The Bond, Swiss Franc, Gold and Silver are all at present above their respective Neutral Zones for today; the other BEGOS Markets are within same, and volatility is leaning toward moderate, (the non-BEGOS Yen having again exceeded 100% of its Expected Daily Trading Range). The S&P 500 is now “textbook overbought” through the past 10 sessions, the last five of which are at an extreme overbought reading: the “live” P/E (futs-adj’d) is 44.7x, essentially double the 66-year historical mean. The Econ Baro awaits October’s Existing Home Sales; and late in the session comes the FOMC’s 31 Oct/01 Nov meeting minutes.
Mark
20 November 2023 – 09:17 Central Euro Time
The abbreviated trading week gets going with the Swiss Franc and Oil at present above today’s Neutral Zone; below same is the Bond: recall our noting to mind the Bond’s “Baby Blues” (at either the Bond or Market Trends page); the Blues in real-time are beginning to roll over (albeit still are above their key +80% level). BEGOS Markets volatility is moderate; indeed for the Yen (not yet officially a BEGOS component), it has already traced 120% of its EDTR (see Market Ranges). The Gold Update cites price having moved back above successfully tested support, in concert with inflation having purportedly come to a halt and the Econ Baro recording its 10th worse 12-day stint since the Baro’s inception back in 1998. The Baro today looks to October’s leading (i.e. “lagging”) indicators, one of just five metrics due for this week.
The Gold Update: No. 731 – (18 November 2023) – “Gold Pops as Inflation Stops and the Economy Flops”
The Gold Update by Mark Mead Baillie — 731st Edition — Monte-Carlo — 18 November 2023 (published each Saturday) — www.deMeadville.com
“Gold Pops as Inflation Stops and the Economy Flops“
Some 40 years ago per advertising billboards for the evening blatt known as the San Francisco Examiner: “A lot can happen between 9 and 5”. And relative to just this past week, ’tis perfectly analogous to the state of Gold, Inflation and the Economy: “A lot can happen between Monday and Friday”. To wit for the week:
- Gold above support spritely popped;
- Inflation (FinMedia’s take) abruptly stopped;
- The StateSide economy frightfully flopped.
Just like that. “Who knew?”
Perhaps our neighbour knew in walking past us mid-week with just a single word uttered our way: “3000”.
Great to hear some Gold awareness there, even as price settled the week yesterday (Friday) at 1984. Yet per the above Gold Scoreboard, the yellow metal’s Dollar debasement value is 3704. At least somebody’s paying attention.
Or (oui, c’est ‘Gold’ en français): was the utterance of “3000” instead a reference to valuing the S&P 500, itself now 4514? The inevitable reversion of the Index’s honestly calculated price/earnings ratio (43.8x “live”) to our historical 66-year mean (22.7x incorporating Bob Shiller’s CAPE pre-2013) brings the S&P well sub-3000. Further, we’ve on occasion herein graphically depicted that were it not for the massive monetary infusion to counter COVID, the S&P by our 50-year regression channel would today be in the high 2000s, a level otherwise gratefully accepted by the investing community had there been no pandemic monetary response. Just a few things to make one go “hmmm…”
Regardless, let’s break down Gold’s pop, inflation’s stop, and the economy’s flop.
Gold’s pop: per the opening bullet point, this past week saw Gold pop back and settle above the green 1980-1922 support zone, price as noted now 1984, the week’s high en route being 1996 (i.e. just 93 points below the 07 August 2020 All-Time High of 2089). To Gold’s weekly bars from one year ago-to-date we go, the blue-dotted parabolic Long trend firmly in place with a lot of underlying safe space:
Moreover, we see by Gold’s monthly bars a Moneyflow “Buy” signal: whilst not a formal recommendation, ’tis worth consideration. The following chart shows a wee chap at lower right extolling said signal. This is because the green Moneyflow track has crossed above the double-center line. Across the past 28 calendar years, this up-cross has occurred 11 times. The average maximum points follow-through is +264, but with this warning: three of the past four such Long signals have garnered at most +50 points of additional gain … just in case you’re scoring at home. For at the end of the day as we always say: “Cash management is everything.” But worth an awareness view here:
Inflation’s stop: In concert with October’s retail inflation having come to a halt (the Consumer Price Index registering “unch”) whilst recording wholesale deflation (the Producer Price Index registering -0.5%), our FinMedia friends swiftly declared the Federal Reserve’s interest rate hikes as having come a conclusion, with cuts commencing next year. And as you regular readers recall, our missive’s wrap two weeks back described the FinMedia’s essentially running the Fed. So there we go. Or do we?
As ’tis our penchant to actually do the math, we came up with the following three-panel graphic of monthly “headline” inflation reports from a year ago-to-date; (note at right the Personal Consumption Expenditures report lags the PPI and CPI by one reporting month). Our focus for each panel is the directional slope of the respective dashed regression trendlines. Again: “hmmm…” For both the PPI and CPI, their slopes are rising; and their October figures are quite the deviations from the trendlines. This can imply a snap-back to the upside come the November numbers. Too, the “core” measures (not displayed) for October are: PPI “unch”, CPI +0.2%, and for September’s so-called “Fed-favoured” PCE +0.3%. Let’s see with all three panels identically scaled:
Economy’s flop: The following bit is not for the weak-of-stomach crowd; thus gird one’s loins as necessary. Our StateSide Economic Barometer this past week got summarily skewered, as tweeted (@deMeadvillePro) Thursday evening. Now here’s the picture from one year ago-to-date, the S&P (red line) ignoring overvaluation as the “bad news is good news” illogicity continues:
And specific to “good news”, as we’ve noted since COVID, the Econ Baro doesn’t lead the stock market as it did during the prior 22 years from 1998 into 2020. ‘Course, the monetary injection post-Covid essentially equaled the increase in the market capitalization of the S&P 500, and we’ve thus been awash in liquidity ever since, (hat-tip “The Market Never Goes Down Dept.”) Why, not even Moody’s — a week ago citing that U.S. credit risk “…may no longer be fully offset by the sovereign’s unique credit strengths…” — can stop the stampeding S&P.
“But still, mmb, that’s a really big drop in the Baro…”
‘Tis a most material drop indeed, Squire. Since the Econ Baro’s inception back in ’98, there have been just nine other drops of this magnitude across a 12-trading day span. All have led to fairly imminent — however not always overwhelming — price declines in the S&P. That stated, the most recent such Baro decline occurred just over a year ago as of 22 May 2022; then come 17 June (just 14 trading days hence), the S&P had fallen -521 points (-12.5%). Whether that repeats — with FinMedia missives now suggesting a record S&P high is nigh (i.e. above the 4819 level achieved on 04 January 2022) — depends upon the investing whims of news followers vs. math doers. Neither overlook that the U.S. “riskless” Three-Month T-Bill still yields an annualized 5.233% per Friday’s settle. On verra…
Either way, at this writing the S&P 500 is “extremely textbook overbought” (based on our concoction of John Bollinger’s Bands, along with standardized Relative Strength and Stochastics) and the S&P 500 futures settled yesterday +229 points above their smooth valuation line (per the website’s Market Values page). Too is the S&P’s aforementioned “live” P/E of 43.8x. Recall the P/E as the S&P topped pre-DotComBomb back in March 2000? 43.2x. Today ’tis one perpetually scary/expensive stock market. And with Q3 Earnings Season having just ended, in collecting bottom lines for 1,860 companies, only 51% improved year-over-year. Specific therein to 446 S&P constituents, 64% improved … but given “It’s the S&P”, should not 100% have improved? What shall the next spin of the wheel reveal? “Les jeux sont faits; rien ne va plus…”
Meanwhile, the next special graphic of the precious metals is our two-panel view featuring Gold’s daily bars from the last three months ago-to-date on the left and likewise for Silver on the right. Of note are Gold’s “Baby Blues” of trend consistency having actually gone negative whilst price has risen. This is because the 21-day red trendline has rotated to negative; we oft quip “follow the blues”, however in this case given the positive pricing track for Gold, we’re not really looking for much downside. Indeed for Silver, her red trendline has rotated from negative to flat, hence her rightmost baby blue dot sitting on the 0% axis. Also as penned in the Prescient Commentary this past Thursday: “…Silver’s daily Parabolics flipped to Long effective today’s open (23.510): the average maximum follow-though of the past 10 such studies (either Long or Short) is 1.695 points…” Therefore with respect to Gold and Silver, leave any silly Shorting ideas to Smart Alec:
As to the 10-day Market Profiles which denote prices at the most robust levels of volume, both panels below look healthy for Gold at left and Silver at right. In fact for the white metal, her +6.6% gain for this past week (vs. +2.1% for the yellow metal) served to reduce the Gold/Silver ratio from 87.1x to 83.4x. Still, the century-to-date ratio is 67.9x, leaving Sister Silver plenty of room to outperform Gold on the upside:
In sum, Gold again has a chance to go for an All-Time High. The S&P by any and all rights is due for a dive (understatement). And certainly both “ought be” similarly priced right ’round “3000” … at least if you do the math. (What a rare concept, eh?)
We’ll close it here with this logistical note:
Next week’s 732nd consecutive Saturday edition of The Gold Update is planned to be quite brief as we shall be “in motion”: just straight to the point with a salient graphic or two along with our view. In any event, don’t be a turkey, given what can ensue…
…rather, keep your eyes (and wealth) on the Golden prize clearly due!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
17 November 2023 – 08:57 Central Euro Time
‘Twould appear to be a quiet Friday in the making: all eight BEGOS Markets are at present within their respective Neutral Zones, and volatility is very light. October’s Housing Starts/Permits come due for the Econ Baro, which itself has had quite the torrid week (https://demeadville.com/economic-barometer/); more on that in tomorrow’s 731st edition of The Gold Update. In real-time at Market Trends, the 21-day linreg trends are now perfectly flat for both the Swiss Franc and Silver, (the latter nonetheless getting a boost from the aforementioned daily Parabolics having flipped to Long). ‘Tis the final day of Q3 Earnings Season, for which the S&P 500 constituents finds 64% having improved their bottom lines of a year ago.
16 November 2023 – 08:58 Central Euro Time
Both the Bond and Gold are at present above today’s Neutral Zones; the rest of the BEGOS Markets are within same, and volatility is mostly light ahead of a busy day for incoming EconData. Silver’s daily Parabolics flipped to Long effective today’s open (23.510): the average maximum follow-though of the past 10 such studies (either Long or Short) is 1.695 points. At Market Trends, the Bond’s “Baby Blues” are above the key +80% axis; upon their eventual decline below that level, we’d then anticipate lower price levels. Included amongst today’s seven incoming metrics for the Econ Baro are November’s Philly Fed and NAHB Housing Indices, along with October’s Ex/Im Prices and IndProd/Cap/Util.
15 November 2023 – 08:59 Central Euro Time
October’s CPI indeed was “center stage” (per yesterday’s comment), the headline retail level coming in “unch”. In turn the Dollar dove and the BEGOS Markets unimpededly rose. Today ahead of wholesale inflation we’ve both Gold and Silver at present above their respective Neutral Zones for today; the other BEGOS components are within same, and volatility is light. Yesterday’s S&P 500 +1.9% rise now finds the Spoo (in real-time) +216 points above its smooth valuation line (see Market Values): historically such extreme deviation leads on average to price descending by well over -100 points within the ensuing weeks such that we may soon see the S&P below where ’twas prior to the inflation data (4411 vs. now 4491); too there’s the “live” P/E of the S&P now 44.9x. Overall today for the Econ Baro we’ve November’s NY State Empire Index, October’s PPI and Retail Sales, plus September’s Business Inventories.
