?”), that mathematically calls for S&P 3300 (or -25% from here).  But that’s just to the “live” mean, (which has evolved by the day since 2013).  For then comes the overshoot, et voilà, we see S&P sub-3000 (or at least -32% from here) as we’ve already on occasion mentioned this year.  ‘Course — again historically — the market always comes all the way back.  It merely depends on how many years or in some cases decades you’re willing to wait.

Still, we can end on a high note:  “BUY GOLD!“  Especially given its being priced today (1971) at just 54% of its true debasement valuation (3658)!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

16 June 2023 – 09:18 Central Euro Time

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The Bond is at present below its Neutral Zone for today; Copper is above same, and BEGOS Markets’ volatility is light, (albeit the Yen [as yet a BEGOS component] has traced in excess of 100% of its EDTR for today). The S&P 500 is now 10 days “textbook overbought”, the last three being at an extreme measure; as for the Spoo, ’tis (in real-time) 335 points above its smooth valuation line (see Market Values), which in terms of rarity across the past 23 years is in the 99.7th percentile. As anticipated per last Saturday’s edition of The Gold Update, the Econ Baro’s busy week has been negative, and concludes today with June’s UofM Sentiment Survey.

15 June 2023 – 09:11 Central Euro Time

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We were wrong in anticipating the FOMC would vote to raise their bank’s FundsRate another 0.25%, albeit ’tis said more increases are still on table. Thus the Dollar is getting the bid today to the demise of all eight BEGOS Markets, seven of which (save for Oil) already are below their respective Neutral Zones. Session volatility ranges from light (for Oil with just a 29% EDTR tracing thus far) to robust (for Silver with at 116% tracing). EDTRs can be reviewed at our Market Ranges page. Cac volumes for the currencies are rolling from June into September, whilst for Oil ’tis rolling from July into August. This is a very busy day for the Econ Baro with 10 incoming metrics due, including June’s NY State Empire and Philly Fed Indices, May’s Retail Sales, Ex/Im Pricing and IndProd/CapUtil, plus April’s Business inventories.

14 June 2023 – 09:14 Central Euro Time

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‘Tis Fed Day, the consensus now overwhelming for a “pause” even as the Fed’s favoured inflation gauge (Core PCE as reported 26 May) is double (4% annualized) the desired rate (2%). We’ll see if the FOMC vote in unanimity to “pause”, or if there is dissent. At present, Copper is the only BEGOS component outside (below) today’s Neutral Zone; volatility is expectedly light. By Market Values, in real-time the Spoo is now 301 points (a massive deviation) above its smooth valuation line; and the S&P’s “textbook” gauge is now “extremely overbought”. Prior to the FOMC’s Policy Statement, the Econ Baro receives May’s PPI.

13 June 2023 – 09:42 Central Euro Time

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The Euro, Swiss Franc, Silver and Copper are all at present above their respective Neutral Zones for today; none of the other BEGOS Markets are below same, and volatility is light-to-moderate. Dough continues to flow into the S&P 500 as the FinMedia declares resumption of a “bull market”, a Fed “pause” on Wednesday (not by our math), and that earnings are “soaring”. (Really? Again, see the current edition of The Gold Update). At Market Values, the Spoo (in real-time) is +291 points above its smooth valuation line: even without the freshly-added +44 points of September contract premium, that’s still an extreme deviation of +247 points. The Econ Baro looks to May’s CPI.

12 June 2023 – 10:09 Central Euro Time

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The week starts with the contract volume for the Spoo rolling from June into September: there is +44 points of fresh premium in the September contract, indicative of sustained higher interest rates; and as reiterated in the current edition of The Gold Update (see therein the Core PCE chart), we expect the FOMC to add another +0.25% to its Bank’s FundsRate on Wednesday, (despite FinMedia writings for a “pause”). At present, we’ve both the Euro and Spoo above today’s Neutral Zones, whilst below same is Oil; volatility is pushing toward moderate. The Econ Baro’s busy week of 16 incoming metrics begins late in the session with May’s Treasury Budget.

The Gold Update: No.708 (10 June 2023) – Gold Sees Short Squeeze? S&P’s Weak Knees?

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The Gold Update by Mark Mead Baillie — 708th Edition — Monte-Carlo — 10 June 2023 (published each Saturday) — www.deMeadville.com

“Gold Sees Short Squeeze?  S&P’s Weak Knees?“

As you regular readers know, Gold’s weekly parabolic trend confirmed flipping from Long to Short at the close of trading back on 26 May per the August (now front month) contract price of 1963.  Since then, price has barely been lower than 1950 and instead briefly climbed back to 2001.  Now we’ve Gold having settled out the week yesterday (Friday) at 1976.

Thus to this point, ’tis been a wee squeeze of the Shorts, Gold having closed higher these last two consecutive weeks.  Indeed let’s straightaway start with Gold’s weekly bars and parabolic trends from one year ago-to-date.  The green support line just above the 1900 level we still view as a reasonable  guide should Gold resume its slide:

Moreover — to lend to their strain — one of our long-standing tenants is lending to the Shorts’ pain as below we show the “Baby Blues” across the last 21 trading days for Gold on the left and for Silver at center; rounding out the metals triumvirate is Copper on the right.  Those blue dots represent the day-to-day consistency of these metals’ respective grey diagonal trend lines. And the near-term significance of the dots rising across the board here means the present downtrends for both Gold and Sister Silver are losing said consistency, whilst the trend for Cousin Copper (oft considered the metals’ leader) has already rotated to positive.  To reprise the tenant:  “Follow the Blues instead of the news, else lose your shoes.”

Broader views of the “Baby Blues” are of course on the website’s Market Trends page for all eight BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P500). And specific to Gold:  whilst the weekly parabolic Short trend as aforeshown is only newly on the go, as herein written a week ago “…wouldn’t it be lovely to have the present Short trend short-lived?…“  When first confirmed two weeks ago, we cited (per historically downside follow-through) that the 1850s would not be untoward on this run, even as the noted low 1900s make support sense.  Still, across Gold’s past 10 prior parabolic Short trends extending back into May 2018, the average duration is some 14 weeks, albeit three of which were single digits.  ‘Course with the Fed to add another +0.25% to its FundsRate on Wednesday (14 June), conventional wisdom selling ought then put Gold back on the skids.

And yes, we think such rate raise — and more — are baked into the cake per this graphic herein presented two weeks ago showing the Fed’s favoured inflation indicator:  the Core Personal Consumption Expenditures Price Index.  To refresh your memory, the red line is the Fed’s 2% inflation target to be achieved by effectively strangling the economy via interest rate increases.  Are we there yet?  No:

And per our Barometer of the Economy, is it being strangled yet?  No:

“Well, it is coming down now mmb…”

Squire, to be sure the Econ Baro has weakened a tad since its most recent peak from just nine trading days ago (on 30 May); this past week alone was quite sparse for incoming reports with just six having arrived, notably low-lighted by April’s slowing Factory Orders and a burst in Jobless Claims.  However, next week we’ve 16 metrics due for the Baro, including inflation measures at both the retail and wholesale levels.  And by “consensus” versus prior period, it appears the Baro may further take a bit of a dip, but not by enough to make the Fed quit.

