Mark

The Gold Update: No. 744 – (17 February 2024) – “More Gold Slippin’ as Inflation Renews Rippin’”

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The Gold Update by Mark Mead Baillie — 744th Edition — Monte-Carlo — 17 February 2024 (published each Saturday) — www.deMeadville.com

“More Gold Slippin’ as Inflation Renews Rippin’“

We yet again reprise that from this year’s first edition of The Gold Update:

“…But in seeing the Dollar take flight to start this year — indeed recovering a 10-day losing streak in just the first two days of 2024 — along with the Bond’s fresh demise as yields rise, might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens … surprise!…”

At that 06 January writing:

  • The Dollar Index was 102.155; ‘tis now 104.195;
  • The U.S. Treasury average product yield (30yr, 10yr, 5yr, 3mo) was 4.368%; ‘tis now 4.564%.

And now just in this past week on January’s renewed inflation front:

  • Core retail inflation (CPI) was +0.4% (+4.8% annualized pace), a 9-month high;
  • Core wholesale inflation (PPI) was +0.5% (+6.0% annualized pace), a 21-month high;
  • And both headline numbers (CPI & PPI) were +0.3% (+3.6% annualized paces), to 4-month highs.

‘Course, the FinMedia anticipates rate cuts, for as we’ve written, the tongue-in-cheek optic is:  as says the media, so does the Federal Reserve, (the political characterization touted as whatever it takes to maintain the present balance of power in Washington DC).  However:  the declining Treasury market says otherwise; and historically, ’tis the market that leads the Fed.

 “So mmb, is it your prediction that the Fed is actually going to have to raise rates?“

Not a prediction, Squire; rather a mathematically valid observation.  Obviously the January inflation data (arguably aberrational) went the wrong way.  Albeit in the Fed’s favour, the 12-month summations of inflation at the wholesale level are duly below the +2% target; but at the retail level ’tis +3% headline and nearly +4% core, both a fair piece above +2%: and that’s on the consumer, who makes up some 70% of the Stateside economic engine.  Thus to cool that overheated engine, the Federal Reserve’s Open Market Committee at some point may actually be compelled to again vote to raise rates.  That’s just the way it works.  Here it all is graphically from one year ago-to-date, the four panels identically scaled for comparable context and the Fed’s +2% target as each red axis.  Note:  the annualized (blue line) levels in all four cases for January are well-above such +2% target:

‘Course, January’s missing puzzle piece at present is Personal Consumption Expenditures Prices, such “Fed-favoured” data not due until 29 February; (the subsequent FOMC Policy Statement is not scheduled until 20 March).  Thus whilst we wait, let’s check Gold’s gait.

Fundamentally, Gold (at least by conventional wisdom) can have its nerves stir should a rate scare impair.  To wit, price settled the week yesterday (Friday) at 2026; ’twas Gold’s fifth losing week of the past seven — and admittedly — most of our missives year-to-date have had a negative near-term price bias.  Thus hardly is Gold’s -5.9% net run down from its 2152 All-Time High (04 December) that unexpected.

Technically, and indeed expectedly, Gold’s weekly parabolic trend — following a 17-week Long streak — finally succumbed to Short as confirmed at yesterday’s close.  Per the following chart of Gold’s weekly bars from one year ago-to-date, the rightmost encircled red dot now implicates testing of the underlying green-bounded support structure (2020-1936), the low this past week already having reached down to 1996:

So as a fresh parabolic Short trend commences, the burning question invariably is “How low shall price go?”  Whilst nobody knows, our best sense is the aforeshown 2020-1936 support structure not only shan’t bust, but shall not be that deeply penetrated.  The maximum downside adversity of the past three such Short trends was respectively just -41, -46, and again -41 points, which if replicated from the present 2026 level would find Gold reaching no worse than 1985-1980.  Still in more broadly reviewing the past 10 Short trends, the maximum median adversity was -78 points (if replicated, to 1947 from here) and the maximum average adversity -103 points (if replicated, to 1923 from here, which would improbably be beyond the support structure). ‘Course with Gold by the opening Scoreboard’s valuation at 3739, any near-term decline can merely be viewed as noise — and depending on one’s cash management parameters — an opportunity to add to one’s pile..

Speaking of piling up, this past week brought 19 metrics into the Economic Barometer (2 more than we’d originally stated per our prior missive).  Without combing back through the Baro’s 27 calendar years of data, ’twas the largest pile for a single week in memory.  And therein, 11 of the metrics improved period-over-period, including the CPI and PPI data.  Remember:  increasing inflation nominally is an Econ Baro positive per the principle of “the rising tide of inflation lifts all boats.”  Why even February’s Philly Fed Index posted a gain for just the second time in the past 18 months … “Stop the presses!”  Still, there were some stinkers, notably featuring shrinkage in January’s Industrial Production and Retail Sales, (the latter subject to natural post-holiday belt-tightening), and the month’s Business Inventories having backed up.  But all-in-all, the Baro ratcheted up a bit more in our year-over-year picture:

 

Meanwhile, the S&P 500 (red line across the Econ Baro) through 33 trading days thus far in 2024 has made all-time highs (the latest being 5048) within 13 of those sessions.  Priced today at 5006, the “live” price/earnings ratio of this “Casino 500” settled the week at 47.5x, vastly beyond the internet “parroted” version of 27.6x.  Why the difference?  The latter version (whilst rightly using “trailing 12-month earnings”) includes “negative p/e ratios” and is unweighted.  The latter version thus is cheating.  As to the current Casino market cap of $43.7T, the liquid money supply (U.S. “M2”) of $21.0T covers only 48% of that; (just something to consider should you sell your stock at the same time as does everyone else).

And still to this day, “everyone else” doesn’t own any Gold, (or so we’re told).  Some say less than one percent of the investing public hold Gold, although in querying AI (Assembled Inaccuracy), it “says” that “10%-15% of managed portfolios” have some (likely indirect) exposure to Gold, even as price trades some -46% below the aforementioned Scoreboard valuation.  But for you WestPalmBeachers down there, why underpay for Gold when you can overpay for the Casino 500?  (Just a passing thought).

Passing through lower price levels somewhat of late has been Gold.  Here next we’ve the two-panel chart of Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right.  In both cases, the baby blue dots of regression trend consistency are, on balance, depicting lack thereof:

Then, too, we’ve the 10-day Market Profiles for the yellow metal (below left) and white metal (below right).  Of interest is the high level of Silver in her Profile versus Gold’s more midrange position.  Indeed as noted earlier in Gold’s weekly bars graphic, the Gold/Silver ratio now at 86.3x is its lowest reading year-to-date.  However:  the century-to-date average being 68.1x, were Silver to rise (and Gold to stay fixed) such as to bring the ratio down to that average, price would be 29.76, a sizable +21% above today’s 23.48 level, (just in case you’re scoring at home):

We’ll close with this absurd deception from the rather desperate “It’s All Good!” FinMedia.  (Ensure you’re not sipping your favourite beverage, lest it spew from your nose given uncontrollable laughter).  Following Tuesday’s release of renewed retail inflation per the CPI, floundering CNN Business ran with this headline, (put your glass down…):  “Good News for Americans:  Inflation cooled back down in January”.  Again, the CPI’s pace increased from +0.2% in December to +0.3%, and its core reading from +0.3% to 0.4%.  Cool, baby.

Cheers!  (And don’t forget the Gold!)

 …m…

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

16 February 2024 – 09:12 Central Euro Time

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The Bond and Swiss Franc are at present below their respective Neutral Zones for today; above same is Copper, and volatility is mostly light, (the red metal the sole component having already traded in excess of 50% [54%] of its EDTR [see Market Ranges]). At Market Trends, save for Oil and the Spoo, the other six BEGOS Markets are in linreg downtrends. And in going ’round the horn in real-time for the five primary components’ Market Values: the Bond is better than -4 points “low” per its smooth valuation line, the Euro -0.023 points “low”, Gold -36 points “low”, Oil nearly +4 points “high”, and the Spoo +185 points “high”. The Econ Baro concludes its very busy week with February’s UofM Sentiment Survey, plus January’s PPI and Housing Starts/Permits.

15 February 2024 – 09:13 Central Euro Time

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We’ve at present both the Bond and Swiss Franc above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. Looking at Market Rhythms, on a 24-test wing basis for consistency, Copper’s 30mn Parabolics ranks 1st. By Market Trends, Copper’s “Baby Blues” are in decline, as are those for all the other components, save for the Spoo, the Market Value for which (in real-time) is +170 points above its smooth valuation line. The “live” P/E of the S&P (fut’s adj’d) is 49.7x. ‘Tis a massive set of incoming metrics (11) for the Econ Baro today: included therein are February’s NY State Empire Index, Philly Fed Index and NAHB Index, plus January’s Retail Sales, Ex/Im Prices and IndProd/CapUtil, plus December’s Business Inventories.

14 February 2024 – 09:19 Central Euro Time

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Silver of late seems to oft be the BEGOS Markets’ sole overnight outlier: ’tis at present below its Neutral Zone for today, whilst all the other components are within same; volatility is quite light with Copper sporting the widest EDTR tracing (see Market Ranges) of just 38% to this point. As perhaps provocatively put at times year-to-date in The Gold Update: what if the Fed had to again raise rates to battle increasing inflation? (January’s “Fed-favoured” Core PCE pace is not due until 29 February). With better than two weeks still to run in Q4 Earnings Season, it remains that 4 in 10 S&P 500 constituents have not improved their year-over-year bottom lines. At Market Values, despite the -1.4% drop yesterday in the S&P, the Spoo (in real-time) is still 133 points above its smooth valuation line; the Index itself is 18 consecutive trading days “textbook overbought” and the “live” (futs-adj’d) P/E is now 47.8x, essentially double where ’twas when first established a dozen years ago.

13 February 2024 – 09:18 Central Euro Time

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At present the Swiss Franc is below today’s Neutral Zone, whilst above same are all three elements of the Metals Triumvirate; volatility is mostly light. As anticipated both in yesterday’s commentary and the current edition of The Gold Update, the yellow metal’s weekly parabolic trend — after having been Long for 17 weeks — has provisionally flipped to Short, confirmation of which shall come at Friday’s settle, (barring a rocket shot above 2152); as noted, this technically opens the door for further testing of the 2020-1936 support structure; strictly on a swing basis for consistency, Gold’s best Market Rhythm is currently the 4hr Moneyflow. We’re notably eying the Core CPI in today’s retail inflation data for the Econ Baro: such Core reading may indicate inflation running at a +3.6% pace.

12 February 2024 – 09:35 Central Euro Time

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The BEGOS Markets start the week with Silver as the sole component at present outside (above) its Neutral Zone for today; session volatility is mostly light, save for the white metal having already traced 82% of its EDTR (see Market Ranges). The Gold Update notes the narrowness of the yellow metal’s trade of late, with the likelihood the weekly parabolic Long trend shall now flip to Short; emphasis is placed on the S&P 500’s ongoing overvaluation and potential positioning within the stock market’s broad-based “emotional” cycle, suggestive of the Index having reached the inflexion point from where “it all goes wrong.” The Econ Baro’s busy week of 17 incoming metrics begins with January’s Treasury Deficit.

The Gold Update: No. 743 – (10 February 2024) – “This is Where it All Goes Wrong (Got Gold?)”

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The Gold Update by Mark Mead Baillie — 743rd Edition — Monte-Carlo — 10 February 2024 (published each Saturday) — www.deMeadville.com

“This is Where it All Goes Wrong (Got Gold?)“

As occasionally is our wont, we start with stocks.  And specific to the somewhat sensationalized title of it all going wrong, “This” is applicable not just to now, but realistically since mid-year 2020 upon the S&P 500’s complete recovery from its COVID collapse in returning to an already then excessively overvalued level in the low 3200s. Today, the S&P 500 (aka “Casino 500″) is at 5027, a +50.1% increase since 18 August 2020, the day the S&P reached back to where ’twas brewing prior to COVID’s undoing.