14 November 2023 – 09:08 Central Euro Time
The Bond is the sole BEGOS Market at present outside (above) its Neutral Zone for today; session volatility is very light, the Econ Baro awaiting October’s CPI to take center stage. Heading our Market Rhythms for trading consistency are (on a 10-test basis) the Euro’s daily Moneyflow, Oil’s 30mn Parabolics and Silver’s daily Parabolics, (too, whilst not a BEGOS component, the Yen’s 1hr Moneyflow also qualifies). The “live” (futs-adj’d) p/e of the S&P 500 is now 42.9x and the yield 1.569% whereas that for the “riskless” U.S. three-month T-Bill is an annualized 5.260%. And in real-time, the Spoo is +127 points above its smooth valuation line, the S&P itself now “textbook overbought” through the past five sessions.
13 November 2023 – 09:04 Central Euro Time
Both Silver and Oil are at present below today’s Neutral Zones; above same is Copper, and BEGOS Markets volatility is pushing toward moderate. The Gold Update confirms our anticipated typical post-geopolitical price pullback: visually therein on the Weekly Bars graphic we’ve placed the 1980-1922 support structure, (expandable to 2001-1901 if need be); and in real-time, Gold is now just +35 points above its smooth valuation line (see Market Values) after having been some +120 points above it. ‘Tis a very busy week for the Econ Baro with 18 metrics due, beginning (again purportedly) today with October’s Treasury Budget. Too, ’tis the final week of a “so-so at best” Q3 Earnings Season.
The Gold Update: No. 730 – (11 November 2023) – “Gold’s Bang-On-Time Dive”
The Gold Update by Mark Mead Baillie — 730th Edition — Monte-Carlo — 11 November 2023 (published each Saturday) — www.deMeadville.com
“Gold’s Bang-On-Time Dive“
Let’s open with this from the “We Hate It When We’re Right Dept.” reinforced by the age-old axiomatic quip: “Be careful of that for which you wish as you just might get it.” And you regular readers definitely get it. For bang-on-time this past week came Gold’s dive.
Far more broadly in positively waving the Gold flag across the past 14 years — from the first edition of the Gold Update on 14 November 2009 with Gold then 1120 to now our 730th consecutive Saturday edition and price at 1943 — in anticipation of interim price declines we’ve on occasion had to deviate from Gold’s otherwise net ascent of 73%, (during which stint the U.S. Dollar’s M2 supply has increased a net 143%). And last week’s anticipative missive (“Gold’s Post-Geopolitical Pullback“) is a case in point, price in turn recording its second-worst weekly loss year-to-date on both a percentage (-2.9%) and points (-57) basis. Which for those of you scoring at home begs the question: “Which has been the worst?”, the answer being the weekly loss ending 29 September of -4.1% or -80 points. ‘Course after that, Gold low-to-high gained +10.7% or +196 points through the heart of October.
Oh to be sure, over the years we’ve pounded the table that “shorting Gold is a bad idea” even in anticipation of price falling. But this time ’round the dastardly Shorts got their fill (if you will) were they Short per last week’s drill. We thus humbly utter the one word by the chap whose car cassette player was sufficiently loud such as to send the Tacoma Narrows Bridge into its destructive suspension swing: “Sorry…” –[Pioneer, ’94].
To add context to present price, graphically for Gold we’ve placed on our year ago-to-date weekly bars the 1980-1922 green-bounded support structure cited in the prior missive. And quite thoroughly hoovered it was this past week per the rightmost bar, although the parabolic trend remains Long:
Further should that support structure bust, it can be expanded to 1990-1914 or even 2001-1901 before Gold’s overall price positioning becomes materially affected … be it lower … or higher than ever before.
‘Course if you’ve been highly hyped up by the FinMedia these days, you may be seeking a dose of meclizine given the descriptive extremes of markets’ motions. “Oh yields are plummeting!” they say. “Oh the Dollar is tanking!” they say. “Oh the stock market’s soaring!” they say. “Oh Gold’s become so passé!” they say. And from the “What Are They Smoking? Dept.” comes this gem: “Oh the Fed’s done raising!” they say. To which we say clearly any effort to do math has gone away. More on that along the way.
But for all the dizzying cries over markets’ careening this way and that, let’s look at the comparative tracks of the five primary BEGOS Markets from one month ago-to-date per the following two-panel display. First on the left — save for Oil — the Bond, Euro, Gold and S&P 500 are all pretty much where they were on this date a month ago. Yes, really:
Second on the right we’ve merely isolated the same tracks solely for Gold and the S&P such as to emphasize their once again dancing un pas de deux as we’ve on occasion depicted these many years. And whilst broadly it shan’t last, at least at this writing the best paired correlation amongst those five primary BEGOS Markets is negative between Gold and the S&P, (which for you WestPalmBeachers down there means when one is going up, the other is going down); thus the mirror-like tracking in the above graphic.
“But what about Oil, mmb?”
Ours is not to wonder why, Squire, other than to speculate when you’ve a lot of something for which demand is intermittently waning, the requisite price to move supply falls, (hat-tip Macroeconomics 101). Moreover: whist many folks are openly befuddled by Oil’s down direction given Mid-East tension, we humbly suggest that one merely mind the website’s Oil and/or Market Trends page such as to follow the “Baby Blues” of trend consistency. Five such Oil signals have therein been produced from one year ago-to-date, the average maximum $/cac follow-through within 21 trading days being $6,386, (ranging from $1,660 to $13,490). That sure beats your trying to outguess the market; or as we oft quip: “Follow the Blues instead of the news, else lose yer shoes.”
Also becoming a bit shoeless of late is our Economic Barometer. Already having been on skids during November, this past week’s muted set of just five incoming metrics was nonetheless net negative for the Baro, notable month-over-month weakenings including September’s Trade Deficit and the backing up of Wholesale Inventories, plus a lurch down in November’s University of Michigan’s “Go Blue!” Sentiment Survey. Too, as household liquidity lessons, the credit card is coming to the rescue.
But: at least we’re told the Federal Reverse shan’t further raise rates, right? Wrong. Here’s the Baro from one year ago-to-date, featuring the earnings-unsupported S&P 500 in red and a table of the Fed’s 2% inflation target vs. the reported data. Stagflation? Stay tuned…
“But mmb, those PPI annualized percents are in line with the Fed’s target…”
Duly noted, Squire. If that Producer Price Index is truly leading, then we ought see the other inflation percents stall, if not fall, although the Fed does have a lean toward those Core Personal Consumption Expenditures. As well, Minneapolis FedPrez Neel “Cash n’ Carry” Kashkari per Dow Jones Newswires “…is not convinced rate hikes are over…” Or to reprise the great Bonnie Raitt from back in ’88: 
“It’s just too soon to tell…”
In the midst of all this, we read the Fed’s interest-rate increases of the past two years being deemed as “historic”. Again, the Fed’s Effective Funds Rate is presently 5.33% (i.e. the targeted 5.25% + 5.50% ÷ 2). Hardly is that “historic”. Anyone remember the Prime Rate at 22% back in 1980? We do. (What would be today’s FinMedia adjective for that? “Steroidic”?)
Specific to the precious metals this past week, a more apt adjective would be “atrophic” as next we’ve the two-panel display of Gold’s daily bars for the past three months-to-date at left and same for Silver at right. As aforementioned for Oil, here we’ve the “Baby Blues” signaling “Sell” in both metals’ current cases upon the dots having slipped below their respective +80% axes. Again we commend “The trend is your friend” even if it must descend:
Indeed with respect to Gold, we tweeted (@deMeadvillePro) this graphic last Monday, reflective of the “Baby Blues” heading south:
And so in turn we go to the 10-day Market Profiles for Gold (below left) and Silver (below right). Simply stated from high-to-low, the word “hoovered” is apropos, with all labeled lines now overhead trading resistance. As for their two-week percentage changes, Gold’s from top-to-bottom is -4.0% whilst that for Silver is -6.3%. Is it any wonder the Gold/Silver ratio — now 87.1% — is at its second-highest level since last March? No ’tisn’t. Reprise: Do not forget Sister Silver!
Toward the wrap, here’s the stack.
The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3706
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
The 2000’s Triple-Top: 2089 (07 Aug ’20); 2079 (08 Mar ’22); 2085 (04 May ’23)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
10-Session “volume-weighted” average price magnet: 1985
Trading Resistance: 1951 / 1964 / 1970 / 1994 / 2007
Gold Currently: 1943, (expected daily trading range [“EDTR”]: 24 points)
Trading Support: none by the Profile
10-Session directional range: down to 1922 (from 1980) = -81 points or -4.0%
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1883 and rising
The Weekly Parabolic Price to flip Short: 1846
2023’s Low: 1811 (28 February)
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240
In sum, Gold is definitely getting the anticipated post-geopolitical pullback. Does it continue? Per the website’s Gold and/or Market Values page, recall that price a mere week ago was +120 points above its smooth valuation line; that deviation has since been reduced to now +39 points. Yet even as Gold’s “Baby Blues” are accelerating lower, again note the cited structural support bases: 1922, 1914 and 1901, the notion thus being that Gold is “safe” above the 1800s.
‘Course, given Gold’s valuation by Dollar debasement is now 3706, ’tis clearly requisite toward maintaining one’s bridge to wealth security.
Thus: don’t be that guy…
…rather consider that Gold today is THE bang-on attractive Buy!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
10 November 2023 – 09:04 Central Euro Time
The Bond is at present above its Neutral Zone for today; the Swiss Franc is below same, and BEGOS Markets volatility is mostly light. Looking at Market Profile resistors for the Spoo (presently 4372) we’ve the 4381-4384 area followed more dominantly by 4396; whilst by Market Trends the Spoo’s linreg in real-time has just rotated to positive, there is broader structural resistance running from 4341 up to 4431; and by Market Values, the Spoo is now +59 points above its smooth valuation line; for the S&P itself, ’tis now “textbook overbought” through these past three trading days. The Econ Baro concludes its quiet week with November’s UofM Sentiment Survey and (purportedly) October’s Treasury Budget.
09 November 2023 – 08:54 Central Euro Time
Copper is the sole BEGOS Market at present outside (below) its Neutral Zone for today; session volatility is light, save for Copper which has traced 57% of its EDTR (see Market Ranges). As Gold’s “Baby Blues” continue to descend, price has thus far traded to as low as 1953: recall from the current edition of the Gold Update the mention of 1951 as a mid-structural support level; currently priced at 1955, Gold is now +58 points above its smooth valuation line (see Market Values) after having been better than +100 above it through recent days. Indeed for Gold, Silver and the Swiss Franc, their “Baby Blues” all having fallen below the key +80% level have in turn seen lower price levels. As the Econ Baro’s subdued week continues, only due today are the usual weekly Jobless Claims.