Either way, per the red line (S&P 500) in the above Econ Baro graphic, the stock market clearly doesn’t care a wit. Yet regardless of what conventional wisdom sees, we continue to couch the S&P as standing on weak knees, due overwhelmingly to weak earnings growth, if you please.  The S&P settled the week yesterday at 4299, its highest closing level since last 16 August.  The S&P’s “live” price/earnings ratio back on that day?  38.8x.  Today?  53.3x.  On an implied basis for that stint, (given the “P” of the P/E is the same), S&P earnings on a cap-weighted basis have thus declined -27%; (that shan’t be reported on CNBS, Bloomy, Foxy…).  So we justifiably await the oft-metioned “Look Ma! No Earnings!” crash.

Or if you prefer: as of yesterday’s close, the market capitalization of the S&P is $37.5T … but the U.S. liquid Money Supply (M2 basis) is “just” $20.4T.  Hence there’s perhaps the “Look Ma! No Money!” crash.  To reprise that stated by the sole recipient (J.G.S.) of the first Gold Update nearly 14 years ago:  “Sumpthin’s gonna happen…”   Or as we’ve put more recently:  “Marked-to-market, everybody’s a millionaire; marked-to-reality, everybody’s broke.”

Notwithstanding lack of earnings or money, there’s always the feared “crash” announcement triggered by a prominent investment bank, for example:  “Churnem & Morefees this morning declared a 20% reduction in clients’ exposure to equities.  S&P futures are locked limit-down.” 

Here’s a mitigating thought:  “Got Gold?” 

And yet by the website’s MoneyFlow page for the S&P 500, ’tis into which investors continue to throw dough.  Here’s a visual snippet showing the cumulative MoneyFlow differential (as regressed into S&P points) for the past week, month and quarter.  We don’t have to comb back through our 18 years of daily MoneyFlow data to know the rightmost differential extreme has never before been seen:

But wait, there’s more:  have you been keeping a wary eye on the VIX, (which for you WestPalmBeachers down there is known as “The Fear Index”)?  Its present level of 13.83 indicates “No Fear” for stocks.  As we tweeted earlier in the week (@deMeadvillePro), the VIX has not been at this complacent a level since one month prior to 2020’s COVID crash.  Further:  across the some 34 years of VIX history, its average level-to-date is 20, and one standard deviation below that is 12.  And if you look back across all those years, when the VIX rarely gets down into the 12s, the S&P has a tendency to become rather, shall we say, “unstable” into the ensuing year or two, including with some past “corrections” ranging from -11.4% to -48.5% … just in case you’re scoring at home.

Meanwhile, scoring a bit better than Gold of late is Silver.  From her recent 26 May low of 22.79 (July contract), she’s increased as much as +8.1% to yesterday’s high of 24.62, whereas Gold from its recent 30 May low of 1950 (August contract) managed just a +2.6% increase to the aforementioned 2001 level.  Nonetheless, the Gold/Silver ratio is still historically high at 81.0x vis-à-vis its century-to-date average of 67.5x.  “Got Silver?” We have her 10-day Market Profile here (below right), the relative present level therein better than that for Gold (below left):

So toward this week’s wrap, let’s assess…

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3668
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Weekly Parabolic Price to flip Long: 2073
10-Session directional range: up to 2001 (from 1950) = +51 points or +2.6%
Trading Resistance: 1977 / 1980 / 1991 / 1996
Gold Currently: 1976, (expected daily trading range [“EDTR”]: 26 points)
10-Session “volume-weighted” average price magnet: right here at 1976
Trading Support: 1961
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1841 and rising
2023’s Low: 1811 (28 February)
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

And indeed to wrap, we couldn’t help but notice this claptrap, courtesy of the UPI, (such as to have former President and Chairman Hugh Baillie likely rolling in his grave):  Ready?  “Heat-trapping carbon dioxide hit record levels in May … not seen in 4 million years” Really?  Moreover, how can it be a record if it already was the case 4 million years ago… Right?  We’d really like some clairification on this if any of you valued readers might ring up one of your australopithecus relatives … you know … to find out at what laboratory in what state or country such measurement was made back then, and so forth.  Just curious.

‘Course, 4 million years ago is peanuts when we consider that Gold (so ’tis said) extends back some 4 billion years when The World was then being pelted by asteroids.  Now that’s real climate change!  In fact:  “Miss Gibbs?  Would you kindly contact Hollywood Studio Rentals and see if we can get H.G. Wells’ time machine for a week or so?”  (She’s a winner).  Oh to linearly regress the value of Gold from then through now and into the future, WOW!  

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

09 June 2023 – 09:21 Central Euro Time

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Silver and Copper are at present above their respective Neutral Zones for today; all of the other BEGOS Markets are within same, and volatility remains light. The VIX continues to move lower (13.65); more on that in tomorrow’s 708th Edition of The Gold Update. The S&P 500 itself has now been “textbook overbought” for five consecutive trading sessions; its “live” P/E (futs-adj’d) is 53.1x and the yield 1.575%. At Market Trends, Copper’s linear regression has rotated to positive (as continues that for the Spoo); whilst the balance of the bunch are still in negative linear regression, their “Baby Blues” of trend consistency are all now rising. The Econ Baro’s week is complete ahead of an ample load ahead, as we pass through the Fed’s +0.25% rise to its FundsRate on Wednesday 14 June.

08 June 2023 – 09:09 Central Euro Time

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Similar to yesterday ’round this time, Silver is the sole BEGOS Market at present outside (this time above) today’s Neutral Zone; volatility is light. The $VIX is down into the 13s, where it last was one month prior to 2020’s COVID Crash; historically, 12 is one standard deviation below the VIX’s lifetime average and generally precedes a significant drop in the S&P 500; obviously by the Index’s high “live” P/E (51.6x), cap-weighted earnings growth for the S&P has essentially been non-existent. Of note, the 3-year U.S. T-Bill continues its annualized yield of greater than 5%. The Econ Baro concludes its fairly light week, today’s metrics including April’s Wholesale Inventories.

07 June 2023 – 09:19 Central Euro Time

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Silver is the sole BEGOS Market at present outside (below) its Neutral Zone for today; session volatility is mostly light. The precious metals appear rather stuck even as Gold’s weekly parabolic Short trend is into its third week, such broader measure being countered thus far by the nearer-term rise in the “Baby Blues” (see Market Trends). By Market Rhythms, the best of late for Gold is its 12-hr. MACD whilst for Sister Silver ’tis her 12-hr. Price Oscillator. And at Market Values, Gold remains pretty much in stead with its smooth valuation line, whereas for the Spoo that measure shows price (in real-time) as 196 points “high”. For the Econ Baro today we’ve April’s Trade Deficit and Consumer Credit.