Since then with constituents’ earnings vapidly unsupportive of price — especially with safe money today earning better than 5.2% — “This” is synonymous with “Disaster”.  And yet per our S&P MoneyFlow page, dough is being thrown into the market at amounts unconscionable, two of our measures there “suggesting” the S&P ought be better than +1000 points higher than currently ’tis! You cannot make this stuff up!

In having couched the S&P’s inane overvaluation in so many ways, we’ve even written of having run out of adjectives to describe it, save for perhaps this one:  here in the small Mediterranean fishing village of Monaco, we look at across the deMeadville office table at one another and regularly say the same thing:  “The market is crazy…”

However, the good news (or if you prefer, bad news) now is that other keen analysts (i.e. with a properly functioning brain) are increasingly noting the S&P approaching dire straits.  Indeed, infamous hedgie David M. Einhorn’s comments (hat-tip Barry Ritholtz’s “Masters in Business”) this past Thursday particularly parallel our very own across many a recent missive.  To wit:

  • We’ve said:  “We’re beyond the Investing Age of Stoopid to that of Braindead”;
  • He just said:  “I view the markets as fundamentally broken”.
  • We’ve said:  “Nobody does the math anymore”;
  • He just said:  “They’re going to assume everybody else has done the work.”
  • We’ve said:  “Everybody just parrots what everybody else says”;
  • He just said:  “Passive investors have no opinion about value”.

Nuff said.  Instead, let’s get graphic.  Our best sense says “This” is where we are now with respect to the S&P 500; (for you WestPalmBeachers down there, the red line isn’t the actual S&P, but the overall shape to the top is scarily spot on):

“Uh, mmb, we just got a note from West Palm Beach requesting the actual S&P graph……“

Well, why not, Squire?  The similarity is striking.  And as you regular readers recall, the red regression channel suggests the bounds for the S&P today had COVID and the subsequent monetary accommodation never happened:

To even logarithmically chart the above track of the S&P still finds present price overwhelmingly out-of-bounds, (polite understatement).

“Oh, but it’s all about the Fed lowering rates!” they say.  “Oh, but it’s all about the booming Biden economy!” they say.  “Oh, but it’s all about AI!” they say.  

We say:  the Federal Reserve has yet to tip its hand, the media are in high gear to either get the President re-elected or go with Michelle Obama, and as for Artificial Intelligence — based upon what flushes through the sewer lines of Internet — we view it more as Assembled Inaccuracy; (more on that in the wrap).

So with respect to the S&P 500 and its “live” price/earnings ratio of now 49.0x, if you’re having an Elaine Garzarelli moment, ’tis absolutely justified.  (For shame, if you have to look her up).  And the inevitable fear commensurate with the S&P’s next “correction” shall be a one-two punch:

  1. Fear of losing one’s marked-to-market millionaire status, (markets plummet); and
  2. Fear of one’s account being credited with broker IOUs, (markets shutdown).

Moving on to Gold, we find for all intents and purposes ’tis not moving; rather, ’tis yet again sleeping.  In settling yesterday (Friday) at 2039, ’twas Gold’s narrowest weekly range by points (31) since that ending two years ago on 04 February 2022; (by percentage between the high and low, ’twas the least rangy since that ending 23 December 2021).  As we’ve so stated of late, these days ’tis nothing but the Casino 500:  alternative smart investments no longer matter.

As for the chart of Gold’s weekly bars from one year ago-to-date, we see the blue-dotted parabolic Long trend still just barely there:  should 2027 trade in the new week, Gold goes bear.  That’s just 12 points of wiggle room within Gold’s expected weekly trading range of now 59 points.  Thus come Monday, Gold either gets off the schneid to the upside, else the trend flips to Short and the green-bounded structural support zone resumes being tested:

On to the ever-exciting Biden economy.  Breathtaking, non?  Have look below at the Econ Baro’s purple-highlighted uptrend streaks!  Well, maybe not … for by typical duration, this last may have run out of gas.  We’ll have a better idea in the ensuing week with 17 metrics due for the Economic Barometer, including on Tuesday retail inflation for January, the “consensus” reading for the Core CPI expected to come in at an annualized +3.6% pace.  Remember this from our opening missive in 2024?  “…might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens … surprise!”  From this side of the Pond, the European Central Bank just voiced concern over disinflation not dissipating as deftly as desired, whereas farther ’round the globe the People’s Bank of China is staring at died-in-the-wool deflation.

Adding to all that confusion came our favourite headline of the week (last Monday), courtesy of Bloomy:  “Treasuries Fall on Powell” … Ouch!  That had to have bruised, but we trust he’s ok.  Either way, here’s the Baro for now along with the goofball (technical expression) Casino 500:

In gliding toward this week’s wrap let’s briefly review sleepy Gold per the two panel graphic of daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  Gold’s “Baby Blues” of trend consistency look to be running out of upside puff, whilst per the Profile, 2052 is now the trading-volume price line in the sand:

Silver’s snapshot of same appears a bit weaker, her “Baby Blues” (at left) struggling for direction, with Profile trading support and resistance as labeled (at right):

And so to wrap with a little AI (again that’s “Assembled Inaccuracy”) fun in three parts.

First and obviously not proper use of AI per se, we simply “Googled” the following question:  “What is the trading profit for the past 10 swings of the S&P 500 emini futures by parabolics on three-point range candles?”  The reply was merely a slew of adverts for commodity trading firms.

Second we went to a proper AI site and identically queried:  “What is the trading profit for the past 10 swings of the S&P 500 emini futures by parabolics on three-point range candles?”  The amount of verbage returned was practically endless, but finally came the reply:  “Therefore, the trading profit for the past 10 swings of the S&P 500 Emini futures by parabolics on three-point range candles is $3175.”  Which is comprehensively wrong.  The correct answer is $938.

Third we thus thought:  let’s try something a little easier.  Ready? In we typed “What is the price of gold?” The reply?  “As of today, the price of gold is $1,775.45 per troy ounce.”  Which again is comprehensively wrong.  The correct answer is $2024.40 (spot) or $2038.70 (futures).  Oh my, AI.

And AI is purportedly bringing us to Dow 100,000?  Talk about “This” being is where it all goes wrong!  

We therefore think for now:  “Forget about it!”

Rather:  Just get some Gold!  That’s Actual Intelligence!

“Smart boy…”

Cheers!

 …m…

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

09 February 2024 – 09:25 Central Euro Time

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All eight BEGOS Markets are at present within their respective Neutral Zones for today; session volatility is very light. The S&P 500 briefly topped the 5000-mark yesterday (at precisely 5000.40) before settling at 4998. Four in ten S&P stocks have thus far not improved their Q4 earnings over those of a year ago. Infamous Dave Einhorn just referred to the markets as “fundamentally broken”; (obviously he reads The Gold Update … more on that in tomorrow’s 743rd edition). Our top Market Rhythms for consistency on a 10-test swing basis are currently the Bond’s daily Parabolics, both the Swiss Franc’s 8hr Moneyflow and daily Parabolics, and the Spoo’s 2hr Price Oscillator. The Econ Baro already has concluded its muted week.

08 February 2024 – 09:16 Central Euro Time

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The Spoo is now above 5000 for the first time in its history, (the S&P itself near the threshold). At present we’ve both Silver and Copper above their Neutral Zones for today; the rest of the BEGOS Markets are within same, and volatility is light. Per our S&P Moneyflow page, dough is flowing into the Index at an unbelievable rate given the more-than-extreme overvaluation: the “live” P/E (fut’s adj’d) is now 50.2x. Today’s Econ Baro metrics include December’s Wholesale Inventories.

07 February 2024 – 09:39 Central Euro Time

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At present, Gold and Silver are the only BEGOS Market outside (below) today’s Neutral Zone; session volatility again is notably light. Of late we’ve a strong positive correlation between the Bond and Gold: indeed the tracks of their daily bars across the past 21 trading days (one month) are (to the glance) identical. We continue to monitor Gold’s weekly technicals, the Moneyflow for which is inching lower still; again a retest of the 2020-1936 can be in the cards, certainly upon the weekly parabolic Long trend flipping to Short, (the hurdle for which is currently 2015 versus price right now of 2048). The Econ Baro looks to December’s Trade Deficit and (late in the session) Consumer Credit.

06 February 2024 – 09:14 Central Euro Time

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The Spoo is the sole BEGOS Market at present outside (above) its Neutral Zone for today; session volatility is notably light, even as nothing is on the schedule for the Econ Baro. Our top three Market Rhythms (on a 10-test swing basis) for consistency are Gold’s 1hr Moneyflow, the Swiss Franc’s 8hr Moneyflow, and the Spoo’s 2hr Price Oscillator. Going ’round the Market Values horn for the five primary components, in real-time we’ve the Bond as -2^22 points “low” vis-à-vis its smooth valuation line, the Euro as -0.022 points “low’, Gold as just -10 points “low”, Oil as basically spot-on its valuation line, and the Spoo as +172 points “high”. At Market Trends, those with positive linregs are Gold, Copper, Oil and the Spoo; thus those negative are the Bond, Euro Swiss Franc and Silver. Through yesterday, only 57% of S&P 500 companies’ Q4 earnings are better than a year ago, with many reports still in the balance over these next couple of weeks.

05 February 2024 – 09:20 Central Euro Time

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The Bond and Precious Metals are starting the week to the downside; the balance of the BEGOS Markets are within today’s Neutral Zone, and volatility is pushing toward moderate; Gold already has traced 75% of its EDTR (see Market Ranges). The Gold Update accounts for 19 fresh points of premium in the April contract, but remains wary of some near-term price setback; too, mention is made of Dot-Com-like worries by Big Banks, (an issue upon which we’ve repeated these last several months). The “live” (futs-adj’d) P/E of the S&P 500 is 51.0x: 98 earnings reports are scheduled for the Index this week. The Econ Baro begins a very light data week with January’s ISM(Svc) Index.

The Gold Update: No. 742 – (03 February 2024) – “Gold Gains Ground on Premium Sound”

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The Gold Update by Mark Mead Baillie — 742nd Edition — Monte-Carlo — 03 February 2024 (published each Saturday) — www.deMeadville.com

“Gold Gains Ground on Premium Sound“

When we last left you a week ago, (albeit given the website’s daily updating we never really leave), we were eying Gold as languishing on a weekly basis, but on a daily basis ’twas set for some bounce.  And that’s exactly how Gold ventured through this past week as priced by the ounce.  The April Gold contract settled yesterday (Friday) at 2057, a gain for the week of 21 points (+1.0%).  However as February’s contract was phased out, an additional +18 points of premium worked into that for April, the “all-in gain” for charting vis-à-vis the “continuous contract” thus +39 points (1.9%).  Therefore by such construct, Gold was “saved” from having flipped its weekly parabolic Long trend to Short, as the blue dots below strive to survive yet another week in our year ago-to-date peek:

Note above on the rightmost weekly bar a small red “closing nub” (red arrow) which is where — sans premium — price would instead be, (i.e. near spot at 2039), and thus in that sense ’twas a rather muted up week.  In fact, strictly by the weekly bars for both the outgoing February contract and incoming April contract, their individual weekly parabolic trends already have flipped from Long to Short:  thus short-lived may be the still-Long “continuous contract” parabolic trend.

Too, the weekly negative technicals herein detailed in our prior missive have only stalled rather than improved with the bounce.  Further per the Federal Open Market Committee’s “less dovish than FinMedia-desired” Policy Statement this past Wednesday, Gold’s road can remain a bit rocky as these next weeks unfold, perhaps with further testing of the 2020-1936 support structure in the balance.