08 November 2023 – 09:01 Central Euro Time
The Bond and EuroCurrencies are at present below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light. At Market Ranges, the recent EDTR widenings for the Bond, Gold, Silver, Oil and the Spoo appear for now to have peaked. Following Gold’s “Baby Blues” falling below their key +80% level, price (now 1974) has since weakened to as low as 1963 yesterday; the Blues in real-time continue to drop as do those for the Swiss Franc, Silver and Oil. The “live” (fut’s adj’d) P/E of the S&P is now 42.5x and the Gold/Silver ratio a very “Silver-attractive” 87.4x despite the present Blues negativity. The Econ Baro awaits September’s Wholesale Inventories.
07 November 2023 – 09:03 Central Euro Time
All eight BEGOS Markets are in the red and all at present (save for the Bond) are below their respective Neutral Zones for today; volatility is mostly moderate. Gold confirmed its “Baby Blues” (see Market Trends) dropping below their key +80% level; priced now at 1976, we can see 1946 trading near-term, well within the context of the support zone described in the current edition of The Gold Update. By Market Rhythms, the most consistent on a 10-test basis is the Euro’s daily Moneyflow which has been near or at the top of all 405 studies now for some time; on a 24-test basis, both the Bond’s 15mn Parabolics and Moneyflow studies top the list, along with the Spoo’s 15min Parabolics. The Econ Baro’s rather “un-busy” week looks to September’s Trade Deficit and Consumer Credit.
06 November 2023 – 08:33 Central Euro Time
The BEGOS Markets’ volatility is light-to-moderate as the new week unfolds. At present, Copper is above its Neutral Zone for today, whilst Gold is below same. The Gold Update anticipates a typical post-geopolitical price pullback is nigh; indeed at Market Trends, Gold’s “Baby Blues” are in real-time slipping below their key +80% axis, (as have Silver’s already so done); confirmation of the “Baby Blues” settling below that level generally leads to lower prices near-term; too, Gold by Market Values is (in real-time) +106 points above its smooth valuation line. Despite all the excitement over the S&P’s recent rally, price has merely returned to where ’twas three weeks ago, the P/E ratio accelerating last week now to 40.9x as Q3 Earnings Season remains rather average at best; (’twas 39.0x those three weeks ago). Nothing is due today for the Econ Baro as it faces a fairly light load this week with just six metrics due through Friday.
The Gold Update: No. 729 – (04 November 2023) – “Gold’s Post-Geopolitical Pullback”
The Gold Update by Mark Mead Baillie — 729th Edition — Monte-Carlo — 04 November 2023 (published each Saturday) — www.deMeadville.com
“Gold’s Post-Geopolitical Pullback“
From our purview, Gold appears on the perch of a downside lurch: a classic post-geopolitical pullback.
“Unless like you’ve said that maybe ‘it is different this time’, right mmb?”
Indeed, Squire, ‘twould be wonderful if Gold of late has been on the march as the world awakens to its real wealth trait versus that of worthless currencies. But obviously Gold’s +10.7% climb from 06 October (low 1824) to 27 October (high 2020) was overwhelmingly induced by the Mid-East mayhem.
‘Tis terrible such tragedy has brought focus to Gold. Yet within that conversation we hope arises a wider awareness of just how inexpensive Gold remains vis-à-vis currency debasement. We need only glance at the above Gold Scoreboard reflecting price having settled the week yesterday (Friday) at 2000 … however by Dollar debasement (even in accounting for Gold’s own supply increase) the yellow metal’s value today is +85% higher at 3707.
That said, as we’ve previously articulated in detail, Gold has a penchant to reverse course downward following geopolitical price spikes, the most recently notable before the Mid-East mayhem being the early stages of the RUS/UKR war in 2022: from that year’s 23 February settle price of 1911, Gold spiked +9% to as high as 2079 on 08 March only to then reverse course by -9% to 1895 come 16 March, i.e. below where ’twas at war’s outbreak; hence the heartless Gold Short then cynically saying “Nothing to see here…”
And whilst now we’re starting to sense some Mid-East geopolitical price reversal is nigh, Gold being so close to its 2089 All-Time High, perhaps renewed wealth awareness then drives the yellow metal more properly into the sky. For as Squire reminds us, maybe ’tis different his time.
By no means does this suggest making light of the Mid-East mayhem. But acceptance of it as an ongoing event has begun affecting its stance in the news cycle. Whilst still unquestionably a dire situation, we penned as follows in this past Wednesday’s Prescient Commentary: “…As Mid-East headlines fall a bit from above the fold, so too falling are the precious metals’ prices…” Moreover come Thursday in perusing Le Figaro, mention of the Mid-East didn’t appear until the seventh story in their “front page” news stack.
To be sure, fundamentally Gold is far too low; geopolitically ’tis somewhat stretched; and technically at least by BEGOS valuation ’tis presently too high. (That courtesy of the “Nothing Moves in a Straight Line Dept.”) To wit, let’s go to our year-over-year graphic of Gold vis-à-vis its smooth valuation line borne of Gold’s movement relative to those of the primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P).
The lower panel’s oscillator (Gold less valuation) tells the “too high” story, price at present better than +100 points above the smooth line. Historically (century-to-date): upon price initially exceeding +100 points above valuation, Gold’s average decline within the ensuing 21 trading days (one month) is -5.5%. Gold most recently exceeded valuation by +100 points in settling at 1993 on 20 October: solely within that “vacuum” of a -5.5% decline would bring 1890 by 20 November. Shall it so do? We think not as Gold shows structural support from 1980 down to 1922; (for you mid-support structure watchers out there, that level is 1951). Moreover as we’ll later see by Gold’s 10-day Market Profile, trading support at present ranges from 1995-1988. But here’s the one-year BEGOS valuation chart featuring Mr. Too High extolling the present extreme:
Still, by Gold’s weekly bars and parabolic trends from a year ago-to-date, Gold appears quite safe as there is plenty of room below present price to the rightmost blue dots protecting the fresh Long trend, even given a post-geopolitical downward reversal of course:
Even broadly by Gold’s daily closing price across the past dozen years, this next view exemplifies the push to break up through the otherwise still existing triple-top spanning the past four years. We thus think any near-term post-geopolitical price decline becomes a springboard to the next All-Time High:
“And don’t overlook that the weakening economic data helped Gold yesterday, mmb…”
True enough there, Squire. The recently burgeoning Economic Barometer took a bit of a whack this past week, markedly so in the October data provided by the StateSide Bureau of Labor Statistics. And generally, any hint that the Federal Reserve (its Open Market Committee as anticipated unanimously standing pat on Wednesday) may be done raising rates feeds positively into Gold.
Indeed, October’s Payroll creation was -49% slower than in September, and the Unemployment Rate ticked up whilst both the Average Work Week and Hourly Earnings ticked lower. “Oh no, say it ain’t slow…” Still, to be fair, ADP’s Employment pace was +27% over September’s: so again, ’tis who’s counting whom. Regardless, other slowings from September into October included the Conference Board’s gauge of Consumer Confidence, the Chicago Purchasing Managers Index, and the Institute for Supply Managment’s Indices for both Manufactuing and Services. Too, the pace of Construction Spending slowed from August into September. Yes, all that negativity came to be, even as on Wednesday the Wall $treet Journal headlined with “The Economy Is Great…” (albeit Europe and China seemingly are on the skids). Either way, StateSide put all its math into the Econ Baro, et voilà:
Now beyond the world of reality, the S&P 500 is going giddy! Or at least those following it are. On Monday: “The S&P gained +1.2%!” Then Tuesday: “The S&P added another +0.6%!” Wednesday: “The S&P is soaring, +1.1%!” Thursday “The S&P is straight up +1.9%!” Friday: “The S&P is all bullish, up yet again +0.9%!”
And thus for the week the S&P garnered growth of +5.9%. Cue the late, great Howard Cosell: “Looook at it GO!”
Here’s to where we saw it go: merely back to now 4358 as ’twas three weeks ago. Thus predictably, you know the next sentence. “Change is an illusion whereas price is the truth.” In other words, (’tis our turn to say): “Nothing to see here.”
In the midst of it all, ‘natch, is Q3 Earnings Season. And for the S&P 500, of the 381 constituents having so far reported, 65% have made more dough than in Q3 a year ago.
But shouldn’t they all be making more? After all, this is the S&P 500, the top-tier, best-of-the-best. And when it does not all go right, valuation is the plight. Thus our honestly-calculated “live” price/earnings ratio for the S&P went from 34.0x on Monday to 40.5x come Friday’s settle. For you WestPalmBeachers down there, that means if you buy the S&P right now, you’re willing to pay $40.50 for something than earns $1. Further, the cap-weighted dividend yield for the S&P is but 1.625%. Do not reprise “Bargain”–[The Who, ’71]. Worth reprising: the U.S. three-month T-Bill annualized yield is now 5.253%.
Then there’s Gold, which as aforementioned can rise +85% just to reach its current Dollar debasement value. (Remember: given historically such eventually happens, this is not a difficult decision). And although price may languish near-term in post-geopolitical recoil, we don’t expect it to come well off the boil, (on which is has been for nearly a month).
So to Gold’s two-panel graphic we go with the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Especially note the baby blue dots of trend consistency. Barring price imminently/rapidly rising, those “Baby Blues” shall cross beneath the key +80% axis: such has occurred twice within the past year resulting in subsequent point drops (within 21 days) of -67 and -20 respectively; and that reasonably aligns with the underlying 1980-1922 support structure noted earlier. Specific to trading support, by the Profile the 1995-1988 zone may be the first to go toward further below:
Turning to Silver, that which seems inevitable for the yellow metal has already happened for the white metal, her “Baby Blues” (at left) having penetrated below the +80% level, as graphically tweeted (@deMeadvillePro) Wednesday evening, (albeit price has yet to let go in being saved by yesterday’s slowing economic inputs). Still, as stated in Thursday’s Prescient Commentary, we can see Silver sliding down toward the 22.18 level. But first by her by her Market Profile (at right), Sister Silver’s last trading bastion of support is 22.95:
So with our expectations for Gold getting a post-geopolitical pullback — but still more broadly maintain an uptrend — we’ll wrap it up here with this from the “Is the FinMedia Really Running the Fed? Dept.” To wit:
As you all know, the FOMC per this past Wednesday’s Policy Statement unanimously voted to maintain the Bank’s FedFunds target range as 5.25%-5.50%. But did they really need to have their traditional two-day meeting? After all, we were informed the previous Friday (27 October) by Dow Jones Newswires that:
“Inflation Trends Keep Fed Rate Hikes on Pause–Underlying inflation picked up in September, government data showed, keeping the Federal Reserve on track to hold short-term interest rates steady at its next meeting.”
Therefore: why meet at all? Even as the recent inflation data we herein recounted a week ago clearly justified the Fed raising rates, the FinMedia already had decided “No no, Jerome” and that was that. (One wonders if they have to sign non-disclosure agreements. Just a passing thought…)
Regardless of who’s running the Fed show, pullback or not, don’t pass on Gold!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
03 November 2023 – 09:02 Central Euro Time
Silver is the only BEGOS Market at present outside (below) today’s Neutral Zone; session volatility is light with October’s Payrolls data in the balance. Yesterday’s +1.9% S&P 500 rise was sufficient to fully unwind the “textbook oversold” stance that had been in place since 23 October; too on Thursday, the S&P’s P/E rose from 34.7x to now 38.8x: with still some 100 Q3 earnings reports due for the S&P, fully one-third thus far have not improved their year-over-year bottom lines; (as penned in last Saturday’s edition of The Gold Update, for the S&P we’re seeing that “…bounce before the next trounce…”); and by Market Values, this bounce has lifted the Spoo up to its smooth valuation line, price back to where ’twas two weeks ago. In addition to the Econ Baro’s incoming jobs data, we’ve also October’s ISM(Svc) Index.