06 June 2023 – 10:48 Central Euro Time

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Silver, Copper and Oil are all at present below today’s Neutral Zones; none of the other BEGOS Markets are above same, and volatility is mostly moderate. Looking at Market Rhythms (on a 24-swing test basis), the leaders are both Copper’s 4-hr. MoneyFlow and 30-min. Price Oscillator, plus the Bond’s 4-hr. MACD. The best correlation at present among the five primary BEGOS components is positive in pairing the Bond with Gold. By Market Values, the only deviation of note is for the Spoo which is (in real-time) 191 points above its smooth valuation line; the “live” (futs-adj’d) P/E of the S&P is 53.0x; the Spoo (currently 4279) shows fairly dominant trading resistance per its Market Profile at 4290 with trading support spanning from 4215-to-4191. Nothing is due today for the Econ Baro, which after its recent rocket shot has been receding across the last four trading days.

05 June 2023 – 09:21 Central Euro Time

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The week starts with most of the BEGOS Markets in the red, notably the Bond, Euro, Swiss Franc, Silver and Copper all at present below their respective Neutral Zones for today; above same is Oil, and volatility is light-to-moderate, the exception being Oil which already has traced 111% of its EDTR (see Market Ranges). The Gold Update still seeks the low-1900s to high-1800s as support during the current weekly parabolic Short trend; however, cited too are the precious metals’ “Baby Blues” (see Market Trends) beginning to curl up from in and around their -80% axes, typically a harbinger of high price levels near-term. The Econ Baro — which has defied ongoing “parroting” of recession — has a fairly light week, today featuring May’s ISM(Svc) Index and April’s Factory Orders.

The Gold Update: No.707 (03 June 2023) – Gold Gets the Grip n’ Trip Treatment

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The Gold Update by Mark Mead Baillie — 707th Edition — Monte-Carlo — 03 June 2023 (published each Saturday) — www.deMeadville.com

“Gold Gets the Grip n’ Trip Treatment“

Point:  One of the long-standing trading tenants of “The Smart Alec Dept.” is to “buy the rumour” and then “sell the news”.  We thus present the quintessential example of such grip n’ trip treatment:  Gold.

Gold entered this past week garnering +19 points of fresh premium as COMEX contract volume moved from June into August.  But wait, there’s more.  For as the week unfolded came the fevoured anticipation for Congressional passage of the StateSide DDD (“Debt Default Deal”):  a raising of the debt ceiling by $4T!  But where’s the dough to make it so?  “Hello Jay?  Janet.  Joey just signed it.  Let’s do it!”  Thus it can’t get any better for Gold, right?  And indeed through the “rumour” stint, Gold gripped for +51 points.  But upon the Congressional approval “news”, Gold then tripped -36 points. 

In sum, by “front month” measuring, Gold’s settling the week yesterday (Friday) at 1964 marked a weekly gain of +18 points, whereas spot itself gained but +1 point. Either way, ’twas a “nothing week” for Gold, which given the approval of the DDD ought rightly have sent the yellow metal to the moon.

Counterpoint:  As we tweeted earlier in the week, ’tis instead the Economic Barometer that’s been moon-bound, doubtless meaning the Federal Reserve (as herein penned a week ago) “…shall keep [its] foot on the rate raise throttle…”  Why, even the brilliant Bloomy brains figured this out following May’s robust Payrolls report on Friday by printing “Yields rise as traders bet on one Fed hike by July.”  Talk about foresight:  the Federal Open Market Committee is only scheduled to issue one Policy Statement prior to July (in adding +0.25% to the FedFundsRate on 14 June).  Impressive FinMedia insight there.  Regardless, make no mistake by the Baro’s take, for even as FinParrots say the economy’s slowing, instead by math ’tis visually growing:

And as “grows” the economy — certainly aided and abetted by inflation — so grows the FedFundsRate, and in turn the Almighty Dollar, its Index of which from low-to-high across the past five weeks is +4.1% toward returning to nearly a three month high (today 104.000; March’s high 105.870).  Whilst most broadly Gold plays no currency favourites, the short (sighted)- term conventional wisdom crowd dumps the yellow metal (or shorts it, as really very few actually own it) in championing the Dollar and its attendant yield.  Indeed the ridiculously-overvalued S&P 500 yields but a wee 1.613% versus the U.S. 3-month T-Bill’s 5.215% — and “Old Yeller” can now rest assured that she can pay the requisite interest,(until…)  Note too:  “always first” Fitch is nonetheless maintaining their “negative credit watch” on the U.S.A., but keeping the “AAA” rating (until…)

Of note as well from the “Afraid to Know the Truth Dept.” you’ll see in the above Econ Baro graphic the wee one with the sign displaying the honestly calculated “live” price/earnings ratio of the S&P 500 as 53.0x; (the current miscalculated parroted version is 24.8x).  We point this out with respect to yield.  The long-standing back-of-the-napkin calculation of yield is to invert the P/E.  Using the parroted 24.8x, the implied yield for the S&P is thus 4.032% — whereas in reality ’tis but the aforementioned 1.613% — which is far closer to the inverted 53.0x yield of 1.887%.  Just in case you’re scoring at home, as “tick-tick-tick goes the clock-clock-clock…”

Meanwhile, ticking lower are the red dots of Gold’s fresh weekly parabolic Short trend, now two weeks in length:

However, therein we see the prior Short trend lasted but four weeks (17 Feb to 17 Mar).  And whilst historically such Short trends suggest Gold revisiting the 1800s during this stint (as graphically herein detailed a week ago), wouldn’t it be lovely to have the present Short trend short-lived?  “Got Gold?”

The still rare breed of investor that does “have” Gold goes for its leverage afforded via precious metals equities.  This being our “month-end” edition of the Gold Update (plus two days of June for which to attune), below we’ve the following year-over-year percentage tracks with Gold +6% itself leading the pack, pursued by Franco-Nevada (FNV) +4%, both the VanEck Vectors Gold Miners exchange-traded fund (GDX) and Agnico Eagle Mines (AEM) -2%, the Global X Silver Miners exchange-traded fund (SIL) -10%, Pan American Silver (PAAS) -30%, and S&P 500 constituent Newmont (NEM) -37%.  Using this date from a year ago as a starting point — given Gold’s positive track — the balance of this bunch ought all be far higher still!

“Yet it depends from where you start, right mmb?”