And that segues nicely, it being month-end (plus two trading days), to our young year-to-date BEGOS Markets standings wherein we find the Bond -2.0% as yields are on the move up and the Dollar gets the bid.  Yet incredibly and contrary to “conventional wisdom”, the S&P 500 is topping the table already +4.0%, even in the midst of a lousy Q4 Earnings Season:

 

“You say ‘lousy’, mmb?  75% of S&P companies have beaten estimates…“

Squire revels in playing this earnings game.  Truth be told, only 56% of bottom lines have improved over a year ago, thus far making Q4 the sixth-worst S&P 500 Earnings Season of the past 27.  Rising yields, a rising Dollar, scant earnings growth, and this Casino 500 sits at an all-time closing high (4959)?  Ought we re-classify The Investing Age of Stoopid to that of Braindead?

But wait, there’s more:  within several missives dating as far back as last mid-November, we’ve likened what we’ve been seeing in the Casino 500 to that which ultimately fed into the DotComBomb some two decades ago.  And — late as they may be in figuring this out — major investment banks are (finally) seeing same.  Hat-tip Bloomy for reporting last Tuesday that “JP Morgan Quants Warn of Dot-Com Style Concentration in US Stocks”, and then followed that yesterday with “BofA’s Hartnett Says Stock Markets Are Behaving Like Dot-Com Era”.  Are the Big Banks at last actually doing the math?

The “live” price/earnings ratio of the Casino 500 is now 50.5x … and as we’ve previously noted, that is higher than ’twas at the outset of the DotComBomb, which high-to-low from 2000 into 2002 found the S&P “correct” more than -50% … just in case you’re scoring — or better yet preparing — at home.  Because in reprising Bachman–Turner Overdrive from back in ’74: “You Ain’t Seen Nothing Yet” 

‘Course, the “talk of the town” remains the so-called “Magnificent Seven”.  Per yesterday’s settle, the combined market capitalization of:  both Alphabet tranches, Apple, Amazon, Meta, Microsoft, Nvidia and Tesla represents 29.2% of the entire S&P 500.  Their average P/E is now 46.5x (44.8x cap-weighted, were they in their own index of just seven companies).  This is beyond lunacy by any historical measure.

Moreover as we’ve all along been wary, the annualized risk-free yield per yesterday’s settle on the three-month U.S. T-bill is 5.210%; that on the risk-all Casino 500 is 1.431%.  (Further, as you regular readers well know, the market cap of the S&P is more than twice the readily available money supply to cover it … oops).  

But back to Gold — the true hard asset currency dating at least as far back as Lydia’s King Croesus, circa 550 BC — ’tis time to bring up our year-over-year comparison of the yellow metal vis-à-vis its key equity brethren.  So from worst to first we’ve:  Newmont (NEM) -37%, Franco-Nevada (FNV) -28%, Pan American Silver (PAAS) -27%, the Global X Silver Miners exchange-traded fund (SIL) -17%, Agnico Eagle Mines (AEM) -15%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -14%, but Gold itself +5%.  Does this mean the price of Gold (2057) is too high?  Hardly, given our opening Gold Scoreboard’s valuation (3754).  But in this goofball era of “The Magnificent Seven, or Nothing!”, the precious metals remain the wallflowers.  It shan’t last; (it never has).  Here’s the graphic:

Next we can see the stance of the precious metals within the overall view of the BEGOS Markets in going ’round-the-horn for all eight components across the past 21 trading days (one month)-to-date.  Therein is Gold with its mild uptrend, whilst Silver is sporting a mild downtrend.  But that’s enough to now place the Gold/Silver ratio at 90.3x, its highest end-of-week reading since that ending 10 March of last year.  We’ve said it before and we’ll say it again:  Sister Silver is CHEAP!  Here’s the whole gang, accompanied by each trend’s consistency per the baby blue dots:

Meanwhile, the once-pumped now rather defunct CNN is all excited:  “Another shockingly good jobs report shows America’s economy is booming.”  Really?  Oh to be sure, the Department of Labor Statistics rounded up a net increase in January Payrolls of 353,000, the most since the same month a year (then 504,000).  ‘Course two days prior to Labor, ADP came in with a net increase for private sector Employment of only 107,000 for January, the fourth-worst monthly reading since still COVID-ridden December 2021.  Too, period-over-period metrics were less in January for both the Average Workweek and the Chicago Purchasing Managers’ Index, as well as for December’s Factory Orders and Q4’s Productivity.  So is the economy truly “booming”?  Of course ’tisn’t, albeit the Economic Barometer has been erratically ratcheting upward these last two months:

Erratic of late, too, is the trade of Gold and Silver.  As we turn to their respective 10-day Market Profiles with Gold on the left and Silver on the right, both are priced ’round their mid-points, trading supporters and resistors as labeled:

‘Course, we can’t let month-end pass without reviewing Gold’s Structure across the monthly bars for the past dozen years, (the rightmost candle encompassing just the first two trading days of February).  So close is Gold to upside uncharted territory … and yet so far:

The ensuing week appears underwhelming for the Econ Baro:  just five metrics are due.  But for Q4 Earnings Season, another 98 reports are scheduled for the S&P 500 as the Index’s insanity continues … or starts to come to its senses.  On verra…

‘Course, nothing is more sensible than having a little Gold!

Cheers!

 …m…

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

02 February 2024 – 09:20 Central Euro Time

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Quick website note: our Market Profiles page is not accurately updating; our goal is to have the issue resolved in a week’s time. <– Resolved. To the BEGOS Markets we go and at present Copper is the sole component outside (below) its Neutral Zone; session volatility is light, save for Copper having already traced 82% of its EDTR (see Market Ranges). Yesterday’s equities’ upside whirl-’round now finds the Spoo (in real-time) +158 points above its smooth valuation line (see Market Values); the S&P 500 itself is now 10 consecutive trading days “textbook overbought”. The Econ Baro awaits January’s Payrolls and revised UofM Sentiment Survey, plus December’s Factory Orders.

01 February 2024 – 09:48 Central Euro Time

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The Bond, EuroCurrencies, Silver and Copper all are below today’s Neutral Zones; above same is the Spoo, and BEGOS Markets volatility is moderate. The data provider’s EPS issue appears to have been resolved such that the S&P Valuation and Rankings page shall resume updating tonight. Yesterday’s -1.6% drop in the S&P 500 was its worst since 21 September. Credit the FinMedia for having really fueled belief for a more dovish FOMC presentation. Despite the S&P’s decline, the Spoo (in real-time) is +97 points above its smooth valuation line (see Market Values). ‘Tis a busy day for the Econ Baro including Januarys’ ISM(Mfg), December’s Construction Spending and Q4’s first peek at Productivity and Unit Labor Costs.

31 January 2024 – 09:17 Central Euro Time

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Ahead of the Fed, both the Euro and Swiss Franc are at present below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate, the Euro notably having already traced 65% of its EDTR (see Market Ranges). As we saw on Monday with both the Bond and Gold, the Swiss Franc’s “Baby Blues” (see Market Trends) have moved above their -80% axis; as our regular readers know, this is indicative of higher prices ahead, albeit for the yellow metal, the negative weekly measures discussed in The Gold Update have us cautious. In addition to the FOMC’s Policy Statement, we’ve for the Econ Baro today December’s ADP Employment data and the Chi PMI, plus Q4’s Employment Cost Index.

30 January 2024 – 09:28 Central Euro Time

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‘Tis quiet across the BEGOS Markets’ landscape, all eight components at present within their respective Neutral Zones for today; volatility is mostly light. Looking at the most consistent Market Rhythms, we’ve (on a 10-test swing basis) the Euro’s 1hr parabolics and (on a 24-test swing basis) both Silver’s 1hr Moneyflow and the Spoo’s 8hr Moneyflow. For the S&P itself (the “live” futs-adj’d P/E now 50.9x) money continues to pour into the Index as depicted on the S&P 500 MoneyFlow page; the Spoo is (in-real-time) +179 points above its smooth valuation line (see Market Values). And at Market Trends, Gold’s “Baby Blues” yesterday confirmed crossing above their key -80% axis, albeit by The Gold Update, a bit more broadly we somewhat expect lower prices. The Euro’s “Baby Blues” similarly confirmed crossing above same yesterday. The Econ Baro awaits January’s Consumer Confidence. And the FOMC’s usual two-day meeting gets underway.

29 January 2024 – 09:12 Central Euro Time

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Firmer to start the week are the Swiss Franc, Gold and Silver, whilst weaker is Copper; BEGOS Markets volatility is mostly moderate. The Gold Update looks for Gold to languish lower as essentially three weekly measures are crossing (or are about to) negatively: Moneyflow, MACD and the Parabolics (should Gold eclipse 2004 basis February this week; note that cac volume is now moving into April with a premium gain of some +18 points). Going ’round the Market Values horn, in real-time we’ve the Bond as nearly -3 points “low” vis-à-vis its smooth valuation line, the Euro 0.014 points “low”, Gold -25 points “low”, Oil +6 points “high”, and the Spoo +151 points “high”. The Econ Baro is quiet today, however Q4 Earnings Season reports become more voluminous as the week unfolds.

The Gold Update: No. 741 – (27 January 2024) – “Gold Looks to Languish Lower”

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The Gold Update by Mark Mead Baillie — 741st Edition — Monte-Carlo — 27 January 2024 (published each Saturday) — www.deMeadville.com

“Gold Looks to Languish Lower“

On the heels of Gold having consecutively made four lower weekly lows, ‘twould appear there’s more languishing to go.  ‘Course our being Pro-Gold, we hope we’re wrong as so.

But recall a week ago our opening with an array of “daily” technical studies for Gold, each with a negative bent.  And now with Gold having since further declined — indeed settling yesterday (Friday) at 2018 — the “weekly” studies, too, are turning more notably negative.

Not to worry:  we shan’t get as deep into the technical mumbo-jumo as we did last week, save to mention the following two Market Rhythms and their typically lower Gold price ramifications.

  • First is Gold’s weekly Moneyflow (data provider’s classic calculation).  It confirmed going negative at yesterday’s close.  The last ten such negative crossovers (as far back as 27 May 2019) have then furthered maximum price declines ranging from -10 to -222 points (prior to the signal’s returning positive), the average maximum drop being -76 points.  Were such “average” to repeat from here at Gold 2018, we’d see 1942.

     

  • Second is Gold’s weekly MACD (“moving average convergence divergence”). There is a fair chance that it shall confirm a negative crossover in a week’s time, (albeit with Gold’s futures volume about to roll from the February contract into that for April with some +18 points of fresh price premium).  Still, the last such 10 negative MACD crossovers (as far back as 23 April 2018) have produced further maximum price drops ranging from -12 to -265 points, the average maximum pullback in that case being -106 points.  

Thereto, we’ve this quick sketch of Gold by the week since mid-year 2023-to-date with these two negative crosses (at right, Moneyflow having gone sub-50 and the MACD pending per next week):

The good news is:   we don’t believe Gold shall decline by all that much as we put some degree of faith in the 2020-1936 structural support zone, again as presented here with Gold’s weekly bars from one year ago-to-date:

Now one might opine that Gold has its psychological 2000 milestone level for support.  However:  since first achieving that price back on 31 July 2020, hardly has it historically held its ground.  Moreover as the wee observer in the above graphic points out, there essentially is no room left between price and the rightmost blue dot of parabolic Long trend.  For should 2004 be eclipsed in the new week, said trend flips to Short and Gold shall find at least a near-term home in the 2020-1936 support zone.  ‘Tis simply the way markets work, barring a fundamental awakening to Gold’s true valuation, (which at present by the opening Gold Scoreboard is 3752).  But as the Investing Age of Stoopid sallies forth — the Casino 500 having already recorded eight record highs through just the first 18 trading days so far this year — Gold likely languishes in its wallflower guise.