02 November 2023 – 09:01 Central Euro Time
Post-Fed the EuroCurrencies are getting a bid, both the Euro and Swiss Franc at present above their respective Neutral Zones for today, as is Copper; the other BEGOS Markets are within same, and volatility is light-to-moderate. Silver confirmed its “Baby Blues” (see Market Trends) moving below the key +80% level, indicative of lower prices near-term: we are eying 22.18 (current is 23.10) barring geo-political price-rise resumption. As the S&P 500 works through Q3 Earnings Season, with 318 constituents having thus far reported, 65% have bettered their bottom lines from a year ago; however more broadly, only 52% have improved. For the Econ Baro, today’s incoming metrics include the initial read of Q3 Productivity and Unit Labor Costs, plus September’s Factory Orders.
01 November 2023 – 09:00 Central Euro Time
As Mid-East headlines fall a bit from above the fold, so too falling are the precious metals’ prices: both Gold and Silver are at present below their Neutral Zones for today; the other BEGOS Markets are within same, and volatility is light with the FOMC’s Policy Statement in the balance. By Market Profiles, Gold is testing its 1989 trading support, the next such level being 1963; for Silver, its key 23.00 level is being tested. Also by Market Trends, Gold’s “Baby Blues” have started to roll over to the downside, and moreover, those for Silver (in real-time) have provisionally dropped below their +80% level suggestive of lower prices near-term. The Econ Baro looks to October’s ADP employment data and ISM Index, plus September’s Construction spending.
31 October 2023 – 08:59 Central Euro Time
The Bond is at present above its Neutral Zone for today; the balance of the BEGOS Markets are within same, and volatility is again light-to-moderate; thereto of note, whilst not (yet) a BEGOS component, the Yen has traced 235% of its EDTR (see Market Ranges for those of the BEGOS Markets) as the BOJ maintains its long-term debt rate of 0% (as opposed to going negative). StateSide, the S&P 500 yesterday gained +1.2%: however the MoneyFlow was only +0.5%, indicative of the relief rally (from the Index’s still “textbook oversold” condition) lacking substance. Going ’round the Market Values page (in real-time) for the primary BEGOS Markets, we’ve the Bond nearly +3 points “high” above its smooth valuation line, the Euro +0.016 points “high”, Gold +131 points “high”, Oil -4.89 points “low” and the Spoo -143 points “low”. The Econ Baro awaits October’s Chicago PMI and Consumer Confidence, plus Q3’s Employment Cost Index.
30 October 2023 – 09:05 Central Euro Time
The “textbook oversold” S&P 500 looks to get a boost at the open, the Spoo at present above today’s Neutral Zone; below same are both Gold and Oil, and volatility is light-to-moderate. The Gold Update reiterates the yellow metal still as “range-bound” rather than “moon-bound”: 1989 is dominant trading support by the 10-day Market Profile; we’re wary as well that by Market Values, Gold (in real-time at 2005) is +131 points above its smooth valuation line. Leading the Market Rhythms for consistency (10-test basis) is Silver with a variety of studies: its daily Parabolics, 12hr MACD, 8hr Price Oscillator, and both the 6hr Price Oscillator and Moneyflow; too, is the Euro’s daily Moneyflow. ‘Tis a busy week for the Econ Baro with 15 metrics on the table, (none due today).
The Gold Update: No. 728 – (28 October 2023) – “S&P Squirms; Gold Firms”
The Gold Update by Mark Mead Baillie — 728th Edition — Monte-Carlo — 28 October 2023 (published each Saturday) — www.deMeadville.com
“S&P Squirms; Gold Firms“
Welcome to this week’s missive featuring your favourite end-of-month graphics as we put the wraps on October, (albeit with two trading days in the balance followed by Wednesday’s EuroSide holiday). And sadly as the Mid-East mayhem continues, the safe-haven bid has further fed into the price of Gold toward settling yesterday (Friday) at 2016, the highest weekly close since 05 May.
However, per this piece’s title, as is our occasional wont we start with stocks, specifically as regards the S&P 500’s state of squirm. To wit from the “‘Tis Not About Us Dept.” you may recall that herein penned back on 22 July:
►“As we tweeted (@deMeadvillePro) last Thursday [20 July]: S&P only -0.7% today (Thu) but the MoneyFlow drain was the most for any one day since 13 Sep ’22. Suggests near-term top is in place.”
‘Course you regular website readers know the MoneyFlow is a directionally-leading characteristic of the S&P 500 which had settled this past 20 July at 4535. From whence, ’tis all gone rather wrong as depicted by the following daily graphic of the S&P’s closings year-to-date:
Indeed since that tweet, the S&P 500 has declined -9.2% (from 4535 to now 4117). However for the moment, the S&P has become “textbook oversold” such that it perhaps gets a bounce before the next trounce. That’s technically.
But fundamentally our “live” price/earnings ratio of the S&P 500 remains high in the sky at 34.6x. And to be sure, Q3 earnings season isn’t helping the situation, regardless of the FinMedia’s fawning. For example: last evening, once-revered Barron’s ran with “Why a Solid Earnings Season Isn’t Good Enough for the Stock Market”. But because we actually do the math, of 596 companies (including 226 S&P constituents) having thus far reported for Q3, just 51% have bettered Q3 of a year ago. That’s considered “Solid”?
“But 67% beat estimates, mmb…”
You know Squire had that comment ready to go. But were we ever to risk dipping a toe into the equities market, we’d desire our shareholdings to be in companies that grow the bottom line rather than shrink it. Yet such has been the illogical lean to the latter that exists in today’s Investing Age of Stoopid. Nuff said. To Gold we go.
And what better segue than to bring up the BEGOS Markets standings year-to-date, Gold having moved from fourth position just at September’s end to now first, +10.2% to this point in 2023. (Note therein the Dollar Index being +3.0% which by conventional wisdom doesn’t happen when Gold rises … except for the fact that “Gold plays no currency favourites” as you regular readers well know). ‘Course the Bond has been creamed, price -12.1% in 2023 whilst yield has risen from 3.975% at year-end 2022 to now 5.023%. As for Sister Silver lacking pace, she’s not getting the geo-political gain garnered by Gold, especially with Cousin Copper on the skids. Here’s the whole gang:
As for Gold’s weekly bars from a year ago-to-date, we’ve locked in the rightmost second blue dot of the new parabolic Long trend, the prior Long trend having failed miserably only to have then been saved by an equally poor trend (the three red dots) for the Shorts. Although we’re rah-rahing away there, should there hopefully be some resolution to the Mid-East mayhem, Gold typically would then drop like a stone. For as we opined a week ago, Gold shan’t become moon-bound until the current All-Time High (2089) is eclipsed; thus it remains for now range-bound, all as herein detailed a week ago. Either way, from Gold’s recent low just on 06 October at 1824, price has since risen to as high (yesterday) as 2020, or +10.7% in 16 trading days. Here are the weeklies:
Now let’s stay in the year ago-to-date mode in turning to Gold and its percentage track along with those of top-tier precious metals companies, wherein not all have positively fared. From the bottom up we’ve Newmont (NEM) -11%, Pan American Silver (PAAS) -9%, the Global X Silver Miners exchange-traded fund (SIL) -4%, Agnico Eagle Mines (AEM) +9%, Franco-Nevada (FNV) +10%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +16%, and Gold itself +21% from this day a year ago. What stands stark in this construct is all these equities lagging Gold! Simply look mid-chart ’round May when Gold was as high as ’tis now, but every equity itself was materially higher than now! The expression may go: “Dere’s Gold in dem dere hills!”, but dere’s real value in dem dere equities! Wow!
Meanwhile, is the StateSide economy Golden? Ehhhh, not really.
“But the Econ Baro had a good week, ehhhh mmb?”
Indeed it did Squire. In fact, of the ten incoming metrics for our Economic Barometer, eight of them improved period-over-period. However, let’s focus on two of those “improvers”. First is the first peek at Q3 Gross Domestic Product: an annualized +4.7% real growth. Impressive. However, again as we do the math: 42% of the otherwise unreported nominal +8.4% growth pace was due strictly to inflation. Unimpressive. And the so-called “Fed-favoured” Core Personal Consumption Expenditures Price Index — after increasing just +0.1% in August — leapt by +0.3% for September: annualized that’s +3.6% and the 12-month summation is +3.5%. Yes, the latter is a two-year low … but is it near the Federal Reserve’s target of +2.0%? No. Still, our best guess for Wednesday’s Open Market Committee Policy Statement is that they’ll unanimously again lie low. Heaven forbid the Fed actually be ahead of the curve. Here’s the Baro:
Let’s next go ’round the horn for all eight components that comprise the BEGOS Markets. Here we’ve their daily bars across the past 21 trading days (one month). Each market has its grey linear regression trendline, four at present rising (Euro, Swiss Franc, Gold and Silver) and four thus falling (Bond, Copper, Oil and S&P 500). ‘Course, the consistency of each trend is denoted by the “Baby Blues” which specifically for the Swiss Franc have just dipped below their +80% axis, suggestive of a cheaper Franc near-term. Is that merely coincident that the FOMC may just raise rates, in turn increasing Dollar strength? ‘Tis one of those things that makes us go “Hmmmm…”:
We’ve already alluded to the white metal not getting the geo-political bid that’s been boosting the yellow metal, the Gold/Silver ratio now 86.8x vs. its millenium-to-date average of 67.8x. Priced to that average, Silver today at 23.24 would instead be +22% higher at 29.73, (just in case yer scorin’ at home). Reflective below of Sister Silver not keeping pace is price being mid-10-Day Profile on the right whereas Gold essentially tops its stack on the left:
So with but two trading days remaining in October, here now is our stratified Gold Structure by the month across these past dozen years. As oft previously shown, now courtesy of the “Here We Go Again Dept.” we’ve Gold’s triple top which “is meant to be broken” as highlighted by the three Golden arrows. Moreover, we’ve anticipated on occasion throughout this year’s missives that Gold shall record a fresh All-Time High in 2023: obviously the momentum is there, barring a post-geo-political price retrenchment (as is the rule rather than the exception). Nonetheless, let’s cue Elvis from back in ’60 with “It’s now or never…”:
Through these 10 months we’ve emphasized the importance of doing the math to get to the truth of such critical metrics as economic inputs, p/e calculations, and so forth. And whilst nothing light can be made of the horrific Mid-East mayhem, as this past week unfolded a mathematical “challenge” shall we say “came to light” over at the United States Department of State. Hat-tip ExecutiveGov which reported: “The Department of State has issued an advisory cautioning United States citizens against travel to more than 200 countries amid rising geopolitical tensions and conflict.” ‘Course, you can see where this is going, given (hat-tip Quora) stating: “Today, there are 197 countries in the world…“ The bottom line here being: if you’re in the States, you’re sorta stuck from going anywhere, nor beyond! Best therefore not to squirm; rather stay firm and stuck in Gold!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
27 October 2023 – 09:01 Central Euro Time
The Bond is at present below its Neutral Zone for today, whilst above same are Copper, Oil and the Spoo; BEGOS Market’s volatility is mostly light. As tweeted (@deMeadvillePro) last evening, we’re finally seeing some “fear” in the Flow, the S&P 500 falling -1.2% yesterday, but its MoneyFlow regressed into S&P points was -2.4%; still, the Index for the present is “textbook oversold”, so perhaps some bounce to unwind that condition, followed then by lower levels sub-4000 (S&P at present is 4137). At Market Trends, the Swiss Franc’s “Baby Blues” have (in real-time) provisionally slipped below their +80% level, suggestive of lower prices near-term, which coincident with a Fed rate hike would further foster Dollar strength. Indeed ahead of next Wednesday’s FOMC Policy Statement, the Econ Baro’s incoming metrics for today include the “Fed-favoured” Core PCE Price Index along with the month’s Personal Income/Spending.