Indeed so, Squire.  For example:  if measuring from the precious metals’ price depths of year-end 2015, Gold today is +85%, but GDX (as a surrogate for many miners both Gold and Silver) is +129% … and arguably some say it ought be far more.  More toward “The Now”, here’s the graphic:

It essentially being month-end, let’s open up the BEGOS Markets’ gates as we go ’round the horn for all eight components by their daily bars from one month ago-to-date.  As shown, save for the senseless S&P (Spoo), the balance of the diagonal trendlines are down given the firming Dollar “phenomenon do-do-do-doooo…”.  And as you regular website viewers know, the baby blue dots represent the day-to-day consistency of each component’s grey trendline.  So notably mind the “Baby Blues” for both Gold and Silver as they’re just starting to curl upward:

Specific to the 10-day Market Profiles for the precious metals, here next we’ve that for Gold on the left and for Silver on the right.  Obviously Gold has much more overhead trading resistance with which to deal, whereas Silver exhibits more of a 23s safety net.  ‘Course, per the aforeshown Gold/Silver ratio of 82.9x versus the millennium-to-date average of 67.5x, Sister Silver remains cheap!

Then broadly in looking at Gold’s Structure by its monthly bars across the last dozen or so years — all those stratified layers notwithstanding — that rightmost triple top remains ripe for the taking:

Toward closing, ‘twouldn’t be month-end without listing the BEGOS Markets’ Standings from year-end 2022 through this 03 June.  Note that Gold has been displaced at the top of the stack by none other than the S&P 500, aka “The Magic Earnings-less Index”.  As stated in the past:  “‘Tis diabolical”:

Which in turn leads us to this wrap.

We’ve oft referred to the current monetary climate as The Investing Age of Stoopid.  So bizarre has it become that we are seeing headlines which a generation ago would have been regarded as completely irrational, (and obviously never would have made the front, if any, newspaper page).  Nonetheless, the once quite useful WSJ just ran above Friday’s fold with “Robust Labor Market Poses Threat to Stocks’ Rally” –> What?  Shouldn’t a robust labor market encourage a stocks’ rally?  But then we forget.  In this New Age of piling into earnings-less stocks, valuation has no bearing to price.  Rather the Fed has become EVERYTHING, even as FinMedia guidance to the Fed’s “next move” is useless as it changes from week-to-week:  “They’re gonna pivot; no wait, they’re gonna pause; no wait, they’re gonna raise, but only once and then they’re gonna pause…”  Good grief:  for the bazillionth time, this is why we do the math.  (To which point, see last week’s missive as regards the Fed-favoured Core PCE inflation gauge).  And by doing the math, we know that to expect.

And most broadly, yes, Gold shall eventually go to the moon!  So either get in, or get off the gantry!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

02 June 2023 – 09:18 Central Euro Time

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The Swiss Franc, Copper and Oil are all above today’s Neutral Zones; none of the other BEGOS Markets are below same, and volatility is light ahead of May’s StateSide Payrolls data; only Copper has thus far traced in excess of 50% of its EDTR (see Market Ranges). Following a Wednesday’s “Flow-weaker-than-S&P” session, money has continued to return to the Index; too by Market Values, the Spoo is (in real-time) +160 points above its smooth valuation line. And as tweeted yesterday, the VIX (now sub-16) is approaching pre-COVID complacency (sub-13). Gold is firming even as the weekly parabolic Short trend is but a week old, the debt default’s being skirted raising the question: from where comes the money to keep going? Tomorrow brings the 707th Edition of The Gold Update.

01 June 2023 – 09:38 Central Euro Time

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Thus far we’ve little change in the S&P Futs even as the U.S. House passes the debt default deal, the Spoo at present within its Neutral Zone for today; above same are both Copper and Oil, whilst below same are the Bond, Euro, Gold and Silver; volatility is light-to-moderate. Yesterday was one of the few sessions we’ve seen of late where the S&P’s monetary outflow (-1.8%) notably exceeded the change in the Index itself (-0.6%); whether this is an inflection point toward a long overdue correction for the S&P remains to be seen, however Flow does lead Index; still by Market Trends, the Spoo remains the sole BEGOS Market exhibiting a positive linear regression trend. ‘Tis a busy session for the Econ Baro including May’s ADP Employment data and the ISM(Mfg) Index, April’s Construction Spending, and the revisions to Q1’s Productivity and Unit Labor Costs.

31 May 2023 – 08:57 Central Euro Time

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Both the Bond and Silver are at present above their respective Neutral Zones for today; below same are the Euro, Swiss Franc and Spoo, and volatility is mostly moderate, Oil being a bit of a laggard with just a 26% tracing of its EDTR (see Market Ranges). @deMeadvillePro tweets Oil’s 2-hr. MACD as having been a super Market Rhythm these past six weeks: of note, the average swing duration of the study is some 1 1/2 days (24 swings tested). Our S&P 500 MoneyFlow page continues to reflect the massive amount of money being thrown into the Index, the notable inflows yesterday going to NVDA, TSLA, AAPL and AMZN; (outflows were most for MSFT and AVGO). The (futs-adj’d) “live” P/E of the S&P is 55.6x; (the publicly “parroted” P/E is 24.3x). Today’s Econ Baro awaits May’s Chicago PMI. The Fed’s Tan Tome arrives late in the session.

30 May 2023 – 09:15 Central Euro Time

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The BEGOS Markets’ two-day session continues, finding Gold (not surprisingly) below its Neutral Zone for today, as are Silver, Copper and the Euro; above same is the Bond, and volatility is moderate-to-robust, the Bond notably having traced 117% of its EDTR (see Market Ranges). Gold’s contract rollover from June to August adds 19 points to price, reflective of broader bullish sentiment for the yellow metal, even as near-term price looks to fall (again per the current edition of the Gold Update). At Market Values, Gold (in real-time) shows as -49 points “low” and the Spoo as +149 points “high”. The Econ Baro awaits May’s Consumer Confidence.

29 May 2023 – 09:26 Central Euro Time

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The BEGOS Markets are into a two-day trading session (Tuesday settlement) as StateSide ’tis Memorial Day, and on this side of The Pond we’ve Whit Monday. There is little markets’ reaction to the tentative U.S. debt ceiling “deal” which still must pass Congressional muster: Copper is the sole BEGOS Market outside (above) its Neutral Zone at present. Gold confirms its weekly parabolic trend as having flipped from Long to Short. The Gold Update cites our near-term downside target zone for the yellow metal, notably selecting the 1893 level within the overall broad structural support from 1975 to 1810, within which we’ve Golden Ratio support from 1912 to 1874. The “live” (futs-adj’d) P/E of the S&P is 56.0x. And contract volume for the Bond is rolling from June into September, whilst for Gold ’tis rolling from June into August.

The Gold Update: No.706 (27 May 2023) – Gold: Our Near-Term Downside Target Zone

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The Gold Update by Mark Mead Baillie — 706th Edition — Monte-Carlo — 27 May 2023 (published each Saturday) — www.deMeadville.com

“Gold:  Our Near-Term Downside Target Zone“

As herein penned just a week ago for Gold: “…the present … Long trend can swiftly end in tears. Either Gold right now resumes adroitly up, or … just a wee drop in actual price, and ’tis over. A new Short trend would then ensue, and … even the 1800s may return anew….”