Meanwhile, we say ’tis nothing but praise through these excellent Bidenomics days.  To quote the late great Howard Cosell:  “Look at him GO!”

Further, as the Economic Barometer rises, so does the stock market.  In fact, the S&P 500’s “live” price/earnings ratio is now 50.0x.  Isn’t that great?  So exciting.  And yet at the same time, how bizarre:  as Q4 Earnings Season rolls along, 101 S&P constituents have reported, of which but 50% bettered their year-ago results.  That is on pace for this to be the worst Earnings Season (save for Q1 and Q2 during COVID 2020) in our S&P database.  And more broadly for 231 companies reporting thus far, just 41% have improved.  Hence, math works: “So up with the “P” and down with the “E” and the P/E is Fif-Tee” –[marcoMusique, ’24].  Here’s the Baro and record-setting Casino 500:

‘Course the highlight for us of the past week’s incoming metrics was the so-called “Fed-favoured” December read of Core Personal Consumption Expenditures as so deftly compiled by the Bureau of Economic Analysis.  And its analysis found the Core PCE having doubled its inflation pace from +0.1% in November to now +0.2%.  But ’tis OK, the mighty Dow Jones Newswires couching the increase as “mild”.  Whew!  And by such FinMedia directive, the Federal Open Market Committed in Wednesday’s forthcoming Policy Statement shall “…maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent…”  Fairly firm however was Q4’s increase in the Gross Domestic Product (+3.3% annualized vs. +2.0% expected).  And naturally — it having been the holiday season — folks spent at a greater pace (+0.7%) than that at which they earned (+0.3%).  But all-in-all, things — as the above chap says — “Couldn’t be better!!!”  (…tick…tick…tick…)

Ultimately better days await Gold even as it looks to succumb a bit near-term term should the aforementioned technicals will out.  Still, there’s a hint of positive news as we go to Gold’s two-panel graphic and notably the daily bars from three months ago-to-date on the left.  Therein, the “Baby Blues” of trend consistency have paused just below their -80% axis.  The rule of thumb is:  upon regaining that axis, price’s near-term tendency is to rise.  ‘Course, it remains to been seen which quantitative measure wins the battle here, as on the right per Gold’s 10-day Market Profile, one is southerly gazing: 

Gazing at same for Silver, her Baby Blues (at left) already have ascended back above the -80% axis.  Again, is that price-positive, with price itself centered in the Profile (at right)?  Indeed, can Sister Silver save the day for the precious metals?  In this case we think not.  However as ol’ Jesse Jackson movingly expounded back in ’88:  “Keep hope alive!”

We’ll close it out for the week with this bit somewhat tongue-in-cheek, (which for you WestPalmBeachers down there means don’t take it too seriously).

You may recall a couple of missives back that we briefly bit into Bitcoin by broaching its “Baby Blues” which had just kinked lower ’round the $44,000/bit level, having since reached to as low as $38,540; at present (all per Futures pricing), Bitcoin is $42,335.

Yet as you know, what clearly perplexes us, is placing a proper valuation on Bitcoin versus its price.  For example, we know ad nauseum that Gold today is priced at basically one-half its dollar debasement valuation.  Too, we know that the Casino 500 today is essentially priced at double its earnings valuation.  The good news in both those cases is that price historically reverts to valuation, (i.e. more broadly we’ll see higher Gold and a lower S&P).  But for the present, irrespective of valuation and the market never being wrong, both Gold and the S&P are merely priced today where the investing/trading community has placed them.  So is Bitcoin.  Period.  And as we’ve in the past quipped, “You cannot will the market to your desired level.”

Yet specific to Bitcoin, as we’ve asked in the past, upon what can one value something based on nothing?  Well, for the balls-to-the-wall Bitcoiners out there, we came up with the following.

As is Bitcoin based on nothing, the same might be said of today’s fiat currencies.  And in the Bitcoiners’ future of perfection, their beloved digital currency world shall basically become the world’s money supply.  Thus can we given Bitcoin a proper valuation?  Have a look.

Hat-tip Visual Capitalist, the global money supply of the industrialized world on an “M1” basis (i.e. hard currency, demand deposits and traveller’s cheques) as of 28 November 2022 amounted to some $48.9T.  So let’s round that up to $50T.

Too, the current supply of Bitcoin is 19M which is en route to becoming permanently fixed at 21M.  So let’s go with the latter.  And what do we get?

$50,000,000,000,000 ÷ 21,000,000 = $2,380,952/bitcoin

We’ve thus encapsuled this in the following table, which one may enjoy viewing whilst listening to “All the Love in the World” –[The Outfield, ’85]:

So in that construct, paying 1.8¢ today for $1 of Bitcoin by futuristic valuation perhaps seems attractive … (just a passing thought).  But clearly this is not a prediction, let alone a recommendation.

Still, at the end of the day, there’s always Gold.  Good Old Gold!  Languish it may, but don’t keep it at bay!

Cheers!

 …m…

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

26 January 2024 – 09:09 Central Euro Time

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The Euro, Copper and the Spoo are at present below their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is mostly light, save for the Euro having already traced 55% of its EDTR (see Market Ranges). Topping our Market Rhythms for swing consistency (10-test basis) are the 30mn Parabolics on both the Swiss Franc and Euro. The S&P settled yesterday (4894) as “extreme textbook overbought”. The Econ Baro concludes its week with December’s Pending Home Sales, Personal Income/Spending, and the “Fed-favoured” Core PCE Index.

25 January 2024 – 09:12 Central Euro Time

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With the first peek at Q4 GDP in the balance, (estimated to be at best half that of Q3), the BEGOS Markets are quiet, all eight components at present within today’s Neutral Zones; volatility is very quiet, with only the Bond having thus far achieved even 40% of its EDTR (see Market Ranges). Nonetheless, money in recent days has really been pouring into the S&P (see the MoneyFlow page) suggestive of still higher levels near-term, (as skeptical as we are more broadly given the “live” P/E of the S&P now 50.2x); but as folks ’round here say, “Earnings no longer matter”; (until they shall). Included as well for the Econ Baro today are December’s Durable Orders and New Home Sales.

24 January 2024 – 09:20 Central Euro Time

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We’ve strength early on in the EuroCurrencies, Silver, Copper and the Spoo; none of the other Markets are below today’s Neutral Zones, and volatility is moderate, Copper notably having already traded 131% of its EDTR (see Market Ranges). On a 24-test basis, our top two Market Rhythms for swing consistency are the Spoo’s 8hr Moneyflow and (whilst not yet a formal BEGOS Market) the Yen’s 4hr Parabolics. At Market Trends, only Oil and the Spoo are in positive linreg. Through yesterday, 50 S&P 500 constituents have reported Q4 earnings with 4 in 10 better than for Q4 a year ago … and yet the Index continues to make new highs.

23 January 2024 – 09:22 Central Euro Time

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Dollar weakness is translating this morning into strength for the BEGOS Markets: save for the Bond, the other seven components are higher, the EuroCurrencies and Metals Triumvirate all above their respective Neutral Zones for today; volatility is mostly moderate. With Silver’s -2.4% loss yesterday, the Gold/Silver ratio has moved above 90x (currently 90.5x) for the first time since 10 March. As for the Spoo, by Market Values ’tis at present +124 points above its smooth valuation line; the S&P 500 itself has begun a new “textbook overbought” series. Q4 Earnings Season thus far remains dismal: of the 33 S&P 500 companies having reported, still only nine (just 27%) have bettered their bottom lines from Q4 a year ago.

22 January 2024 – 09:17 Central Euro Time

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Strength in the Spoo at the moment would have the “live” P/E of the S&P leap to 50.4x at the open, (after settling last week at 49.7x): more on the S&P’s dangerous overvaluation in the current edition of The Gold Update, which also sees near-term weakness for the precious metals. Both Gold and Silver are at present below today’s Neutral Zones. BEGOS Markets’ volatility is pushing toward moderate, and Silver itself has already traced 102% of its EDTR (see Market Ranges). Currently priced 2023, we’ve marked Gold’s underlying support structure as 2020-1936. The record-setting Spoo’s 21-linreg has rotated from negative to positive (see Market Trends). The Econ Baro starts its week with December’s Leading (i.e. “lagging”) indicators.

The Gold Update: No. 740 – (20 January 2024) – “Gold from Time Biding to Price Sliding”

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The Gold Update by Mark Mead Baillie — 740th Edition — Monte-Carlo — 20 January 2024 (published each Saturday) — www.deMeadville.com

“Gold from Time Biding to Price Sliding“

Wherein a week ago we wrote of “Gold Biding Time”, the yellow metal has since proceeded from time biding to price sliding, settling this past week yesterday (Friday) at 2032.  And from our purview, purely the culprit appears technical.  Indeed as previously penned:  “Still by a whole host of daily mainstream technicals, Gold can be couched at present as rather namby-pamby.“

To wit, let’s go ’round the horn with our preferred technical studies (those currently best appearing on the website’s “Market Rhythms” page).  At present via Gold’s daily candles:  the Parabolics are Short, the MACD (“moving average convergence divergence”) is Short, the Price Oscillator is Short, the Moneyflow (canned data-provider version) is Short … and the 13/89 EMA (“exponential moving average”) is approaching a negative crossover to Short.  Such current conditions are denoted below on our master analytics chart, the time frame being the past 42 trading days (two months):

 

‘Course, do not disregard therein our long-standing cogent comment that “Shorting Gold is a bad idea” if for no other reason that opening “up-gaps” can wipe out one’s trading account without even a millisecond to intervene.  See, for example, 19 March 2009, 16 March 2020, 28 February 2022, 04 August 2023, et alia.  Were Smart Alec Short, say, 100 Gold contracts going into any of those four days alone, his trading account at the open would have been creamed by an average of -$387,500 … just in case he’s still licking his wounds at home, (let alone if he’s even around anymore).  A word to the wise is sufficient.  Or as a savvy StateSide investor once quipped:  “Whenever I buy Gold, I then hope for the price to go down as it’s like having an insurance policy with declining premiums.”  Wise indeed.

However, from the infamous “Nothing Moves in a Straight Line Dept.” Gold’s negative technicals are such that the weekly parabolic Long trend per the blue dots next shown may be nearing its end, with a test of the 2020-1936 zone of structural support then in the balance.  With Gold presently priced at 2032, ’tis but +35 points above the flip-to-Short level at 1997:  given Gold’s “expected weekly trading range” is now 64 points, the 1997 price is not that distant to avoid being penetrated in the ensuing week, barring price firming up and out of the chute to still higher ground.  But with money once again pouring into the earnings-less Casino 500, Gold (as is usual anyway) is out of favour … just make sure you own some.  Here’s the weekly bars graphic:

Moving on to the Economic Barometer, 10 of the past week’s 15 incoming metrics improved period-over-period:  thus an ongoing boost to the Baro.  The one statistic that completely gob-smacked us was The University of Michigan’s “Go Blue!” Sentiment Survey.  Not only did it record its highest reading since that for July 2021, but the month-over-month leap was the largest since that for September 2008 when in fact ’twas all going wrong with the FinCrisis.  What are they smokin’ over there in Ann Arbor?  Goodness gracious.  (Did anybody note January’s New York State Empire Index fell from -14.5 to -43.7, its poorest reading since 2020’s COVID springtime?)  But bring on December’s booming Retail Sales and up went the Baro.  And duly note the green bit therein:

 “Worst start to Earnings Season in memory, mmb?“

Across our 14 years of recording earnings, Squire, we’ve never seen a start worse than this.  Rightly however, as we “tweeted” (@deMeadvillePro) this past Thursday:  “This may be statistically insignificant as ’tis very, very early in Q4 Earnings Season.”  And yet through the balance of the week, the poor trend continued.  Specific to the S&P 500:  31 companies have thus far reported, of which just a scant nine (29%) bettered their bottom lines over Q4 of a year ago.  In our records, that is worse than the S&P’s worst prior all-in quarter which registered only 36% having bettered for Q2 of COVID-plagued 2020.