26 October 2023 – 09:03 Central Euro Time
At present we’ve the Metals Triumvirate higher and the EuroCurrencies lower. Notably for the second straight session (to this point), both Gold and the Dollar are gaining, (“Gold plays no currency favourites”). The Spoo continues to work lower: as we’ve (yet) to see “fear” in the S&P’s MoneyFlow, (when otherwise Flow falls at a faster rate than the Index itself), this feels mildly reminiscent of the old so-called “Gentlemen’s Crash”, although hardly has price fallen nearly to any crash proportion. These next two days have key incoming metrics for the Econ Baro ahead of next Wednesday’s FOMC Policy Statement: today we await the first peek at Q3’s GDP, along with other reports including September’s Durable Orders and Pending Home Sales.
25 October 2023 – 09:07 Central Euro Time
At present, all eight BEGOS Markets are within their respective Neutral Zones for today, and volatility is at best light. In looking at Market Rhythms on a 10-test basis, the most profitably consistent through yesterday are Silver’s 8hr Price Oscillator, 12hr MACD, 6hr Moneyflow and daily Parabolics, plus Oil’s 4hr Moneyflow, the Euro’s daily Moneyflow, and the Swiss Franc’s daily MACD. On a 24-test basis, the best is Gold’s 1hr Price Oscillator. By our S&P MoneyFlow page, we’ve still yet to detect any real fear, even as our “live” P/E (futs-adj’d) is now 36.9x. The Econ Baro gets its back-loaded week underway with September’s New Home Sales.
24 October 2023 – 09:02 Central Euro Time
The Bond, Gold and Copper are at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light, save for Copper having already traced 67% of its EDTR (see Market Ranges). By Market Values we’ve Gold in (real-time) +107 points above its smooth valuation line. In tandem with the Dollar having weakened across the past two weeks, by Market Trends the linregs for Gold, Silver, the Euro and Swiss Franc all have rotated to positive; those for the other four BEGOS components remain negative. Yet Silver is still a laggard to Gold, the G/S ratio at 86x vs. the century-to-date average of 68x: as we from time-to-time quip in The Gold Update: “Don’t forget the Silver!”
23 October 2023 – 09:24 Central Euro Time
Save for the Spoo, the other seven BEGOS Markets are in the red, all at present below their respective Neutral Zones for today; session volatility is pushing toward moderate. The Gold Update sees the yellow metal as remaining “range-bound” until the All-Time High (2089 vs. the current 1986) is eclipsed, (from which Gold then becomes “moon-bound”, ideally to its present Dollar debasement value of 3724). The Econ Baro is back-loaded this week from Wednesday on, key reports including Q3 GDP and the “Fed-favoured” Core PCE Index. And thus far, Q3 earnings by year-over-year comparison is relatively weak: mind our Earnings Season page.
The Gold Update: No. 727 – (21 October 2023) – “Gold: Range-Bound? Or Moon-Bound?”
The Gold Update by Mark Mead Baillie — 727th Edition — Monte-Carlo — 21 October 2023 (published each Saturday) — www.deMeadville.com
“Gold: Range-Bound? Or Moon-Bound?“
Across the past 23 trading days (from 20 September) Gold traded per that date’s high of 1969 down -145 points (-7.4%) to 1824 (on 06 October) from which price then ascended +185 points (+10.1%) through yesterday (Friday) to as high as 2009 in settling out the week at 1993.
Further from the aptly-named “Short Memories Dept.” ’twas funny how the FinMedia and friends just two weeks ago were pronouncing the end of Gold as a viable source of wealth: now ‘twould seem they can’t get enough of it.
Moreover as suggested in last week’s missive, for Gold’s weekly parabolic Short trend ’twas “Three strikes and yer out!”, as provisionally penned in Thursday’s Prescient Commentary. And with the week having ended, that trend is now confirmed as Long per the fresh encircled blue dot:
So: is Gold remaining range-bound? Or is it finally moon-bound? Let’s start with the former.
For the bazillionth time we postulate that “change is an illusion whereas price is the truth”. Whilst the low-information, short-attention span, instant gratification crowd have recently been yanked to and fro through Gold’s plunge before its “Going to a Go-Go”–[Miracles, ’65], let’s focus on price, the truth to know. To wit:
Today’s 1993 price also traded during 34 of the prior 168 weeks going all the way back to that ending 31 July 2020. And as anyone who is paying attention knows, Gold’s infamous triple top (2089/2079/2085) has yet to be broken, (which they are meant to so do). Thus until the next All-Time High is achieved, price remains range-bound, for 1993 today ain’t anything over which to bray “Olé!” Here is price (i.e. “truth”) via the monthly candles from 2020-to-date, denoting the triple-top:
But what has not yet happened — and may not happen — is the usual Gold post-geo-political price spike decline. As herein penned a week ago: “…(to risk a terribly overused phrase) perhaps ‘it’s different this time’…” With reference to the above-labeled “Mid-East Mayhem”, two brutal weeks have passed since the Hamas/Israël incursion, Gold having initially spiked as anticipated. But given the typical historical time pattern of prior geo-political price spikes, now two full weeks hence, Gold has been void of retrenchment. The most recent prior example was early on in the RUS/UKR war, Gold twice spiking in 2022 on both 24 February and 08 March … only to trade beneath the initial spike as swiftly as 16 March, even as the war worsened. Not this time however as quite a number of bad actors fight for center stage in the “Who’s backing whom?” phase.
Recall too our citing Gold vis-à-vis its smooth valuation line per both the website’s Market Values and Gold pages. Just prior to the Mid-East mayhem, price already was better than -115 points below valuation: now ’tis +107 points above same per our next graphic. (Note: the valuation line compares Gold’s movement relative to those of the other primary Markets that comprise BEGOS, i.e. the Bond / Euro / Gold / Oil / S&P). Yet should Gold not materially retract — and instead its All-Time High of 2089 be eclipsed — then ’twill be fair to say Gold is moon-bound:
“So how high then is the moon, mmb?“
Squire rhetorically knows the answer to his softball question, (thanks mate!). Clearly moon-bound for Gold is to match its true Dollar debasement level, presently per the opening Gold Scoreboard at 3724. To be sure, such journeys can seemingly take forever: on 09 March 2012 that debasement level reached 2089; but such All-Time High for Gold was not achieved until better than eight years later on 07 August 2020. As valued charter reader THR oft quips “Gold will make you old”, but ‘twould be folly not to anticipate 3724 … and beyond! Or in the words of the Great Gleason: “To the moon, Alice!”
As to the destination of the economy, net-net ’twasn’t a nice week of incoming metrics for the Econ Baro. Some were improved, notably September’s Housing Starts and Industrial Production/Capacity Utilization. Conversely, October’s National Association of Home Builders Index weakened as did the NY State Empire Index; the pace of September’s Retail Sales slowed as did that for both Building Permits and Existing Home Sales; the Conference Board’s (lagging) set of Leading Indicators turned even more negative; and Business Inventories for August backed up. Nothing is easy. Here’s the Baro:
Neither is it easy for the S&P, given both the geo-political climate and the Index’s ongoing overvaluation, our “live” price/earnings ratio settling the week at 36.2x. And speaking of earnings, (or lack thereof), have you been following their Q3 season? Specific to the S&P 500, 68 constituents have thus far reported: just 34 (50%) of those bettered their bottom lines from a year ago. More broadly? ‘Tis worse: with 134 companies’ (of some 1800 to eventually report) results in hand, just 44% have bettered. Too as tweeted (@deMeadvillePro) this past Thursday, “Flow leads dough…” per our S&P MoneyFlow page depicting a more negative stance.
And again from the “They’re Just Figuring This Out Now? Dept.”, iconic ol’ Morgan Stanley finds U.S. Treasuries attractive at 5%. (‘Course you readers of The Gold Update have known for months that the T-Bill’s been yielding at least 5% since 18 April.) Oooh and this quick update: the market capitalization of the S&P 500 per Friday’s settle is now down to $36.9T; but the liquid money supply (“M2”) of the U.S. is only $20.8T. It doesn’t add up very well, does it? No it doesn’t.
But ’tis adding up quite nicely for Gold as we next go to its two-panel display of daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. The baby blue dots of trend consistency have only just crossed above their 0% axis, suggesting the uptrend has more “Room to Move”–[Mayall, ’69] in spite of near-term technicals being somewhat stretched. Thus given some natural price retraction, we can see the key underlying support levels as labeled in the Profile:
With the like drill for Silver, her “Baby Blues” (below left) are just on the threshold of turning positive whilst she exhibits a belly of Profile support (below right) in the upper 22s. (More broadly, Silver’s weekly parabolic trend still is Short, whereas aforeshown Gold’s is now Long). Nonetheless, Sister Silver is gaining that precious metal bid:
To sum up, ’twas a great week for Gold and a poor one both for equities and the StateSide Economic Barometer, the latter in the new week looking to the first peek of Q3 Gross Domestic Product and that “Fed-favoured” Core Personal Consumption Expenditures metric for September.
And with geo-politics continuing to dominate the airwaves whilst the lousy Q3 Earnings Season unfolds, one ought expect more of the same at least near-term, albeit liquid markets don’t move in a straight line. But the “Baby Blues” at the website’s Market Trends page tend to keep one on the correct side of it all.
Indeed all-in-all — at least until Gold posts a new All-Time High above 2089 — we still see price as more range-bound than moon-bound. But again, as Jackie points out to Alice:
Or as we time-to-time say: “Tick tick tick goes the clock clock clock…” Got your precious metals?
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
20 October 2023 – 08:53 Central Euro Time
Per our tweet (@deMeadvillePro) last evening, “Flow leads dough…” as is now being depicted on the MoneyFlow page for the S&P 500; too, our notion of the Spoo attaining the 4500 level at least near-term (based on the upside reversal at Market Trends of the “Baby Blues” two weeks ago) is now nixed, even as the Spoo’s 21-day linreg trend has just turned positive; again, 4431 nears to clear for a run to 4500. Today at present, the Bond is above its Neutral Zone; both the Euro and Copper are below same, and BEGOS Markets volatility is mostly light, within the context of Market Ranges (EDTRs) having expanded. Gold’s EDTR is now 26 points, meaning that 2000+ is within range today; presently 1987, Gold’s nearest dominant Market Profile supporter is 1963. The Econ Baro is scheduled to close its week with September’s Treasury Budget.