And so ’twas the latter case that came to pass this past Thursday (at precisely 12:42 GMT) upon Gold penetrating the 1942 level. And lo (double entendre), a fresh red encircled dot was printed, heralding the start of a new Short trend for Gold’s weekly bars:

And thus the age old question again is asked:  “How low doth Gold go?” Within the above graphic, the white area represents the most recently carved support structure for Gold, spanning from the 02 February high of 1975 down to the 28 February low of 1810.  Therein, the green zone encompasses Golden Ratio support spanning from 1912 to 1874.  That in turn is bisected by the purple midpoint support line at 1893 — a reasonable downside target — which is -53 points below Gold’s having settled out the week yesterday (Friday) at 1946.

More specific to the last 10 parabolic Short trends that extend back a full five years, be it by average, trimmed-mean, or median adversity, such vacuum suggests Gold reaching the 1852-1835 area.  Whilst that still is inside the overall white support structure, our lean is that the 1893 purple line is the extent of adversity on this down run. On verra…

‘Course, that’s all technical.  But as long as Gold continues to be kicked around as a commodity rather than as a currency, the technicals typically will out.  Ultimately there remains the main fundamental:  currency debasement.  And by our opening Gold Scoreboard, we value Gold today at 3686, even accounting for the wee increase in the supply of Gold itself plus some shrinkage of late in the StateSide “M2” Money Supply.

 “But mmb, Gold always rises to prior maximum debasement values, right?”

Exactly right there, Squire.  Historically ’tis the case, however the lag time can be significant: the last such occurrence was per Gold’s still-standing All-Time High of 2089 on 07 August 2020, the debasement value for which was attained some eight years earlier during March 2012.  Indeed as a charter reader of The Gold Update has quipped these many years:  “Gold will make you old.”  But ’twill also make you financially substantive.

Speaking of substantive, such is the state of the Federal Reserve’s favoured inflation rate.  As the Fed assumes that neither do you drive nor eat, it looks to push down Core Personal Consumption Expenditures to an annualized inflation pace of +2%.  And the full-throat FinMedia buzz is that following another +0.25% FedFunds rate increase come the 14 June Open Market Committee’s Policy Statement, they shall then “pause”.  Shall that produce enough “economic slowdown” to garner just +2% annualized Core PCE inflation?  We don’t think so, per the following graphic:

We constructed this inflation measure two ways from January 2020-to-date.  First, the yellow line takes each month’s Core PCE rate and annualizes it (which for you West Palm Beachers down there is x 12).  Second, the blue line is the moving 12 months’ summation of the Core PCE, which is the more commonly accepted version.  The Fed’s horizontal red line goal is at 2%.  Does the blue line look like it’s about to drop to the red line anytime soon? No it doesn’t.  And there are five more FOMC meetings still in this year’s balance alone.

As for “economic slowdown”, by our tried-and-true Economic Barometer (now in its 26th calendar year), “slowdown” of late appears more as “boomtown”:

And as has been the rule rather than the exception through these last four weeks (basically a whole month’s worth of data) period-over-period metrics are improving.  Of the 10 that hit the Baro this past week, 8 were better, including April’s Personal Income, Personal Spending, both New and Pending Home Sales, plus an upward revision to Q1’s Gross Domestic Product from +1.1% (annualized) to +1.3%.  ‘Course, the cautionary note therein is inflation’s effect vs. REAL growth.  And that shall keep the Fed’s foot on the rate raise throttle, even as the Minutes from the FOMC’s 02-03 May meeting noted some members’ thoughts to potentially “pause”.  But the Econ Baro since then has been a rocket ship …  albeit somewhat fueled “as things get worse more slowly.”

Then, too, is the issue of U.S. Treasury default under Secretary Janet Yellen.  ‘Twould be a week from Monday (05 June) per “Old Yeller”, barring some BandAid and tape resolution.  Rating agency Fitch (which always figures to be first) is said to be “considering” a downgrade of its StateSide credit rating.  But not to worry:  President Biden’s Administration has their “contingency plan” waiting in the wings.  (Just mind the “direct deposit” of that Social Security cheque…)

Moreover, the stock market isn’t worried at wit.  Money is pouring into the S&P 500 at a pace we’ve not witnessed since we began collecting stock-by-stock MoneyFlow data on a daily basis back in 2005.  ‘Course, you can count on one hand the five or so stocks that essentially are the whole S&P 500.  But money is money such that by the website’s three measures (weekly, monthly, quarterly) this leading indicator of Flow is unabashedly pointing to much high levels for the Index to go.  All that remains to justify it are earnings.  (Note:  the “live” price/earnings ratio of the S&P 500 settled the week at 55.1x.  The good news is that the “parroted” version is but a mere 24.3x).  Further, the 3-month U.S. Treasury Bill may yield 5.115% as opposed to the S&P’s 1.607%.  But stocks don’t default, right?  Even if the money doesn’t exist to cover them, right? (As of yesterday:  S&P 500 Market Capitalization = $36.6T; “M2” Money Supply = $20.5T … just in case you’re scoring at home).  Have a nice day.

But hardly are the precious metals having nice days.  Let’s start with our two-panel graphic for Gold.  On the left, the “Baby Blues” of trend consistency cracked below the +80% axis back on 05 April, price then 2037; as of yesterday, ’twas better than -100 points lower at 1936.  (Again ad nauseam, “Follow the blues…” given their leading quality).  On the right, all those labeled overhead resistors are Gold’s plight in its downward Market Profile flight:

Faring none the better is poor ol’ Sister Silver, her “Baby Blues” (below left) in pure consistent plunge, although in her Market Profile (below right) she’s found some trading support above 23.25.  Similar to Gold’s aforeshown support structure, for Silver such support extends down to 19.95, (but please let’s not go there, dear Sister…):

‘To sum it all up, Gold’s being conventionally considered a commodity — versus True Cash — finds it in techncially-negative mode, with the high 1800s in its near-term balance.  Doubtless, if there is any resolution for a StateSide default, it shan’t be until “lawmakers worked late with the Administration into Sunday night” (i.e. 04 June), even as ’tis now reported that a tentative agreement has been reached.  But that’s just the way Washington operates and it makes for ad-revenue-generating late-night boob tube “breaking news”.  Prior to which, we see nothing of substance to break Gold’s downward bent, barring poor employment reports later in the ensuing week.  Gold shall naturally run this parabolic Short course as it always does, only to then resume its broader upward climb.  And that we trust shall be sublime to a High of All-Time!

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

26 May 2023 – 09:16 Central Euro Time

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The metals triumvirate are above their Neutral Zones at present; the other BEGOS Markets are within same, and volatility is light-to-moderate. Gold’s weekly Parabolics have provisionally flipped from Long to Short: in tomorrow’s 706th Edition of The Gold Update we’ll look at “how low is low”. As noted earlier, the MACD has also provisionally gone Short. In tandem, the Dollar Index has crept above the 104 level for the first time since 17 March (Gold then 1994 vs. today’s 1950). ‘Tis a key day for the Econ Baro as we get the Fed’s favoured inflation metric of April’s Core PCE Prices (which we’ll also assess in tomorrow’s missive); other metrics include the month’s Personal Income/Spending and Durable Orders.