And yet, the Casino 500 yesterday recorded its first all-time high (4842) since that on 04 January 2022 (4819).  To again reprise the late, great Vince Lombardi:  “What da hell’s goin’ on out dere?!?!?”

This really is becoming scary.  One can be securely safe in U.S. Treasuries at triple the yield of S&P 500.  But maybe that’s not considered fun.  Surely it shan’t be fun should the stock market shut because the money doesn’t exist to fund folks’ stock sales.  Today, obviously teaching Personal Finance at the undergraduate level is a waste of time.  Remember our herein quoting Jerome B. Cohen:  “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.”  As penned on the above Econ Baro, the “live” price/earnings ratio right now for the Casino 500 is 49.7x.  If you don’t believe it, do something your broker can’t do … the math:

As for having to pass Portfolio Theory at the graduate level, forget about it:  ’tis no longer needed given earnings no longer have meaning.

But wait, there’s more.  Shame on you if not following the website’s S&P MoneyFlow page.  And WOW did it whirl ’round this past week to upside.  Here’s the problem:  decade-to-date (the S&P’s closing span being from 3701 to now 4840) the average amount of money requisite to move the S&P up or down one point is $1,100,278 … as of yesterday the actual amount is a thin $540,068.  That essentially means this “record-setting rally” is frothy and built on a lot of small trading block BS (can we print that, Mr. Editor?)

The point is:  if you’re wedded to stocks, be wary to withstand having a hellova haircut.  ‘Tis coming and ’twill be comprehensively butt-ugly.  Or as we’ve on occasion quipped:  “Market-to-market, everybody’s a millionaire; market-to-reality, they ain’t worth squat.”  Write it down.

Meanwhile as cited, Gold’s price continues to be written down of late.  In our two-panel graphic at left the old adage of “Follow the blues instead of the news, else lose your shoes” is in full cavort (but best not to go Short).  Then at right, Gold’s 10-day Market Profile finds price rather clinging to the final bulge of support:

And pretty much the same can be said for Silver, albeit her three months of daily bars (below left) lack Gold’s on balance (yet waning) upside bent, justifying the Gold/Silver ratio now 89.3x, its highest level since 10 March of last year.  Per the Market Profile (below right) 22.70 shows as Sister Silver’s final level of near-term trading support:

 Before our final quip to close, let’s see what the Gold stack shows:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3738
Gold’s All-Time Intra-Day High:  2152 (04 December 2023)
Gold’s All-Time Closing High:  2092 (01 December 2023)
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar ’22); 2085 (04 May ’23)
2024’s High:  2088 (02 January)
10-Session “volume-weighted” average price magnet:  2037
Trading Resistance:  2036 / 2052 / 2058
Gold Currently:  2032, (expected daily trading range [“EDTR”]: 26 points)
Trading Support:  2014
10-Session directional range:  down to 2005 (from 2071) = -66 points or -3.2%
2024’s Low:  2005 (17 January)
The Weekly Parabolic Price to flip Short:  1997
The 300-Day Moving Average:  1937 and rising
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

Indeed to close, let’s go to the Swiss snows at the WEF (World Elites’ Forum) wherein the “It Doesn’t Apply to Us Dept.” was in full folly, (as you may well have already heard).  The “emphasis” of this year’s Davos boondoggle being “Climate Change” and “AI”, one John Forbes Kerry — THE U.S. Special Presidential Envoy for Climate (his having previously been both U.S. Secretary of State and U.S. Senator from The Commonwealth of Massachusetts, as well as having served in Viet Nam) — was media-queried in reference to the 1,000+ private jets having carbonized their way to either Zurich or St. Gallen-Altenrhein.  The response:  “That’s a stupid question”.

Which leads one to wonder what a Davos plat du jour was this year …

Avoid stoopid.  Acquire Gold!

Cheers!

 …m…

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

19 January 2024 – 09:19 Central Euro Time

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As was the case yesterday at this time, all eight BEGOS Markets are presently within their respective Neutral Zones for today, and volatility thus again is quiet. The amount of money it takes to move the S&P 500 one point is literally but half was it was just back in November, a “warning sign” as to just how frothy the S&P has become; too, with the “live” P/E at 48.5x, the Index remains on very unsteady footing. That noted, the S&P’s MoneyFlow has been on the upside go notably these last two trading days. The Econ Baro concludes its week with January’s UofM Sentiment Survey and December’s Existing Home Sales.

18 January 2024 – 09:16 Central Euro Time

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The BEGOS Markets are at present quiet with all eight components inside today’s Neutral Zones; volatility is light. At Market Trends, the Spoo’s 21-day linreg has rotated to negative leaving just the Swiss Franc still (barely) in a positive stance. By Market Rhythms, our most consistent study on a 10-test swing basis is Copper’s 30mn Parabolics, whilst on a 24-test swing basis ’tis the Euro’s 4hr Parabolics. Per Market Values, the most extreme appearance by deviation from its smooth valuation line is Gold which shows (in real-time) as -50 points “low”. The Econ Baro’s incoming metrics for today include January’s Philly Fed Index and December’s Housing Starts/Permits.

17 January 2024 – 09:12 Central Euro Time

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Whilst yesterday’s S&P Moneyflow was actually positive (+0.9%), the Index itself fell -0.4%, but by our broadest measure (quarterly) the Flow still is suggestive of lower Index levels. Earnings Season is off to a poor start; however with just 30 companies having reported (of some 2,000 expected), this may not yet be statistically significant: 80% having beaten estimates … but just 40% have improved their bottom lines over Q4 a year ago. At present, Silver, Copper and the Spoo are below their respective Neutral Zones for today; none of the other BEGOS Markets are above same, and volatility is pushing toward moderate. Cac volume for Oil is moving from February into March. And ’tis a big day for the Econ Baro with January’s NAHB Housing Index, December’s Retail Sales, Ex/Im Prices, and IndProd/CapUtil, plus November’s Business Inventories. Too, we receive the Fed’s Tan Tome for January.

16 January 2024 – 09:16 Central Euro Time

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Into the second day of the BEGOS Markets’ two-day session we’ve now the Bond, EuroCurrencies and Spoo all to the weak side; Copper is the sole component at present above its Neutral zone. Volatility is moderate-to-robust given it being a double-session, the Swiss Franc leading the ranginess with a 109% tracing of its EDTR (see Market Ranges). Quietest of the bunch is Gold, thus far with just a 51% tracing: again per the current edition of The Gold Update, the yellow metal is biding its time within a broader rising price environment. At Market Trends the following are now sporting negative 21-day linregs: the Bond, Gold, Silver, Copper and Oil, and it remains that the “Baby Blues” of trend consistency are all in descent. The Econ Baro’s week begins with January’s NY Empire State Index.

15 January 2024 – 09:15 Central Euro Time

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Given the StateSide holiday, the BEGOS Markets are into a two-day session (for Tuesday settlement). At present we’ve the Bond below its Neutral Zone for the session, and Copper above same; volatility is expectedly light. The Gold Update cites the December dichotomy between an inflationary CPI and a deflationary PPI, and that Gold on balance is biding its time these days, its broader measures of trend still quite positive. Q4 Earnings Season for 2023 is in the banks’ results phase: of the six having reported this past Friday, four bottom lines were worse than for Q4 of 2022. Still, the S&P 500 remains near its 4819 all-time high, the futs-adj’d opening at this instant for tomorrow being 4787, and the “live” P/E thus 46.6x. The “all-to-risk” S&P now yields 1.465% and the “risk-free” 3-month T-Bill an annualized 5.198%. The Econ Baro awaits a week with 15 incoming metrics.

The Gold Update: No. 739 – (13 January 2024) – “Gold Biding Time; Bitcoin Prime Time”

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The Gold Update by Mark Mead Baillie — 739th Edition — Monte-Carlo — 13 January 2024 (published each Saturday) — www.deMeadville.com

“Gold Biding Time; Bitcoin Prime Time“

We directly start with this as culled from the second paragraph penned herein a week ago:

“…But in seeing the Dollar take flight to start this year … along with the Bond’s fresh demise as yields rise, might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens … surprise!…”

And in that vein, true to form, this past Thursday’s release of the StateSide Consumer Price Index for December posted a +0.3% rise in retail inflation over that recorded for November, in turn increasing the 12-month summation from +3.1% to +3.3%; and should you neither eat nor drive, that for the “Core” rate is now +3.9%.  As we’ve previously mused with respect to the Federal Reserve’s Open Market Committee, perhaps +4% is the new +2%.

Yet fortunately come Friday, the Bureau of Labor Statistics’ ringside timekeeper rang the bell to save the academically forward-looking Producer Price Index.  That registered wholesale inflation as -0.1% December deflation, a number far more in line with November’s “Fed-favoured” Personal Consumption Expenditures Indices; (December’s are due 26 January).

But wait, there’s more:  should we be deflating, evidenced by prices actually falling…

“C’mon, mmb, that never happens…”

…Squire you weren’t around in the early 30s.  But to your point, at the retail level we cannot recall prices in general receding, save for there being a “SALE!”  Why, even the cost here of our preferred Bordeaux is +23% from just a year ago.  No deflation there.

And yet if deflation indeed rears its depressive head, ought the Fed cut rates right now?  Why wait whatsoever for the FOMC’s 31 January Policy Statement?  The Great Greenspan didn’t wait back in January 2001; he exceptionally slashed the FedFunds rate -0.5% astride an earnings-less DotComBomb in freefall.  Might we today similarly see Prescient Powell do same should the earnings-lacking Casino 500 slip into an icy, glacial crevasse?  Our “live” price/earnings ratio for that S&P 500 is now 46.5x, and you ad nauseum know, there ain’t the dough to cover that show, (S&P Market Cap now $41.8T vs. “M2” Money Supply $20.9T).

Further, from the “Oh by the Way Dept.” the 12-month CPI summation for the year 2000 was +3.3% as ’twas just recorded for 2023.  Then following into 2001, the S&P was down as much as -28.4%.  Might we thus see 2001 all over again?  What with so-so earnings, plus a safer and better yield by far in the debt market, ’tis just one of those “stars-are-aligned” things that make us go “hmmm…”

 

However, “hmmm…” also expresses this past week for Gold.  Upon all the inflationary/deflationary dust settling, Gold itself settled the week yesterday (Friday) at 2054, a sleepy net point gain for the five days of +1.  Biding its time, here are Gold’s weekly bars from a year ago-to-date:

Therein, the good news is Gold’s resilience off the week’s low (2017) from the CPI blow, again saved by the bell per the PPI sub-zero.  Still by a whole host of daily mainstream technicals, Gold can be couched at present as rather namby-pamby.  To be sure per the above chart, both the blue-dotted parabolic trend and overall dashed linear regression trend remain positive.  But let’s leap to the less robust daily depiction per our proprietary technicals, notably the last three months-to-date for Gold below left and for Silver below right.  For both precious metals, their respective baby blue dots of regression trend consistency continue to drop, (the old adage of course being “Follow the blues instead of the news, else lose your shoes”).  Here’s the graphic by the daily bars:

That stated, the 10-day precious metals’ Market Profiles are at present supportive of price.  Below for Gold on the left, the 2051-2034 zone looks fairly firm (despite the aforementioned 2017 weekly low), whilst on the right for Sister Silver, that same 23.20 remains her volume-dominant price support.