19 October 2023 – 09:04 Central Euro Time
Narrow ranges thus far characterize the BEGOS Markets: only the Bond is at present outside (below) its Neutral Zone for today, and volatility is notably light, the Bond with the widest EDTR tracing to this point (see Market Ranges) at just 37%. Gold’s weekly parabolic trend has provisionally flipped from Short to Long, (confirmation to come upon Friday’s settle); price, which just two weeks ago was better than -100 points below its smooth valuation line (see Market Ranges) is now (in real-time) 71 points above same. As for the Spoo, should the recent 4431 high not be eclipsed, our 4500 notion likely gets nixed. Incoming metrics for the Econ Baro include October’s Philly Fed Index plus September’s Existing Home Sales and Leading (i.e. “lagging”) Indicators.
18 October 2023 – 10:53 Central Euro Time
The Metals Triumvirate and Oil are the BEGOS Markets’ leaders thus far, those four all at present above today’s Neutral Zones; below same is the Bond, and volatility is moderate. On a $/cac basis, Silver is the broadest mover, at present +$1725. At Market Trends, the Spoo’s “Baby Blues” appear poised to break above their 0% axis by week’s end: again from the week prior we’ve ruminated about the Spoo making a go for 4500, (the S&P’s vastly high “live” P/E of 38.3x notwithstanding). And per the Euro’s page, its best Market Rhythm — the daily MoneyFlow study — triggered a Long signal per yesterday’s open (1.05885). For the Econ Baro we’ve September’s Housing Starts/Permits; then late in the session comes the Fed’s Tan Tome for October.
17 October 2023 – 09:03 Central Euro Time
‘Tis red across the board for the BEGOS Markets, notably with the Bond, Euro, Gold, Copper and Oil all at present below their respective Neutral Zones for today; volatility however is mostly light. On a $/cac change basis, Copper’s is the most at the moment, -$1,012. At Market Trends, whilst all eight components are still in negative linreg trends, all their “Baby Blues” are in ascent, meaning the trends’ downside consistencies are waning. By the Spoo’s Market Profile the most dominant resistor above present price (4394) is 4401. And Oil’s cac volume is rolling from November into December. For the Econ Baro we await October’s NAHB Housing Index, September’s Retail Sales and IndProd/CapUtil, and August’s Business Inventories.
16 October 2023 – 09:12 Central Euro Time
We begin the week with both the Euro and Copper at present above today’s Neutral Zones; below same are the Bond, Gold and Silver. With respect to the yellow metal, note in the current edition of The Gold Update the “tease” as regards Friday’s “Hobson Close”; should Gold further dip, we see structural support in the 1898-1881 zone; as well, 1885 is a key Market Profile support apex for Gold. BEGOS Markets volatility is light-to-moderate. The Econ Baro’s busy week of 14 incoming metrics starts today with October’s NY State Empire Index. And mind our Earnings Season page with reports for Q3 picking up the pace as the week unfolds.
The Gold Update: No. 726 – (14 October 2023) – “Awakening to Gold”
The Gold Update by Mark Mead Baillie — 726th Edition — Monte-Carlo — 14 October 2023 (published each Saturday) — www.deMeadville.com
“Awakening to Gold“
Now before we all get too excited out there about Gold having yesterday (Friday) posted its largest one-day net gain since 17 March by both percentage +3.4% and points +64, let us acknowledge that price is right where ’twas a mere 14 trading days ago on 26 September. So in settling out the week at 1946, for you “three-week” price charters, Gold for said stint is essentially “unch”. Or as we oft quip: change is an illusion whereas price is the truth. And at 1946: truth = cheap.
Still, yesterday’s robust move was gratefully appreciated. Save also for 17 March, Gold hadn’t had such a single session up move since a smattering of days when the 2020 COVID scare got underway (from 23 March – 09 April that year), prior to which was a +4.7% day’s net gain on 24 June 2016. Too, in measuring the Gold futures by MoneyFlow (change x volume), yesterday’s inflow ranked third-best year-to-date. (And further for those of you curiously scoring at home, yesterday’s +3.4% net Gold gain ranks 27th-best century-to-date, the most being +9.0% away back on 17 September 2008 upon ol’ Black Swanee’s song about everything else going wrong).
Impressively however, as we’ve pointed out over these many years, Gold — unlike other major markets –has a tendency to rise faster than it falls. To wit: most recently from high-to-low, price dropped -112 points in nine trading days (26 September – 06 October). Yet from just Friday a week ago – i.e. six trading days — +123 points was price’s gain: don’t miss the Gold Train!
‘Course by the benefits of debasement, foresight, and a new geo-political catalyst, Gold this past week “got off the schneid” in fast fashion. To quickly encapsulate these three Gold positives:
► By debasement Gold remains ridiculously undervalued vis-à-vis the above Scoreboard; priced now at “the market is never wrong” level of 1946, ’tis nonetheless -48% below the Dollar debasement value of 3725, which given historical price-to-value reversion shall eventually be reached.
► By foresight as herein starkly charted a week ago, Gold vis-à-vis its smooth valuation line (per the website’s Market Values page) was “nearly -100 points ‘low’, historically an extreme that begs for reversion up to the mean”. Moreover for four consecutive sessions (02-05 October) Gold settled at least -100 points below said line. Now ’tis +39 points above it … reversion swiftly wins again.
► By geo-politics came the incursion into Israël whilst we were putting pen to paper at this time a week ago. Obviously then followed — as anticipated by a material amount — Gold gapping higher at Sunday night’s open whilst the S&P futures gapped lower.
“But in the past, mmb, you’ve gone on about how geo-political price spikes then come all the way back down…“
We’ve detailed in prior missives examples of that typically being Gold’s case, Squire. But (to risk a terribly overused phrase) perhaps “it’s different this time”, especially per the just cited realities of debasement and foresight, the wake-up catalyst now being geo-political.
The point is: Gold has been priced way too low for way too long, pure and simple. And as the Investing Age of Stoopid seemingly unravels, those paying attention may finally be awakening to Gold.
“And you read what Grantham said, eh mmb?“
Our good man Squire really is on a roll today. Yes, we swerved past a Bloomy piece which teased “Jeremy Grantham Says No One Should Invest in the US“ (as culled from a FinMedia television interview). And admittedly, we chuckled over the interviewee’s referring to the small-cap Russell 2000 as being replete with horribly high-debt “zombie” stocks.
But neither let us rule out the ongoing overvaluation of the large-cap S&P 500. That “mightiest of the mighty” index still maintains many sky-high silly valuations, the “live” cap-weighted price/earnings ratio settling the week at 38.2x; (recall 10 years ago it being -33% lower at a still expensive 25.4x … scary).
And do you remember how overvalued shares fared notably in ’87, ’02, and ’09? To quote Jonathan Winters in the role of Lennie Pike: “I hope you turn away … that you just look the other way” –[It’s a Mad, Mad, Mad, Mad World; United Artists, ’63]. For per yesterday’s settles, 101 of the 503 S&P constituents now have P/Es of 40.0x or more. Repeat: scary. As for “fear”? Yesterday the S&P netted a loss of -0.5% … but the MoneyFlow regressed into S&P points dropped -1.0%. And as you website followers know, Flow leads dough. Repeat: “fear”.
‘Course as is Gold’s wont, it can benefit from the “fear” trade. Oh to be sure, Gold’s weekly parabolic trend remains Short (as does that for Silver). But in turning to Gold’s weekly bars from one year ago-to-date, such Short trend had a big chomp taken out of it per the rightmost bar. As for the flip-to-Long level for the enusing week being 1968, ’tis well within Gold’s current “expected weekly trading range”, now 48 points. Three strikes and out for the red-dotted Short trend? Here’s the graphic:
Too, especially for those of you who’ve been with us across better than a decade, there’s the ol’ 300-day moving average for Gold. Historically it typically marked significant support or resistance for Gold, although much of that “reliance” has since waned. Still, if only by coincidence, in this next graphic of Gold’s daily closes for some dozen years, that average (in blue) shows as support per the rightmost price bounce. And as usual, the “triple top” remains there for the taking should the investing world ever awaken to reality:
As to the reality of the StateSide economy, its “yo-yo-ing” has built in a somewhat positive slant from about mid-point (this past April)-to-date in our year-over-year view of the Economic Barometer:
Tell-tale signs of ongoing “Dollar strength” influenced the Baro’s incoming metrics as the week unfolded. September’s Import Prices shrank whilst those for Export increased. And inflation at both the wholesale and retail levels came in bit hotter than consensus expectation. As for the consumer, The University of Michigan “Go Blue!” Sentiment Survey took quite a hit in declining from September’s 68.1 reading to only 63.0 for October, the third-largest monthly decline in the past 16 months. Indeed, oh that “Dollar strength”, the “Dixie” recording its 11th up week of the past 13. Yet if you query: “How then can Gold have also gone up?” Re-read last week’s piece.
Reading below into Gold’s two-panel graphic we see the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. Note that Gold’s “Baby Blues” of trend consistency are on the up move: because they still are below the 0% axis, the trend mathematically remains down, however ’tis rotating toward turning positive. And because Gold settled on its high price for the past two weeks, the present “white bar” is barely discernable at the top of the stack. (Are those the Gold Shorts we hear yelling “Hobson close! Hobson close!”? Always a pleasure to have them take the other side of the trade):
Next we’ve the like display for Silver, her daily bars at left and Profile at right. Clearly her recent rally whilst robust visually appears a bit dwarfed vis-à-vis that for Gold. Mais au contraire as Gold’s recent low-to-high gain is +6.7% whereas that for Silver is +10.3%. Thus be thee not discouraged, Sister Silver!
We now close on a memorializing note for James E. Sinclair.
We were honoured to meet “Mr. Gold” in San Francisco some nine years ago on 15 November 2014. Long-time readers of The Gold Update know ’tis infrequent that we read the fine writings of other Gold analysts (so as not to bias our own thinking and interpretation of data). Jim was an exception with whom we occasionally corresponded, and he’d always reply. And his thorough understanding of The Gold Story was rarely paralleled. Thanks for the awakening, Jim.
In his memory, let’s indeed add a word to this moving ’73 Pink Floyd piece, his now resting at “The Great GOLD Gig in the Sky”:
Cheers to Jim!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
13 October 2023 – 08:58 Central Euro Time
The Bond, Gold and Silver are at present above today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is quite light. Even as equities struggled yesterday, there remains no “fear” for the S&P 500 per our cap-weighted MoneyFlow page. Further per our Market Trends page, the Spoo’s “Baby Blues” in real-time continue their ascent; our best Market Rhythm at present for the Spoo on a 10-test basis is its 6hr Moneyflow study; on a 24-test basis ’tis the daily Price Oscillator study. To wrap the week for the Econ Baro, September’s Treasury Budget has been moved to next week; however today we’ve the month’s Ex/Im Prices, plus October’s UofM Sentiment Survey.
12 October 2023 – 08:59 Central Euro Time
Money is moving into the BEGOS Markets this morning: at present, the Bond, Euro, Swiss Franc, Gold, Silver and Copper all are above today’s Neutral Zones; otherwise, Oil and the Spoo are within same, and volatility is again light. At Market Trends, even as all eight components remain in linreg downtrends, respective “Baby Blues” are rising, (save those for Oil). Gold has significantly firmed on the geo-political bid, prior to which price was better than -100 points below its smooth valuation line (see Market Values): that reading in now real-time is just -19 points; whilst as noted the yellow metal tends to decline following geo-political price spikes, price already was overly low pre-event. More in this coming Saturday edition of The Gold Update. The Econ Baro awaits metrics including September’s CPI and the Treasury Budget (originally listed for yesterday).