25 May 2023 – 09:44 Central Euro Time

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The Euro and Swiss Franc are at present below today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is pushing toward moderate. Our “live” (futs-adj’d) P/E for the S&P is 51.7x and the yield is 1.644%; that for the 3-month T-Bill is 5.185%. Looking at Market Rhythms, on a 10-swing test our best study is Gold’s Daily Price Oscillator, whilst on a 24-swing test basis ’tis the Bond’s 2-hr. Parabolics. The Spoo now at 4138 is right on its Market Profile’s most heavily traded price of the past two weeks. Included for the Econ Baro today we’ve April’s Pending Home Sales, plus the second view of Q1’s GDP. Fitch is weighing a downgrade of the StateSide credit rating.

24 May 2023 – 09:41 Central Euro Time

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Silver and Copper are at present below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is mostly light, save for Copper which has already traced 64% of its EDTR, (see Market Ranges). Despite yesterday’s S&P pullback, the Spoo remains the only BEGOS component in positive linear regression, (see Market Trends); the Index itself is mildly “textbook overbought”; key Market Profile trading support for the Spoo is 4138. ‘Tis another quiet day for the Econ Baro, however the FOMC Minutes from the 02-03 May meeting come due.

23 May 2023 – 10:50 Central Euro Time

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The Swiss Franc plus all three components of the metals’ triumvirate are at present below today’s Neutral Zones; none of the other BEGOS Markets are above same, and volatility is mostly moderate. Gold has traded thus far today to as low as 1956, (the prior week’s low being 1954); as previously noted, should 1942 trade before week’s end, the weekly parabolic Long trend shall flip to Short. Money continues to pour into the S&P 500: per our MoneyFlow page, the forward readings range from 100-to-600 points higher, albeit weak earnings combined with relative high interest rates ought actually see the S&P move materially lower. The rise in the Econ Baro these past three weeks certainly suggests the FOMC shall continue to raise rates. And today the Baro looks to April’s New Home Sales.

22 May 2023 – 09:19 Central Euro Time

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The BEGOS Markets begin the week with weakness in both Copper and Oil, the two components at present below their respective Neutral Zones for today. The Gold Update cites our being wrong about the yellow metal’s imminent rise to an All-Time High (i.e. above 2089, which still stands from 07 August 2020); instead, the weekly parabolic trend would flip from Long to Short this week were 1942.1 to trade, (price currently is 1977); too, Gold’s weekly MACD is provisionally crossing to negative. Q1 Earnings Season concludes with 56% of the reporting S&P 500 constituents having improved their bottom lines from a year ago: ex-COVID reporting periods, that is the second-weakest quarterly improvement since Q3 of 2017, (and in turns lends to why our “live” P/E for the S&P is now 52.2x). ‘Tis a quiet day for the Econ Baro with most incoming metrics due toward week’s end.

The Gold Update: No.705 (20 May 2023) – Gold’s Nigh High Goes Awry (aka When We’re Wrong, We’re WRONG!)

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The Gold Update by Mark Mead Baillie — 705th Edition — Monte-Carlo — 20 May 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Nigh High Goes Awry (aka When We’re Wrong, We’re WRONG!)“

From “Nigh” to “Awry” indeed, as straightaway we run with this rare reprise:  “Boy, Did I Get a Wrong Number!” –[Hope, Sommer, Diller; UA, ’66].

Since mid-March, our oft-stated target for Gold has at minimum been its still-standing All-Time High of 2089 … and beyond!  … such that throughout we’ve not chosen a forecast high for this year.  But come 04 May, the jive to 2085 was the most Gold could thrive, only to since see the yellow metal then dive -131 points to 1954 in settling out this past week yesterday (Friday) at 1980.  Way not to go, mmb…
 … albeit hardly are we throwing out the baby (let alone this old man) with the bathwater.

But worse, having been caught up in our own fundamental fervour that this finally was “IT“ — e.g. that Gold at long last was going to imminently break up through 2089 en route to the mid-2100s come July — we instead committed a cardinal error.  (Ready?)

We ignored the very leading essence of our own website’s analytics which from two weeks ago had already begun pointing to near-term lower levels for the precious metals.  “Whoomp! (There It Is)” 

 
“Now don’t beat up on yourself too much there, mmb.”

Regardless, dear Squire, we rather recklessly ditched our reliably leading indicators on the exceptional notion that this time ’round Gold was well and truly en route to new uncharted upside territory.  Even as weakness in our Market Trends‘ “Baby Blues” (notably so for Silver) began to set in; even as on 04 May by Market Values Gold was still trading +44 points above its smooth valuation line after having more so been +153 points above same just back on 13 April; even as on 11 May Gold crossed below its Market Magnet.  All tried and true leading signals across better than two decades … and all of which we ignored.  Instead, we stayed on go for Gold to glow whilst our own stuff warned of a blow.  Thus now, here’s what Gold’s weekly bars show:

 
No, ’tis not the prettiest of pictures.  Given:  price today at 1980, the ensuing week’s parabolic “flip to Short” level just -37 points lower at 1943, and Gold’s “expected weekly trading range” now 65 points, the present parabolic Long trend can swiftly end in tears.  Either Gold right now resumes adroitly up, or the combination of the blue parabolic dots rising at a weekly pace of +16 points and just a wee drop in actual price, and ’tis over.  A new Short trend would then ensue, and by Gold’s price structure, even the 1800s may return anew.

Oh to be sure, we cannot imagine any more Gold positives than are already in play.  Yes, the Dollar’s been “firming” a bit, but you know, and we know, and everyone who’s being paying attention from Bangor Maine to Honolulu and right ’round the world knows that Gold plays no currency favorites, as herein graphically exhibited ad nauseam over the years. 

Moreover, ’tis not just the precious metals that are somewhat stifled of late.  For across the past 21 trading days (one month) — with the exception of the S&P 500 — the seven other components which make up BEGOS (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P) are sporting negative linear regression trends.  In fact, here are the percentage tracks for the five primary components since a month ago, essentially exhibiting a general markets’ malaise (Oil having traced an even more negative phase):

 
And yet that said, nothing markets-wise seems natural anymore, save for the fact that price is never wrong: we cannot will Gold to eclipse 2089 just as we cannot will the S&P 500 (today 4199) to return to a rational earnings valuation in the mid-2000s.  But we steadfastly believe in due course that both will.  And yet as my fine friend and business partner here quips along with me:  “Everything we learned in Portfolio Theory has become useless.”  At least until means reversion again comes to the fore as is its historical encore.