On to the Economic Barometer, which from its 06 December low has been ratcheting up in recovery.  Specific to this past week’s array of just nine incoming metrics — December’s zany inflation/deflation notwithstanding — we categorize just one as “worse” period-over-period (and yes ’tis boring):  November’s Wholesale Inventories reduced at a slower pace than those for October.  Otherwise, everything’s “Great!” (recall the Baro herein a week ago).  Why, the Monthly Treasure Deficit for December was better than halved from November … so exciting, non?  (Well, maybe not, depending on one’s contextual data source).  Here’s the whole year-over-year picture:

“And now for something completely different” –[Monty Python, ’71].  Rarely do we bring up bits**t…

“Now, now, mmb…”

…yes, Squire, ok, “Bitcoin”.  But it did  take prime time billing this past week in anticipated –and in turn — approval of 11 exchange-traded funds now tradable (including from some high-level names such as Franklin Templeton, Blackrock, and Fidelity).  And whereas with both Gold and the Casino 500 we’ve mathematical extremes vis-à-vis price and valuation (the former priced way too low and the latter way too high), with Bitcoin price is valuation given ’tis something based on nothing beyond a fixed supply.  Reprise:  “The market is never wrong”; ’tis where the traders have placed Bitcoin:  thus ’tis priced right at valuation, pure and simple.  Through transactional growth should Bitcoin gain further acceptance toward supplementing worthless fiat currencies, the price ought materially rise “as time goes by…” –[Herman Hupfeld ’31].

Either way, we decided to take a peek at “The Now” for Bitcoin.  Since the SEC’s cautionary “Gensler Granting” of the ETFs this past Thursday, Wall Street treated Bitcoin as essentially it does “all things” anticipated:  the rumour having been bought, the news then was sold.  ‘Tis depicted here (at left) across the past three months-to-date, the rightmost two days evident of the peak (futs 49,435) and subsequent sell (futs now 43,425).  The “Baby Blues” nicely captured the consistency of the recent run up before pipping down on Friday.  For the present, the strength of the broader trend across the panel is encouraging, however there’s that unfilled gap from 04 December (39,640 to 40,325); still, because Bitcoin spot trades ’round the clock, such unfilled gap may be mere talk.  But not so much mere talk are the S&P futures (at right), the “Baby Blues” therein extending their descent.  “Got stock?”  Sorry to hear that:

Thus there we are for this week as Gold bided its time whilst Bitcoin saw prime time … at least for a bit.  Directionally near-term for Bitcoin, we’re clueless.  Broadly for Gold we’ve no concerns. But for the Casino 500, we’re worried the whole roulette wheel could fly right off the spindle (given we do the earnings — or lack thereof — math).  Regardless with respect to the latter, the children’s writing pool over at the once-mighty Barron’s ran this past week with “Why S&P 500 Pain Could Turn to Gains”.  What pain?  There’s been no S&P pain since the January-October “owie” back in 2022.  Which in turn (save for the brief COVID crash and dash) pales in comparison to the last real pain from the 2007-2009 FinCrisis.  But through generational turnover in today’s “stocks never go down” bubblesphere, this is to where we’ve arrived.  And when the fear sets in that upon selling one’s stock, one might not actually receive the proceeds, the stock market rather than crashing might instead simply shutdown … just a passing thought.

GOT GOLD???

Cheers!

 …m…

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

12 January 2024 – 09:20 Central Euro Time

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The Metals Triumvirate and Oil are the BEGOS Markets’ winners at present; the other components are within today’s Neutral Zones, and volatility is again mostly light. Last Saturday’s (and still current) edition of The Gold Update introduced the notion that inflation may not be cooling, and we saw evidence of that in yesterday’s CPI data for December; today the Econ Baro looks to the wholesale level of inflation via December’s PPI. Gold (presently 2043) has thus far seen the session’s low at 2034 which is the most dominantly-traded Market Profile price across the past two weeks. Q4 earnings ought get more notice through these next several trading days as financial institutions’ results begin to arrive, (see too the website’s Earnings Season page for the overall picture).

11 January 2024 – 09:09 Central Euro Time

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Early on we’ve strength in the Bond, the Metals Triumvirate and the Spoo; none of the other BEGOS Markets are below their Neutral Zone, and volatility is mostly light. At Market Trends, Copper’s linreg has rotated to negative, joining Silver also in that stance; however as noted yesterday, the “Baby Blues” of trend consistency are falling for all eight components. Our best Market Rhythm by swing results (on a 10-test basis) currently is Gold’s 8hr MACD and (on a 24-test basis) the Euro’s 4hr Parabolics. Included in today’s metrics for the Econ Baro are December’s CPI along with the (occasionally elusive) Treasury Deficit.

10 January 2024 – 09:15 Central Euro Time

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The BEGOS Markets are at present quiet, all eight components within their respective Neutral Zones for today; volatility is light across the board. The Swiss Franc per our Market Trends page confirmed its “Baby Blues” of trend consistency having fallen below the key +80%, suggestive of lower prices near-term; currently, our favoured Market Rhythm for the Swiss Franc is its 4hr MoneyFlow. Yesterday the S&P got a bit of a MoneyFlow boost; however the tide of the Spoo continues to weaken as its 21-day linreg trend continues to rotate toward turning negative, (again see Market Trends). November’s Wholesale Inventories come due for the Econ Baro.

09 January 2024 – 09:10 Central Euro Time

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The precious metals are rebounding this morning, both Gold and Silver at present above today’s Neutral Zones; the other BEGOS Markets are within same, and volatility is mostly light, save for the precious metals having already traced in excess of 50% of their EDTRs (see Market Ranges). At Market Values, all five primary BEGOS components are fairly near their respective smooth valuation lines. Meanwhile at Market Trends, it remains that all the markets are in linreg uptrends save for Silver: however in all eight cases, their “Baby Blues” are in decline, exemplary of the uptrends losing their consistency. For the Econ Baro we’ve November’s Trade Deficit; and Q4 Earnings Season is underway which you can track here at the website.

08 January 2024 – 09:25 Central Euro Time

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The precious metals and Oil are weak this morning; BEGOS Markets volatility is pushing toward moderate as the year’s first full trading week begins. The Gold Update is somewhat wary of the early-year inflation trading push out of the Bond and into the Dollar, Gold in turn getting the “conventional wisdom” sell. For the S&P 500, the MoneyFlow page is decidedly negative such that lower Index levels ought be in the offing; specific to the Spoo, its “Baby Blues” (see Market Trends) are (in real-time) accelerating their fall, and by Market Values the Spoo looks to a negative crossing below its smooth valuation line, barring a firm rally this week: confirmation of such crossing would, too, suggest lower price levels. Late in the session for the Econ Baro we’ve November’s Consumer Credit.

The Gold Update: No. 738 – (06 January 2024) – “Gold Stumbles into New Year as the Dollar Gets into Gear”

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The Gold Update by Mark Mead Baillie — 738th Edition — Monte-Carlo — 06 January 2024 (published each Saturday) — www.deMeadville.com

“Gold Stumbles into New Year as the Dollar Gets into Gear“

The biggest eye-opener for us through the first four trading days of 2024 — a year in which we’ve called for Gold 2375 — is the Dollar’s sudden resilience.  Oh to be sure:  the FinMedia buzz is focused on whether or not the Federal Open Market Committee shall vote to cut its Bank’s Funds Rate come their 20 March Policy Statement, (somewhat shunning that first scheduled for 31 January).

But in seeing the Dollar take flight to start this year — indeed recovering a 10-day losing streak in just the first two days of 2024 — along with the Bond’s fresh demise as yields rise, might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens … surprise!

Graphically below, ’tis not that noticeable, let alone overwhelming.  But right of the vertical line in commencing 2024, clearly the concerted move is out of the Bond (i.e. yields on the increase) and into the Dollar in what may be deemed as a pro-inflation play, with Gold entangled by conventional wisdom as a “sell”:

Hardly is renewed inflation a firm forecast.  Yet curiously, the Buck and the Bond appear early on as inflation anticipative; and as is our wont to say:  “…the market is never wrong…”

“But as you also always say, mmb, it can be really misvalued…”

True enough, Squire, the two most glaring examples (per our honestly performed math) being the S&P 500 priced +76% above earnings valuation and Gold priced -45% below debasement valuation.  As for “How long has this been going on…” –[Ace, ’74], the S&P’s valuation above mean and Gold’s valuation below same extend back a good dozen years.  “…tick tick tick goes the means reversion clock…”

But as to inflation anticipation:  between now and the Fed’s end-of-January confab, StateSide there’re four key incoming data sets on inflation:  the Consumer Price Index, Producer Price Index, Export/Import Prices, and the “Fed-favoured” Personal Consumption Expenditures Index.  And on this side of the Pond as the year begins, we’re weathering an +8% increase in the cost of our morning café crème/croissant … ouch!

Why?  Because “the club” (oh yes) says ’tis responding to price increases in what it now pays per kilo of coffee.  So we decided to check:  and ICE Coffee futures for March delivery have increased in the last few months by as much as +41% (10 October low to 19 December high).  However, the good news for you caffeine heads out there is Dow Jones Newswires having run yesterday (Friday) with “Eurozone Inflation Rose Less Than Expected, Keeping Rate-Cut Talk on Track” in turn easing our inflative coffee cost concerns … whew!

But as this is not “The Coffee Update”, let’s get on to Gold, which indeed has stumbled thus far into New Year, price having sported its first down week since that ending 08 December in settling yesterday at 2053, albeit a still comfy +84 points above the parabolic trend’s flip-to-Short level at 1969.  And at the foot of this weekly bars graphic we’ve the Gold/Silver ratio now 87.8x, its highest end-of-week level since that ending last 10 March, (the century-to-date average but 67.9x):

As for Gold “awareness”:  if measured by trading range, ’tis not really there, even as price has been fairly firm on balance these past 14 months, (with notable thanks to the BRICS banks).  Still, despite the Gold hype, a public unaware remains the stereotype.  Drawing from the website, the next two-panel graphic displays Gold’s “expected daily trading range” (EDTR) from one year ago-to-date on the left, and the same for the Swiss Franc on the right.  For Gold, expected range from day-to-day is as ’twas a year ago, yet waning.  However for the Swissie, after a year’s worth of range doldrums, clearly of late ’tis back in play, regardless of way.  So beyond banks increasing their Gold shares, it remains that no one else cares:

Meanwhile, looking to find its own way is the Economic Barometer, exemplified by five of the year’s first ten incoming metrics having improved period-over-period … meaning that five did not improve.  Still net-net, December’s job creation and a firm upswing in November’s pace of Factory Orders were enough to bring a New Year boost to the Baro’s first week.  Culling from Friday’s White House statement:  “…2023 was a great year for American workers. The economy created 2.7 million new jobs … more jobs than during any year of the prior Administration…”  ‘Course, not mentioned was that 2023 posted the current administration’s weakest year vis-à-vis job creation, (given 5.1 million in 2021 followed by 4.6 million in 2022).  But far be it from us to rain on the President’s parade; rather, here’s the wayward Baro from one year ago-to-date along with the stratospheric S&P 500 (in red):

‘Course with respect to the S&P, we recall the old adage “As goes January…”, which at least early on is not boding well.  Should you be following the website and/or our “X” feed (@deMeadvillePro), you already know the leading characteristics of the S&P Futures’ “Baby Blues” are suggesting still lower stock prices, certainly underscored by the negative MoneyFlow differential of late.  What this next graphic illustrates is that regardless of time frame (one week, one month, or one quarter), money as regressed into S&P points is flowing out at a pace faster than the decline in the Index itself, and has provably led the decline into New Year:

“So how low would be low, mmb?“

‘Course, none of us know, Squire, and a multitude of measures can be applied.  Here’s one:  a full Golden Ratio retracement between the S&P’s October low of 4104 and the recent not-quite-all-time-high of 4793 would bring us to 4368, a further -7% correction from the current 4697 level.  Or should Q1 Earnings Season net-net show no growth, a reversion to the original “live” price/earnings ratio of 25.4x (at its establishment in January 2013) from such current P/E of 44.7x would elicit an S&P “correction” from here of -43% down to 2669, which would put price back into its growth regression channel had COVID never occurred.  Thus to tie the bow with reference to the aforementioned comment on earnings valuation (just in case you’re scoring at home), 4697 today is +76% above 2669.