11 October 2023 – 09:12 Central Euro Time
Copper is the sole BEGOS Market at present outside (above) its Neutral Zone; session volatility is light. As tweeted (@deMeadvillePro) last night, the Spoo did confirm its “Baby Blues” (see Market Trends) moving above the key -80% axis, inferring high price levels: structurally there appears room to move near-term to 4500 (present price is 4393); ‘course as we regularly cite, fundamentally the S&P remains significantly overvalued, its “live” P/E at 38.8x. Gold has (yet) not returned to its pre-Middle East event level of the 1830s: typically such price retrenchments occur following geo-political price-spikes; current price is 1877. The Econ Baro looks to September’s PPI and the month’s Treasury Budget; late in the session we’ve the minutes from the FOMC’s 19-20 September meeting.
10 October 2023 – 09:08 Central Euro Time
A whirl ’round day yesterday for the S&P, arguably getting a safe-haven bid given events in the Middle East; as well the S&P is now “textbook oversold” through 13 days and the MoneyFlow differential is still positive, indicative of “fear” remaining at bay; moreover at Market Trends, the Spoo’s “Baby Blues” are in real-time moving above their -80% level, indicative of further price rise near-term. For today at present, Gold, Copper and Oil are below their respective Neutral Zones for today; the balance of the BEGOS Markets are within same, and volatility is light-to-moderate. And for the Econ Baro we await August’s Wholesale Inventories.
09 October 2023 – 08:58 Central Euro Time
Expectedly, given the incursion in the Middle East, Gold gapped notably higher at last night’s open and the Spoo notably lower. The latter along along with the Euro are at present below today’s Neutral Zones, whilst above same are the Bond, Metals Triumvirate and Oil; BEGOS Markets’ volatility is moderate. The Gold Update looks to 1800 as support: whilst the geo-political event has given Gold the typical boost, history reminds us that such spikes tend to reverse themselves as the ensuing days unfold; still (in real-time) Gold now at 1865 is -66 points below its smooth valuation line (see Market Values). And of course broadly, Gold remains vastly undervalued by currency debasement and the S&P 500 vastly overvalued by unsupportive earnings.
The Gold Update: No. 725 – (07 October 2023) – “Gold Further Tanks; to the Dollar No Thanks”
The Gold Update by Mark Mead Baillie — 725th Edition — Monte-Carlo — 07 October 2023 (published each Saturday) — www.deMeadville.com
“Gold Further Tanks; to the Dollar No Thanks“
“Well ya know, Gold is down because of Dollar strength…”
Oh good grief are we sick of hearing that. Honest to Pete, knee-jerk “conventional wisdom” is hardly our investing indicator of choice, especially when it comes to owning Gold, which at this writing — in having settled out the week yesterday (Friday) at 1847 — is as cheap as can be. More on that as we move forward.
But let’s begin by (again) debunking the notion of “Dollar strength”. ‘Tis axiomatic that which is worth zero (“0”) — regardless of it being acceptably transacted in exchange for other currencies, goods and services — is at any price still worth “0”. Further to our point — given we oft quip Gold plays no currency favourites — let’s point (►) to past periods (sampled from three-to-four months in duration) of positive correlative strength for both the Dollar and … oh say it ain’t so … Gold! To wit:
► Just after the turn of the century (which for those of you who can do math began with 2001), the Dollar Index (“Dixie”) from 19 Feb ’01 to 21 May ’01 recorded a net gain of +6%: Gold’s net gain for the identical stint was also +6%.
► How about in 2005: from 29 Aug through 28 Nov, Dixie’s net was +7% and Gold’s was +12%.
► Then there were the FinCrisis throes of 2008: from 08 Sep through 08 Dec both Dixie and Gold netted gains of +7%. Are we having fun yet?
► Check out 2010: from 01 Feb through 14 June whilst Dixie gained +7%, Gold nearly tripled same with +20%. They say: “No Way!” … Way.
► Ah, then came infamous 2011: from 27 Jun through 26 Sep Dixie’s net change was +6% … Gold’s was +9%.
► Three years hence from 27 Oct ’14 through 02 Feb ’15 Dixie netted +9% and Gold a still respectable +5%.
► And similarly just last year in 2022 from 10 Jan through 25 Apr, Dixie gain a net +8% and Gold again a net +5%.
Thus to paraphrase the Johnny Paycheck tune from back in ’77, you can “Take this Dollar strength and shove it.”
Regardless, as we’ve emphasized, of late ’tis hardly just Gold being pinned down by the Dollar. The primary BEGOS Markets (Bond / Euro / Gold / Oil / Spoo) have all — save somewhat for Oil until just these last few days — been on the skids. The following picture depicts their percentage tracks from some three-months ago-to-date along with the green-dashed Dixie:
And amongst the selling, Gold was shoved lower for the third straight week, the 1824 low being revisited for the first time since 09 March. So per the price tracks in the opening Gold Scoreboard, Gold today (1847) is lower than ’twas on this day three years ago (1936), even as the U.S money supply (“M2” basis) is +33% higher now than then ($15.6T –> $20.8T). But the market never being wrong, Gold completed its second week of the fresh parabolic Short trend, here per our view of the weekly bars from one year ago-to-date:
Also as anticipated, Silver’s weekly parabolic trend is now Short.
“But are you resolved to ‘how low is low’ for Gold, mmb?“
A side-stepped question that duly warrants a studied answer, Squire. That red line in the above graphic is precisely at the 1800 level, (one ought think another “planned” loading up point for the sovereigns). As for an analysis in the vacuum of averaging: Gold’s average points drop for the past 10 weekly parabolic Short trends from each confirmation is -101 points. Therefore from the “confirmation price” of 1865 two weeks ago, a -101 downside would bring 1764. Indeed the mid-to-upper 1700s were extremely price congestive throughout much of 2021. Yet just this past March (left end of the red line) found Gold buyers coming to the fore. Should that repeat — especially upon recognition that “Dollar strength” can be beat — this new Short trend can well end as short-lived.
“But even if the Fed raises again, mmb?“
Squire, ’tis starting to look like another Federal Open Market Committee vote to boost the cost of FedFunds come 01 November. But again in expunging “conventional wisdom”, you along with many of our long-time valued readers already know Gold can get on the go even in times of rising interest rates, (see 2004-2006). And as we regularly say, with the Gold Scoreboard valuation of 3725 today, price at 1847 is ever so cheap.
More to the point per the website’s Gold page, here next is the graphic of Gold’s daily closes from one year ago-to-date astride the smooth valuation line (born of price changes relative to those of the primary BEGOS Markets: Bond / Euro / Gold / Oil / Spoo). The lower panel is the difference between price and valuation, which per yesterday’s settle is nearly -100 points “low”, historically an extreme that begs for reversion up to the mean. And now we learn of an incursion in Israël which can have geo-political price ramifications for Gold. Either way, have we mentioned that Gold is cheap? Indeed:
Not appearing so cheap of late is the thrust of the StateSide Economic Barometer. In spite of the hand-wringing over a returning recession, the Econ Baro has been marching right up the road, albeit such apparent “growth” includes “inflated” data. Recall on 28 September the final read of Q2 Gross Domestic Product incorporated a chain deflator implying 44.7% of growth was inflated vs. real. Still, some fairly bold metrics boosted the Baro this past week, notably Labor’s Payrolls numbers for September (+48% over August), although ADP’s Employment data was 180° out-of-phase (-51%). Too, August’s Factory Orders whirled ’round from shrinkage to expansion. But on a scary note: Consumer Credit — a key economic driver — actually shrank in August for the first time since the summer of 2020 when all were cowering under COVID. (Prior to that, Consumer Credit hadn’t shrunk on a monthly basis since its July reading in 2012). Are FedChair Powell and his trusty FOMC able to sleep? Raise ’em and weep? Here’s the Baro:
Specific to the markets, let’s now go ’round the horn for all eight BEGOS components. Typically we reserve this view solely for our month-end editions of The Gold Update. But with “Oh that Dollar strength!” ruling the roost, here we’ve the exceptional picture of each market’s grey diagonal trendline heading down across the past 21 trading days (one month) along with their respective baby blue dots of day-to-day trend consistency. Indeed as we tweeted (@deMeadvillePro) this past Thursday with respect to Oil having already issued a Sell signal in the prior week, “Follow the blues, (you know the drill…)”:
And to specifically drill down into the precious metals, follows are their respective 10-day Market Profiles for Gold on the left and for Silver on the right. Despite the recent selling, both metals at present exhibit trading support below current price (white bar), notably for Gold as labeled at 1834 and for Sister Silver in her 21.70-21.25 zone:
With Q3 Earnings Season underway and 10 metrics due for the Econ Baro in the new week, let’s wrap here with two notes from deMeadville’s vast array of departments.
First from the “Core No More? Dept.” we perused an interesting essay (hat-tip FI’s Todd Bliman) emphasing that the Federal Reserve evaluates inflation and the economy well beyond the oft-mentioned Core Personal Consumption Expenditures Price Index. We (indeed one would assume all of us) agree, albeit the Core PCE month-in and month-out seems very closely aligned with the Fed’s 2% inflation goal. Nevertheless, as hard-wired ad nauseum throughout the FOMC’s Policy Statements, they “…will continue to monitor the implications of incoming information for the economic outlook…” and oh baby as payrolls grow but consumers lie low, which way shall the Fed go? The next Core PCE reading is three trading days prior to the next FOMC vote.
Second from the “They’re Just Figuring This Out Now? Dept.” (the popularity of which is growing by leaps and bounds), Dow Jones Newswires discovered this past week that “Rising Interest Rates Mean Deficits Finally Matter“. Otherwise, who knew, right? Moreover, does this (finally) threaten the ongoing Investing Age of Stoopid? Stay tuned…
As to ongoing so-called “Dollar strength” ultimately getting shoved, we reprise Daryl Cagle’s oldie-but-goodie graphic given that ultimately 0 = 0: So do stay with Gold and Silver!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
06 October 2023 – 08:58 Central Euro Time
The Eurocurrencies are the weak link thus far with both the Euro and Swiss Franc below today’s Neutral Zones; the balance of the BEGOS Markets are within same, and volatility is light with September’s Payrolls data due (12:30 GMT). Oil having come off, all eight BEGOS components are now in negative 21-day linear regression downtrends. Specific to the S&P 500, there remains no sight of “fear” given the positive differentials of Index change vs. flow per our MoneyFlow page; too, by “textbook technicals”, the S&P stands as “oversold” through 11 trading days; ‘course, the big fundamental bug-a-boo remains the “live” P/E now 37.6 (futs adj’d real-time). In addition to Labor’s jobs data, the Econ Baro also awaits August’s Consumer Credit late in the sessdion.