And speaking of earnings, let’s take a moment to assess those of the S&P 500.  One year ago on 19 May 2022, the S&P stood at 3901:  ’tis today at 4199, an increase of 6.9%.  Similarly on that exact day a year ago, our “live” price/earnings ratio for the S&P was 29.8x:   ’tis today at 52.9x, an increase of 43.7%, (which differs considerably from the “parroted” P/E of 24.3x courtesy of the “nobody actually does the math” crowd).  Why so high?  Simple:  Q1 Earnings Season just ended.  Therein, 450 S&P 500 constituents reported.  Excluding the three terrible COVID quarters (Q1, Q2 and Q3 of 2020), this year’s Q1 Earnings Season ranks second-worst since Q3 of 2017 as only 56% bettered their year-over-year results … which means 44% did not so do.  (What ever happened to the coveted “high quality” standards necessary to be in the S&P, hmmm?)

Either way, not to worry per this recent (hilarious) statement from the great multinational Royal Bank of Canada:  “…On the surface, Q1 earnings season looks pretty good … S&P 500 earnings per share (EPS) is on pace to decline 4.2 percent year over year, better than the consensus forecast of a 6.7 percent decline at the end of the quarter…”  The Investing Age of Stoopid rolls on…

Then again, are things actually getting better?  A StateSide Debt Default aside — an economic catastrophe that U.S. Secretary of the Treasury Janet “Old Yeller” Yellen rightly deems would be “severe” — our Economic Barometer has been doing quite nicely of late:

 

Of the past week’s 13 metrics which came into the Econ Baro, 10 were period-over-period improvements across quite a spectrum of indicators, including May’s Philly Fed Index and NAHB Housing Index, April’s Retail Sales, Housing Starts, Industrial Production, Capacity Utilization, and the Conference Board’s Leading (i.e. “lagging” given the Baro always being in the lead) Indicators, plus a working off of March’s Business Inventories. Nonetheless, we’re a bit hesitant to cue up Elvin Bishop’s ’75 hit “Sure feels good feelin’ good again “

Meanwhile from the “‘Tis Not a Beauty Contest Dept.” we go to our 10-day Market Profiles for Gold on the left and for Silver on the right.  From their highs of just over two weeks ago, Gold has fallen as much as -6.3% whilst Silver has repelled nearly double that at -11.2%.  No happy faces there;

Such repelling notwithstanding, let’s wrap with this from the “Cooler Heads Prevail Dept.“

We’re on occasion asked, “What’s it gonna take for Gold to really go up?” Answer:  the same thing it takes for any market to go up –> more offers being hit than bids.  Whilst Gold is very actively traded, (year-to-date COMEX volume alone running at an average of 2.53 contracts traded per second, each contract controlling 100 ounces of Gold, which by today’s price is an average traded claim on Gold of $501,000 per second), the universe of trading entities is not materially expanding given maximum “open interest” is not growing beyond some 400,000 contracts.  And we understand Gold remains significantly “under-owned” vis-à-vis managed portfolio allocation.

‘Course, that can all change in a heartbeat:  “Hey Mabel?  Our Treasury check never showed up this time!”  Followed by:  “Hey Mabel!  I sold some stock but the broker says they don’t actually have the money to pay us!”  Hey Egbert:  finally now you’ll try to get some Gold, eh?  The moral of the story thus being –> do NOT be that guy:

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter:  @deMeadvillePro

19 May 2023 – 09:18 Central Euro Time

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Following yesterday’s fallout across all of the BEGOS Markets — except for the Spoo — we’ve at present the Swiss Franc, Gold, Silver, Copper and Oil all above their respective Neutral Zones for today; none of the other components are below same, and volatility is pushing toward moderate. At Market Values, the Spoo (in real-time) is +136 points above its smooth valuation line; Oil is better than -4 points below same. And at Market Trends, the Spoo is now the sole component sporting positive linear regression. The Econ Baro has already wrapped up a positive week. And today is the final day of Q1 Earnings Season, (we’ll have S&P 500-specific details in tomorrow’s edition of The Gold Update).

18 May 2023 – 09:20 Central Euro Time

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Silver is the only BEGOS Market at present outside (below) its Neutral Zone for today; session volatility is again light. The Spoo yesterday worked up through its Market Profile 4135-4138 resistance zone, indeed reaching above our “high if an up day” for the first time since 05 May. However, the lack of growth in Q1 Earnings Season has pushed the “live” P/E of the S&P up to (futs adj’d) 52.3x; the Index’s yield is 1.609% versus that (annualized) for the 3-month T-Bill’s 5.088%. Of note per Market Ranges, EDTRs on balance are narrowing, certainly so for the Bond, Euro, Swiss Franc, Oil and the Spoo. For the Econ Baro, today’s metrics include May’s Philly Fed Index, plus April’s Leading (i.e. lagging) Indicators and Existing Home Sales.

17 May 2023 – 09:11 Central Euro Time

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Copper is at present the sole BEGOS Market outside (above) its Neutral Zone for today; otherwise, session volatility is light. Based on the rapid recent rise in the Econ Baro — plus inflation remaining at large — we don’t see the Fed making the FinMedia anticipated “pause” anytime soon. The precious metals are caught in the overall decline of all the BEGOS components as the Dollar gets a renewed bid. In fact, Gold is now the only component still sporting a positive linear regression trend (see Market Trends), although its “Baby Blues” of consistency are falling. Notably for the Spoo, by its Market Profile, the 1435-1438 zone shows as overhead trading resistance. A meager Q1 Earnings Season comes to a close at week’s end. And the Econ Baro today looks to April’s Housing Starts/Permits.

16 May 2023 – 09:14 Central Euro Time

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The precious metals’ recent weakness is continuing this morning, with both Gold and Silver at present below their respective Neutral Zones for today, as is Copper. Above same is the Bond, and volatility is pushing toward moderate. By our Market Trends page, only two of the BEGOS Markets are in positive (albeit weakening) linear regression: the Bond and Gold. In looking at Market Rhythms, the best consistency — on a 10-swing test basis — is for the Bond by both its 2hr. MACD and 2hr. Parabolic studies; on the 24-swing test basis ’tis Oil’s 2hr. MACD and its 4hr. Parabolics. Today’s load of incoming metrics for the Econ Baro include May’s NAHB Housing Index, April’s Retail Sales, IndProd/CapUtil, and March’s Business Inventories.

15 May 2023 – 09:17 Central Euro Time

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The Euro, Swiss Franc, Copper and the Spoo are at present above their Neutral Zones for today to start the week for the BEGOS Markets; below same is the Bond, and volatility is mostly light. The Gold Update emphasizes Silver’s selling last week as being overdone vis-à-vis the slippage in the other metals; indeed this morning, Gold, Silver and Copper all are up a bit early on; and specific to Silver, she finished Friday 1.30 points — an extreme deviation — below her Market Magnet. In looking at Market Values, only Oil is notably deviated from its smooth valuation line, by nearly -8 points. And the Econ Baro starts a fairly busy week with May’s NY State Empire Index.