Regardless of measure, the straits for the S&P 500 as a single Index remain extremely treacherous:  but until the FinMedia and bullish-beyond-belief analysts own up to the overvaluation, it can remain “Game On!” for the stock market.  For in today’s equities environment, earnings mean nothing … until they again do; (ref:  DotComBomb 2000-2002:  “We don’t need no stinkin’ earnings!”  Oh really?).

Fortunately Gold, given ’tis money, does have meaning as we next turn to the two-panel graphic of the yellow metal’s daily bars from three months ago-to-date at left and 10-day Market Profile at right.  Gold’s “Baby Blues” of trend consistency have of a sudden stalled, suggesting near-term lack of puff for further price rise.  And by the Profile’s labels, this 2051-2074 zone at present determines whether price can instead break higher, else first succumb to a retest of the lower 2000s:

The near-term playbook looks much the same for Silver.  Presently 23.39, were the white metal to slip some more, the broader 23.88 to 21.93 price structure spanning from late October into mid-November appears supportive (below left); more immediately per the Profile (below right), 23.20 appears key to hold:

We opened in musing on inflation:  reporting thereto ranks significant in the first full trading week of 2024 with December’s CPI due Thursday (11 January) followed by the PPI on Friday (12 January).  Shall such metrics renew the inflation scare?  Or instead remain benign over which we’ve nothing to care?  As a great friend and financial colleague remarked over this morning’s inflated coffee:  “This is not going to be an easy year.”  Indeed with valuations so out of whack, it may not be an easy several years.  “Well, ya gotta buy the dip”, they say.  Ok, you go first, Conway.  We’ll hedge with Gold for the Long way!

Cheers!

 …m…

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

05 January 2024 – 09:23 Central Euro Time

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We’ve weakness this morning in the Bond and EuroCurrencies; the other BEGOS Markets are at present within today’s Neutral Zones, and volatility is again light. As did the Spoo on Wednesday, the Bond has now confirmed its “Baby Blues” (see Market Trends) having crossed below their key +80% axis: currently priced at 122^15, we can see a near-term run down into the 120 handle. The leading MoneyFlow for the S&P 500 continues to deteriorate more swiftly than the downside change in the Index itself, even as the “textbook overbought” condition concluded with a 39-trading-day streak. And for the Econ Baro, ’tis Payrolls day for December, along with the month’s ISM(Svc) Index, plus November’s Factory Orders.

04 January 2024 – 09:09 Central Euro Time

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The BEGOS Markets are quiet, at present all eight components within their respective Neutral Zones for today; obviously, volatility is light. Despite the S&P 500 having recorded two down days to commence the year, it nonetheless is entering what would be a 40th consecutive trading day as “textbook overbought”: having settled yesterday at 4704, an up session today would likely maintain that condition, else a down day would finally nix it. Too for the Spoo, its “Baby Blues” (see Market Trends) confirmed settling below their +80% axis yesterday, suggestive of still lower price levels ahead: whilst this is a highly reliable leading near-term indicator, the prior such occurrence failed to produce anything materially to the downside. Today’s Econ Baro metrics include December’s ADP Employment data.

03 January 2024 – 09:02 Central Euro Time

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At present we’ve weakness in the Bond and Copper, and strength in the Euro; BEGOS Markets volatility is light. As tweeted [@deMeadvillePro], whilst the S&P dropped -0.6% to start the year, the MoneyFlow regressed into S&P points fell -2.1%: as this is a leading indicator, we look to still lower S&P levels near-term, especially as the Index itself is now 38 consecutive trading days “textbook overbought”. Debt yields and the Dollar rose in beginning 2024, counter to FinMedia expectations of their “Fed pivot”. The Econ Baro awaits December’s ISM(Mfg) Index; too, we’ve the FOMC Minutes from the 12-13 December meeting.

02 January 2024 – 09:14 Central Euro Time

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Early on the New Year we’ve weakness in the Bond and EuroCurrencies, and strength in Gold, Silver, Oil and the Spoo. The Gold Update targets a “conservative” high in 2024 for 2375 as detailed in the write-up. The S&P 500’s “textbook overbought” condition ranks in the 97th percentile of all such conditions across the past 44 years, the “live” P/E settling 2023 at 46.3x, an 82% increase from its inception a dozen years ago, purely reflective of earnings not keeping pace with price. In real-time, the Spoo is 193 points above its smooth valuation line (see Market Values). The Econ Baro kicks off the year with 10 incoming metrics this week, including due today November’s Construction Spending.,

The Gold Update: No. 737 – (30 December 2023) – “Gold – We Conservatively Forecast 2375 for 2024’s High”

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The Gold Update by Mark Mead Baillie — 737th Edition — Monte-Carlo — 30 December 2023 (published each Saturday) — www.deMeadville.com

“Gold – We Conservatively Forecast 2375 for 2024’s High“

‘Twas a year ago at this time we opted out of forecasting a high price for Gold in 2023, other than to opine ‘twould make a new All-Time High (above that of 2089 from 07 August 2020), which indeed eventuated at 2152 this past 04 December.  Since then, Gold proceeded to settle the year yesterday (Friday) at 2072.

Opting to not forecast a high for 2023 was simply a function of “Who knows how high ‘twould go…” once the then existing 2089 All-Time High was eclipsed.  To wit, you may recall our tongue-in-cheekedly leaving such prognostication to the “Fibonacci Extension Crowd”.

“So how is it any different this time for 2024, mmb?

Well, dear Squire, we’ve drawn upon our response to that which you herein queried a week ago.  For this time ’round we’ve at least some historical guidance upon which to draw.  To cut to the quick: we demonstrated last week that century-to-date whenever Gold has had a five-day run into Christmas of better than +1.0%, its average maximum price increase (as measured from the settle of the last trading day before Christmas) through the ensuing year is +23.9%.  That average comes from seven qualifying occurrences during 2001 through 2022:  and now for 2023 we’ve an eighth occurrence.  Thus applying that +23.9% average maximum increase to Gold’s 2065 settle this past 22 December would bring 2557 during 2024.

However: because a) we fully comprehend that “average” is not “reality” and more importantly that b) cash management drives at least some degree of capital preservation (which for you WestPalmBeachers down there otherwise means “greed kills”), we’ve decided to lop off one standard deviation of that average, which then conservatively forecasts +15.0% above 2065 — thus 2375 — for 2024’s high.  Anything beyond that is gravy.  Thus from the “Sneak Preview Dept.” the above Gold Scoreboard now highlights next year’s high forecast, which upon being achieved shall be a beautiful thing.

Beautiful too is Gold’s having completed 2023 +13.2% to stand on the BEGOS Markets’ podium, second only to the S&P 500 +24.2%.  (We’re considering from time-to-time re-christening the latter as the “Casino 500”, for clearly as this Investing Age of Stoopid continues to unfold, any consideration of earnings for price valuation has been summarily dismissed; more on that catastrophic catalyst later).  But for the present, here are the Final BEGOS Markets Standings for 2023:

Save for the S&P, the most glaring out-of-sorts pairing therein is Gold’s firm performance versus Silver’s no performance (-0.6%).  At year-end 2022, the Gold/Silver ratio was 75.7x; here at year-end 2023 ’tis 86.2x.  The century-to-date average is now 67.9x, at which ratio (given Gold’s present 2072 level) means Silver instead of being 24.03 today would find it +21% higher at 30.50.  So again for those of you scoring at home:  do not forget the Silver!  As for cellar dweller Oil (-11.4% in settling the year at 71.33):  the percentage price of one barrel of “Black Gold” per one ounce of Gold is a wee 3.4%, the average this century being 6.8%.  “Green” may be popularly great, but do not Oil underestimate.

Specific to our Gold, here are its weekly bars across the entirety of 2023, the present parabolic Long trend now 11 blue dots in duration.  And in pointing toward more in 2024, we anticipate Golden fireworks galore:

Next we broaden the Gold perspective by bringing up the yellow metal’s year-over-year cumulative percentage track along with those of key precious metals’ equity brethren.  Thus as measured from 28 December 2022 through 29 December 2023, we again have Gold itself leading the pack +14%, and then in descending turn:  the VanEck Vectors Gold Miners exchange-traded fund (GDX) +8%, Agnico Eagle Mines (AEM) +5%, the Global X Silver Miners exchange-traded fund (SIL) -1%, Pan American Silver (PAAS) -2%, Newmont (NEM) -13%, and finally Franco-Nevada (FNV) -19%.  So the bottom line here remains the ever-lagging nature of the equities:

As to how ’tis all really going comes the StateSide Economic Barometer.  What we’ve gleaned from the FinMedia is, should you be seated on the left side of the aisle, the economy is doing fantastic; if instead on the right side, ’tis at best spastic.  But because we do the math, the Econ Baro’s net negative bent appears rather drastic.  Indeed, here’s a stat with which you shan’t be provided anywhere else:  of the 590 incoming metrics for the Baro during 2023, 47% improved from period-to-period, 47% worsened, and 6% were static.  (Per the performance by the prognosticators:  17% of the metrics met consensus estimates, 43% were better, and 40% were worse).

“So why then the ‘net negative bent’ as you put it, mmb?

Because, Squire, 30% of all period-to-period readings were then revised lower, whereas only 25% were revised higher, (leaving 45% unrevised).  All-in-all, hardly fantastic, rather more spastic, and bent toward drastic:

‘Course, the red line accompanying the Baro is the afore-dubbed “Casino 500” (has a rather realistic ring, non?)  The Big Roulette wheel through year-end is now 37 consecutive trading days “textbook overbought”, placing it in the 97th percentile of all such overbought conditions across the past 44 years.  As for the aforementioned dismissal of earnings, our “live” price/earnings ratio finished the year at 46.3x:  that is +82% above our first such reading of 25.4x in January 2013.  Similarly from that same month, Bob Shiller’s CAPE has leapt +46% from 22.1x to now 32.3x, and the otherwise “broker-parroted” S&P/DJI version has expanded +53% from 17.3x to now 26.4x.  The annualized all-risk “Casino 500” yield settled the year at 1.466% … the annualized no-risk U.S. three-month dough is at 5.180%. Or in quoting Roger Moore to Gloria Hendry:  “Make your choice.” –[Live and Let Die, ’73]

Still, if living by the website’s Market Trends page, ’tis been hard to be wrong of late given the dying Dollar, the Buck having dumped -6.2% of its Index value high-to-low in the year’s final two months.  Why, the Swiss Franc alone now costs more than $1.20 for the first time (save for its €uro-decoupling one-day spike on 15 January 2015) since 06 September 2011, (that date ringing a bell as ’twas Gold’s 1923 All-Time High which never again was breached until the noted 07 August 2020 date).  But to the point:  with the exception of Silver (sadly), the BEGOS Markets’ grey regression trendlines across the past 21 trading days are all in positive slant, the baby blue dots indicative of the consistency of those trends:

Then zooming in on the precious metals’ 10-day Market Profiles, Gold’s supremacy over Sister Silver is quite clear, the yellow metal settling the year above the Profile’s mid-point, whilst the white metal is below same.  But you already know (courtesy of the “Dept. of Redundancy Dept.”) not to forget the Silver!

So to wrap with Gold this past month having recorded a new All-Time High at 2152 and it now being both month-end as well as year-end, here we’ve the defined Gold Structure chart through the past dozen years, now featuring 2024’s goal of 2375, (conservative, or otherwise):

In transiting through New Year, one wonders how much longer the S&P 500 can withstand trading at nearly double its earnings valuation and Gold at nearly half of its currency debasement valuation.  Ours indeed is to reason why — to seek reversion — for at some point it shall be nigh.  And historically, ’tis always arrived.

But now for the present, ’tis time to imbibe!  Thus from the entire deMeadville crew,  a most Golden New Year to All of You!

Santé !

 …m…

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

29 December 2023 – 09:17 Central Euro Time

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Early on in the year’s final session we’ve at present the Swiss Franc, Gold and Copper above their respective Neutral Zones for today, whilst Silver is below same; volatility for the BEGOS Markets is light, with only the Swiss Franc having thus far exceeded 50% (now 56%) of its EDTR (see Market Ranges). By Market Trends, the “Baby Blues” for both the Bond and Spoo remain fairly glued to the ceiling. The S&P 500 (4783) is a day’s range from an all-time high (4819): despite the FinMedia rooting for such high, the Index obviously continues its fundamental trek as extremely overvalued by earnings (the “live” P/E now 46.7x), and the technical track is now 36 days (“textbook overbought”). The Econ Baro concludes its year with December’s Chi PMI. Gold appears firm in the upper 2000 handle: tomorrow’s 737th edition of The Gold Update gives our forecast high price for next year. Indeed: Happy New Year!

28 December 2023 – 09:41 Central Euro Time

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The EuroCurrencies and Gold are at present above today’s Neutral Zones, whilst the Bond is below same; BEGOS Markets volatility is mostly light. The Swiss Franc is trading above 1.20 for the first time (save for its brief Euro-decoupling spike in January of 2015) since September of 2011. Gold is again teasing the 2100 level, the session high to this point being 2098: by Market Rhythms on a 10-test basis, various Gold studies populate the top of the consistency stack, notably for the 4hr, 6hr, 8hr and 12hr timeframes; and by Market Values, Gold (in real-time) is +51 points above its smooth valuation line. For the week’s light Econ Baro calendar, today’s metrics include Pending Home Sales for November.

27 December 2023 – 09:23 Central Euro Time

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Both the Bond and Copper are at present above today’s Neutral Zones; the other BEGOS Markets all are within same, and volatility is again light. The S&P 500 is -44 points below its 4819 all-time high; the EDTR (see Market Ranges) for the Spoo is coincidentally 44 points; (for the S&P itself ’tis 38 points); the S&P is entering its 35th consecutive “textbook overbought” trading session, and the Spoo (in real-time) is +256 points above its smooth valuation line; (extreme too is the Bond now better than +7 points above same). The “live” P/E of the S&P is 46.3x and the yield 1.468% vs. 5.203% for three-month U.S. dough. By Market Trends, both Silver and Oil remain the only two components in 21-day linreg downtrends, albeit the latter’s “Baby Blues” are swiftly rising. Again the Econ Baro remains quiet until tomorrow.

26 December 2023 – 09:17 Central Euro Time

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Into the shortened trading week we go with Gold at present above its Neutral Zone, as too are Silver, Copper and the Spoo; the balance of the BEGOS Markets are within same, and volatility is light. The Gold Update details an historically-based case for Gold to reach 2500 in the ensuing year. The S&P 500 looks to open higher toward entering its 34th consecutive trading day as “textbook oversold”; the “live” P/E adjusted to the futures is presently 45.7x. For tracking the Spoo, currently our best market rhythm for consistency (10-test basis) is the 8hr Moneyflow and (on a 24-test basis) the 15mn Parabolics. The Econ Baro has just three incoming metrics for this week, none due until Thursday.

The Gold Update: No. 736 – (23 December 2023) – “A Great Gift for Gold as It Climbs into Christmas”

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The Gold Update by Mark Mead Baillie — 736th Edition — Monte-Carlo — 23 December 2023 (published each Saturday) — www.deMeadville.com

“A Great Gift for Gold as It Climbs into Christmas“

You likely shan’t glean this from anywhere else, so here we go.  In this 23rd year of the 21st century, for these past five trading days leading up to Christmas, Gold recorded a net weekly gain of +1.5%, settling yesterday (Friday) at 2065.  For the same five-day stint in past years, percentage gains of better than +1.0% have occurred seven times, which begs the question, courtesy of our good man Squire:

“So then, how well does Gold do the next year, mmb?

The answer is in the following gift box for Gold:

 

Therefore — at least historically so far this century — for the five-day run up to Christmas when price has netted a gain in excess of +1.0%, Gold’s “Average Maximum Gain” at some point through the end of the ensuing year is +23.9%, which from the present 2065 level suggests 2557 during 2024.  ‘Twould be a welcome, healthy step toward the current Gold Scoreboard’s valuation level of 3703.

“But, mmb, that valuation has been over 4000 in past, no?

Yes it absolutely has, Squire.  And ’tis based on Dollar debasement as mildly mitigated by the increase in the supply of Gold itself.  But as many-an-astute reader here knows, the U.S. liquid money supply (“M2”) from 15 April 2022 through today has shrunk from $22.05T to now $20.71T (-6.1%) whilst total Gold tonnage has simultaneously increased from 206,942 to 211,537 (+2.2%).  Such combined effect has thus been serving to reduce the Scoreboard’s valuation of Gold.  ‘Course given — again historically — that Gold’s actual price has eventually reached up to prior high valuation levels, one has much to look forward to by holding/increasing one’s pile.

Piling up too is Gold’s price per the weekly bars from one year ago-to-date, the blue-dotted parabolic Long trend now 10 weeks in length.  The Shorts (should there be any left following their having been all but obliterated two weeks ago) may see the rightmost few bars as “too high” above the positive dashed trendline, such as to warrant a ShortSide shot.  But given our foregoing on price’s firm follow-though upon gains into Christmas, we instead are broadly focused on Gold looking well up into next year … and beyond!

Then from the “(Almost) Everything is Up Because the Dollar is Down Dept.” — which as you know from our purview is due to the FinMedia (the boss) already having instructed the Federal Reserve (the stooge) to cut rates — here we’ve the five primary BEGOS Markets’ respective percentage tracks from one month ago (21 trading days)-to-date.  The Bond having been left for dead in October is clearly the winner whilst in the basement obviously is Oil as in mere years it shan’t be used any more.  “These food containers made out of wind are really cool!”  But we digress…  Here’s the graphic:

Blown down on balance certainly since October, albeit having lately garnered a bounce, is the Economic Barometer.  But did you catch on Thursday the Conference Board’s lagging indicator called “Leading Indicators” for November?  -0.5%, (no surprise as the Econ Baro is always leading such report).  Slipping too were the month’s New Home Sales, December’s Philly Fed Index (which has scored only two positive readings across the last 19 months), and Q3’s Gross Dometic Product getting finalized down a few pips.

Still, Personal Income and Spending both increased their paces during November, and the month’s so-called “Fed-Favoured” Core Personal Consumption Expenditures Index came in again at just a +0.1% pace.  The latter’s 12-month summation is +3.2%, the lowest since that as of April 2021.  Indeed for the Baro’s significant collection of 17 metrics this past week, 10 improved period-over-period.  Thus we’ve this:

And therein note ole St. Nick pointing down at the top of the S&P.  We’ve documented beyond ad nauseam the bazillion reasons for a major S&P correction, (e.g. “Stocks Suicide Mission” from just a week ago).  Further, we witnessed on Wednesday (as tweeted @deMeadvillePro)  a microcosm of how swiftly it can go.  From Friday (15 December) into Wednesday (20 December) the S&P 500 garnered three successive days of “higher highs” … then late-session Wednesday, those three days of gains were gone in just three hours.  Deeper into the numbers:  the pace at which stocks hit downside bids was nine times the pace they’d previously been hitting upside offers.   That is a fear-filled, comparatively monstrous downside pace.  True, it didn’t last long, and the S&P then rather messily tried to recover to close its week.  But it shows us just how thin is the ice on which the S&P is now skating.  Or to cue the popular Yes album from back in ’71: “Fragile” Oh yes, indeed:

We shan’t futher belabour the point of the unconscionably high S&P other than to (yet again) say:  the current “live” P/E is 45.6 (nearly double that of a decade ago); the market cap is $41.6T … the money supply is $20.7T; the yield is 1.479% (all-risk)  … for the U.S. T-Bill ’tis 5.208% (no-risk); and just in case you’re scoring at home, the Index is now 33 consecutive trading days “textbook overbought”.

(Oh, and this too on the off notion that for some silly reason you don’t have protective stops in place:  first S&P futures “limit down” is -7%, then -13%, then -20% … all on the same day).

Funny how through these recent years, broadly speaking the S&P (given unsupportive earnings) trades at double its value whereas Gold (given currency debasement) trades at half its value.  ‘Course, we’ll see who laughs last upon “means reversion”.

As to the “now”, here next is our two-panel display of Gold’s daily bars from three months ago-to-date on the left along with the 10-day Market Profile on the right.  ‘Twould appear Gold’s baby blue dots of trend consistency are nearly halting their fall; and in the Profile, present price appears protected by the 2048 level:

As for the same drill with Silver, her “Baby Blues” (at left) need to apply a bit more brake pressure, with her Profile (at right) indicative of trading support at 24.40 just below her 24.47 weekly settle.  “Hold that line”, Sister Silver!

Thus there we are with but four trading days remaining in 2023.  And as entitled, Gold’s pre-Chirstmas five-day gain at least by historical comparison is a great gift for the yellow metal going into next year.  ‘Course, next week we’ll be here with our wrap for the year and as to how 2024 may well appear.

So with a tip of the cap to our IT crew for voluntarily creating this lovely card from us…

…as they say ’round these parts: “Joyeux Noël !”  And give the gift of Gold!

Cheers!

 …m…

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

22 December 2023 – 09:57 Central Euro Time

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Oil is the only BEGOS Market at present outside (above) its Neutral Zone for today; session volatility is light. By Market Trends, six of the eight components are in 21-day linreg uptrends components, (the two downtrends being for Silver and Oil). Per Market Rhythms, our most consistent on a 10-test is Gold’s 8hr MACD whilst on a 24-test basis ’tis the Yen’s (not yet a BEGOS Market) 2hr MACD. The Econ Baro concludes its busy week with November’s Personal Income/Spending, “Fed-favoured” Core PCE, Durable Orders, New Homes Sales, and revision to December’s UofM Sentiment Survery. Merry Christmas to everyone everywhere!

21 December 2023 – 18:04 Central Euro Time

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Apologies, we just noted that this morning’s post obviously didn’t “make the trip”. The thrust therein was the S&P 500 yesterday giving up the prior three days’ gains in just three hours. The Index is trying to firm today, but is coming off as we type. Still, save for the Bond and Oil, the balance of the other six BEGOS Markets are higher today. The Econ Baro took a dip today on weakness in Jobless claims, Q3 GDP revision, Philly Fed and Leading Indicataors.

20 December 2023 – 09:10 Central Euro Time

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Both the Bond and Copper are at present above today’s Neutral Zones; below same is the Euro, and volatility is quite light, the largest EDTR (see Market Ranges) to this point being that of the Euro at 48%. Going ’round the Market Values horn of the five primary BEGOS Markets (in real-time): the Bond is better than +8 points “high” above its smooth valuation line, the Euro less than +0.01 points “high”, Gold +38 points “high”, Oil -3.24 points “low”, and the Spoo +298 points “high”, the Index itself having recorded its 30th consecutive trading day as “textbook overbought”. For the Econ Baro we’ve December’s Consumer Confidence, November’s Existing Home Sales and Q3’s Current Account Deficit. –> We sadly learned yesterday of the passing of Bob “MeBob” Falk, a fine and well-known trading colleague over many years as far back as the 1990s at Avid Trader. He shall be missed, and we extend our sincere condolences to his entire family.