The Gold Update: No.704 (13 May 2023) – Gold Comes a Bit Undone, but Silver’s Selling is Overdone!

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The Gold Update by Mark Mead Baillie — 704th Edition — Monte-Carlo — 13 May 2023 (published each Saturday) — www.deMeadville.com

“Gold Comes a Bit Undone, but Silver’s Selling is Overdone!“

 

A mere four weeks ago we penned our 700th missive entitled “Gold: The Next All-Time High is Nigh”.  And as you nauseatingly know from just prior to this past week, Gold came within four wee points of so doing in reaching 2085 on 04 May, (the All-Time High of course still 2089 from 07 August 2020).

Since however, our “Nigh” has gone somewhat awry, Gold having just recorded a wimpy week of net -9 points in settling  yesterday (Friday ) at 2016.  Regardless, from the 04 May high of 2085 to this past week’s low of 2006 was Gold’s coming a bit undone to the tune of -3.8% in less than seven trading days. 

But the more morose lowlight was the comprehensive shellacking of Silver, her selling overdone indeed!  And it all happened in just these last two trading days, Silver settling at 24.13 to close out her week.  ‘Twas quite untoward to take in:  for at Wednesday’s settle (25.63) the Gold/Silver ratio was 79.5x; 48 hours later ’twas 83.5x!  Such two-day increase of 4.0x hasn’t occurred in better than two years (since 03 February 2021)!  Moreover, from Thursday’s high to Friday’s low, Gold dropped -2.0% … but Silver was chopped liver at one point to the tune of -7.0%!  “Hold the onions!”  Behold the two-day percentage tracks for our metals’ triumvirate of Gold, Silver and Copper from this past Thursday through Friday (15-minute data):

 

Oh to be sure, Cousin Copper is somewhat the culprit here.  Just as Gold is money, we consider Silver as same.  But we’ve seen at times over the years our Sister Silver discard her precious metal pinstripes for her industrial metal jacket when on occasion Cousin Copper comes calling.  Yet clearly per the above graphic, let’s just say the white metal’s dalliance with the red metal this time ’round was rather excessive (understatement), whether measured by Copper’s percentage decline, Gold’s modest decline, and/or the Gold/Silver ratio itself.  So say it loud, say it proud:  “Got Silver?“  Further as is our wont to point out — given the century-to-date average Gold/Silver ratio of 67.5x — were Silver priced today by that metric, she’d be +19% higher than her current 24.13 at 29.86.  Reprise:  “Got Silver?“

As for the yellow metal, it recorded an “inside week”, (i.e. a “lower high” and “higher low”).  Not to get too deep into the statistical weeds as we turn to Gold’s weekly bars from one year ago-to-date, but you may find this tidbit of interest.  In reviewing the prior ten parabolic Long trends (from as far back as January 2018), upon Gold therein printing an “inside week”, price’s “median maximum” gain in the ten ensuing weeks was 64 points (which from here at 2016 would be 2080), and price’s “average maximum” gain in those same stints was 108 points (which from here at 2016 would be 2124).  Thus specific to that construct playing out, ’tis fair to still say that a new Gold All-Time High remains nigh.

And to that end, the current trend remains Gold’s friend.  As of course does currencies’ debasement.  Yes, ’tis true that from 1980-to-date the supply of Gold itself has increased +123% … but the supply of U.S. Dollars alone (“M2″ basis”) across those same 43 years has increased +1,198%.  That is 10x the supply increase of Gold.  “Got Gold?”  And conservatively taking the average price of Gold for the year 1979 (such as to avoid 1980’s Gold price spike) of 310: 10x that is 3100.  Reprise: “Got Gold?”  We do right here:

 

“When it all goes wrong” indeed.  How’s that avoidance of StateSide “debt default” working out?  So far ’tisn’t.  “There goes the credit rating…”

“But mmb, it says here: ‘The validity of the public debt of the United States … shall not be questioned.'”

Excellent, Squire, to see you’re keeping up with the 14th Amendment [Section 4].  Anything there about the validity of folks’ bank deposits?  How about the validity of stock prices given stratospheric price/earnings ratios?  Again bearing in mind Jerome Cohen’s writing “In a bear market many stocks will sell at 5 to 7 times earnings, while in bull markets the average level would be about 15 to 18 times earnings” we’ve this rip from the website’s Valuation and Rankings page for the S&P 500:

 

Then too we’ve the Economic Barometer which for the third consecutive week regained some ground.  In fact the only real stinker was Friday’s marked decline in the University of Michigan’s “Go Blue!” Sentiment Survey, its initial June reading falling fourth most since the April 2020 onset of COVID.  To be sure, when concern arises as to whether that ever-reliable U.S. Treasury Interest cheque shall arrive in the mail — or not — sentiment clearly sags.  ‘Course with our “live” P/E for the S&P itself at now 52.6x, alternatively one can cash out before it all goes wrong there as well:

 

Next let’s drill down (quite literally for Sister Silver) into the daily bars across the past three months-to-date with Gold on the left and with Silver on the right.  Fairly stark difference there, the rightmost couple of days for Silver versus Gold.  Did we mention Silver’s selling as being overdone?  Absolument!

 

Then too we’ve the 10-day Market Profiles for the yellow metal (below left) and the white metal (below right).  Whilst Gold rests just below trading resistance in the denoted 2020-2032 range, a swift Silver climb to her 25.85 line would be ever so sublime, for we anticipate ’tis just a matter of time before the precious metals further their shine:

In closing it out this time ’round, what with all the talk of StateSide “debt default”, this past week (as we’ve done over the years) we perused the Budget of the U.S. Government for Fiscal Year 2024.  If you’ve never so done, we encourage you to so do, especially if you pay federal tax.  Amongst the double-columned 185 pages and the many “Seriously?” items therein comes this allocation for the Office of Refugee Resettlement (ORR).  ‘Tis allocated $7.3B to help resettle up to 125,000 refugees in 2024 … which of course works out to $58,400/refugee.  That’s darn good dough if you can get it!  Better still:  get some Gold, and Silver too!

 

Cheers!

…m…

www.TheGoldUpdate.com
www.deMeadville.com

12 May 2023 – 09:26 Central Euro Time

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Oil is the BEGOS Markets’ weak link this morning, at present below its Neutral Zone for today; the balance of the bunch are within same, and volatility is light-to-moderate. Silver yesterday took its worse high-to-low points shellacking since 09 March 2022, the intraday move being -1.375 points (-5.7%); more in tomorrow’s edition of The Gold Update. By Market Rhythms, our most consistent (10-swing test basis) at present is the Swiss Franc’s 1hr. Moneyflow study, whilst per the 24-swing test basis ’tis Oil’s 2hr. MACD. The Econ Baro concludes the week’s inflation data with April’s Ex/Im Prices, plus the UofM Sentiment Survey.