05 October 2023 – 09:01 Central Euro Time
With EDTRS (see Market Ranges) having ramped up of late, the BEGOS Markets are notably subdued this morning, all eight components at present within their respective Neutral Zones for today; volatility is light-to-moderate. As tweeted (@deMeadvillePro) last evening, Oil (the Market Trends sell signal via the “Baby Blues” having come 7 trading sessions ago on 26 September, albeit price initially zooming higher still into the 95s) has finally come off down into the 84s; price has thus finally returned to its smooth valuation line (see Market Values). As for Gold, currently 1836, ’tis (in real-time) -107 points below its smooth valuation line. Today’s incoming metrics for the Econ Baro include August’s Trade Deficit.
04 October 2023 – 09:05 Central Euro Time
Red returns to the BEGOS Markets this morning for all eight components, only three of which are not at present below their Neutral Zones (Euro, Silver, Oil). Session volatility is again moderate to this time of day, and indeed by Market Ranges, EDTRs are (finally) turning upward toward more relatively “normal” levels across the last 12 months. By Market Rhythms: on a 10-test basis the Euro’s daily Moneyflow study is our most consistent, followed by Silver’s 12hr MACD and then again the Euro’s 4hr Parabolics; on a 24-test basis, the best of the bunch is Copper’s 1hr Parabolics. Mind our Earnings Season page as that for Q3 is underway. And for the Econ Baro today we’ve September’s ADP Employment along with the ISM(Svc) Index, plus August’s Factory Orders.
03 October 2023 – 09:02 Central Euro Time
The gutting of Gold (1839) continues, the Dollar Index approaching its 107 handle, a level not seen since November 2021. However, Gold by Market Values is (in real-time) -115 points below its smooth valuation line, a fairly historical extreme: such prior deviation (per 01 July 2021) then found Gold move up by better than +200 points into the start of the 2022 RUS/UKR conflict, even as the Dollar strengthened across the same stint; (more on that in next Saturday’s edition of The Gold Update). At present, Gold is below today’s Neutral Zone, as are the Swiss Franc and Copper; none of the other BEGOS Markets are above same, and volatility is again moderate. At Market Trends, Oil’s “Baby Blues” are (in real-time) accelerating their drop: with the two recent daily lows in the 88s having been breached, the next structural low is 85.49. The Econ Baro is quiet today ahead of 10 metrics due tomorrow through Friday. And Q3 Earnings Season begins this morning.
02 October 2023 – 09:07 Central Euro Time
The BEGOS Markets begin October on a mixed note. At present, we’ve the Bond, Gold and Silver below today’s Neutral Zones, whilst above same are the Swiss Franc, Copper and the Spoo; volatility is moderate. The Gold Update confirms the yellow metal’s weekly parabolic trend as having flipped to Short; and as anticiapted, such trend for Silver today has provisionally flipped as well to Short. Oil continues to flirt with its 90 handle: at Market Trends, Oil’s “Baby Blues” are slowly slipping lower; and at Market Values in real-time, Oil is +7.36 points above its smooth valuation line; price has not been below such line since 03 July, (price then 69.53 vs. today’s 91.24). The Econ Baro awaits September’s ISM(Mfg) Index and August’s Construction Spending.
The Gold Update: No. 724 – (30 September 2023) – “Gold Guillotiné !”
The Gold Update by Mark Mead Baillie — 724th Edition — Monte-Carlo — 30 September 2023 (published each Saturday) — www.deMeadville.com
“Gold Guillotiné !“
We start by paraphrasing this oft-misquoted line from American TV icon Desi Arnaz: “mmb, you’ve got some ‘splaining to do!”, even as our two previous missives entitled Gold as being “Technically Torturous” and “The Torture Continues”. Following which — at precisely 13:40 GMT this past Wednesday — Gold succumbed to the guillotine in penetrating the week’s parabolic protection at 1905.2, provisionally flipping such trend from Long to Short, in turn confirming so with price settling yesterday (Friday) at 1865. In fact, you may recall that such guillotining was presciently previewed in our prior missive’s graphic of Gold’s weekly bars. And so it came to pass that 28 weeks of net gain for Gold are now gone, (albeit such trend for Silver is still barely Long, but likely shan’t be come Monday’s open). Here’s the updated dual panel graphic:
“That’s a gruesome graphic there, mmb…”
Sadly so, Squire, wherein we see at left Gold’s red-encircled parabolic dot confirming such trend having swung from Long to Short, whilst at right Silver’s Long trend is but 8¢ from the end, the guillotine in top gear as the Dollar Revolution continues.
In reaching this past week to as high as 106.540, ’twas the best level for the Dollar Index since 30 November of a year ago, (Gold settling that day at 1783 … but let’s not go there). Today at 105.870, the plucky buck is but -18% below its historical high of 129.050 upon its futures’ inception away back on 20 November 1985. And were that gap to close, U.S. interest rates shall be far higher still, the FedFunds rate back then being 8.05% versus today’s 5.50%.
Yet that noted, just yesterday the Bureau of Economic Analysis reported the Federal Reserve’s favourite inflation gauge for August, the pace of the Core PCE Price Index coming in at a rather benign +0.1%, which annualized is well below the Fed’s +2.0% target. Shall the Fed’s Open Market Committee therefore vote to again “pause” come their 01 November Policy Statement?
Regardless, as depicted above, Gold’s weekly parabolic Long trend never got off the pause button, was executed, and is now Short. And recall when said Long trend began a month ago, we were looking toward a fresh All-Time High show. Instead from Gold, out went the dough. Here’s our updated table of Gold’s ten prior weekly parabolic Long trends, plus the latest’s zero result across the bottom. As Sheriff J.W. Pepper said to the elephant in “The Man with the Golden Gun” –[Eon/UA, ’74]: “Boy, you is ugly”:
Understandably, you now may well ask “So how low is low?” There we shan’t go, save for some structural support from this 1865 level down to 1813 built in early March. And whilst conventional wisdom points to “Dollar strength” as the yellow metal’s culprit, we again hearken back to a Gold truism: that it plays no currency favourites. Simply recall the 2010 six-month stint wherein from January through June the Dollar Index gained +10% and Gold +13%. Boom! It does happen.
Still since mid-year, Gold and its equities brethren have been pressured. It being month-end, here’s our year-over-year view of those elements’ percentage tracks depicting the VanEck Vectors Gold Miners exchange-traded fund (GDX) +14%, Franco-Nevada (FNV) +13%, Gold itself along with Agnico Eagle Mines (AEM) +12%, the Global X Silver Miners exchange-traded fund (SIL) +3%, Pan American Silver (PAAS) -7%, and Newmont -12% (as we know encompassing acquisition costs). But again from mid-way, this hardly is the happiest chart in the house:
Month-end also means bringing up our year-to-date standings of the BEGOS Markets. And atop the stack for the first time in deplacing the S&P 500 to second spot is Oil. Rounding out the podium is the Doggy Dollar, (although because ’tisn’t a BEGOS component, we can still say Gold is in third position). Properly the cellar dweller is the Bond as the Year of the Yield continues:
Specific to the second-place S&P 500, clearly it struggled through the oft seasonally-challenged month of September. But more importantly, are both Wall Street and the FinMedia finally waking up to valuation reality? More on that in our closing paragraph(!) As for economic reality, here’s the StateSide Econ Baro from one year ago-to-date, replete with its mega yo-yo swerves and curves:
“Yo, Joe! Which way does it go?” For this past week’s set of 12 incoming metrics, eight were worse period-over-period and one was “unch”, thus leaving just three that improved, including August growth in both Personal Income and Durable Orders. But the month’s real stinker was Home Sales, both New and those listed as Pending. And pity the poor Chicago Purchasing Managers Index: its September reading of a paltry 44.1 marks the 13th consecutive month of regional economic contraction. “Go Bears…”
Speaking of “Go” — save for Oil — going down through September was the continued direction for the balance of the BEGOS Markets, (as ’twas the case back on 12 August when we penned “Ain’t Just Gold Been Headin’ Down…”). Nearly everything gets sapped during “Dollar strength”, but again its yield is decent, the three-month U.S. T-Bill paying an annualized 5.300% per yesterday’s settle. And that’s risk-free dough, (even if DC is closed). Either way, let’s go ’round the horn for all eight BEGOS components by their daily bars from one month ago-to-date, Oil being the sole market sporting a rising trendline, albeit its baby blue dots of trend consistency are weakening as we tweeted (@deMeadvillePro) earlier in the week:
As for the precious metals’ 10-day Market Profiles, obviously we find their respective present prices (the white bars for Gold below left and for Silver below right) down in le panier de la guillotine, the yellow metal alone having lopped off some -100 points in just eight days. Within the overall Profiles, Gold’s high-to-low is -5.4% whilst that for Sister Silver is -7.3%.
Again as ’tis month– indeed quarter –end, here we’ve the stratified view of Gold’s Structure per the past dozen years-to-date, its triple-top axiomatically waiting to break:
To close, per our aforementioned tease, here we go courtesy of the “Where Have You Been These Last Four Years? Dept.”
Regular readers know — and notably so since 2019 — we’ve been constantly concerned as to the overvalued state of equites, especially the S&P 500 Index as a whole. Oft we’ve quipped that we’re in “The Investing Age of Stoopid” purely by doing the honest math to compute the S&P’s price/earnings ratio, presently 37.7x as opposed to the parroted, dumbed-down 24.5x believed by your broker, (who frankly today appears incapable of doing the math). But that’s where we are now. And as we herein have written ad nauseum through these recent years: “…earnings are not supportive of price…”
Well here it comes… READY?
This past Wednesday the lightbulb finally illuminated in the children’s writing pool over at Barron’s, headlining their webpage “above the fold in bold” with:
“The Stock Market Has a Big Problem. It’s Called Earnings.”
They’re just figuring this out now???
And yet when we view our MoneyFlow page for the S&P 500 — even during its current decline — true “fear” has yet to appear.
But what appears most appealing to us is Gold being priced today (1865) at just half its Dollar debasement value (3726) per our opening Gold Scoreboard.
Thus — precious metal guillotines and Dollar Revolution aside — in strolling along life’s path, what ought you have glowing in your vault? Gold!
Cheers!
…m…
www.TheGoldUpdate.com
www.deMeadville.com
and now on Twitter(“X”): @deMeadvillePro
29 September 2023 – 09:09 Central Euro Time
Following its fourth-consecutive down day, Gold is at present above its Neutral Zone as are Silver, Copper, the Euro and Swiss Franc; none of the other BEGOS Markets are below same, and volatility is moderate-to-robust, the white metal already having traded 108% of its EDTR (see Market Ranges). Oil, which yesterday traded its widest high-to-low range (-3.64 points) since 22 June, still finds its “Baby Blues” (see Market Trends) not having recovered their +80% level, (thus Tuesday night’s Sell signal remains intact if not over-ridden by prudent cash management): price yesterday reached to as high as 95.03 vs. the present 91.71; 90.50 continues as Market Profile support, followed somewhat structurally by the low 88s. Among today’s income metrics for the Econ Baro we’ve September’s Chi PMI, plus August’s Personal Income/Spending along with the Fed-favoured inflation gauge: the Core PCE Index.
28 September 2023 – 09:09 Central Euro Time
Gold’s weekly parabolic trend has provisionally flipped from Long to Short, (as tweeted [@deMeadvillePro] last evening); more on this outlying exception in next Saturday’s edition of The Gold Update. Tweeted too was Oil’s breaking above its recent high (93.74) such that from a cash management perspective ’tis better to stand aside for the moment. At present, Silver is the sole BEGOS Market outside (below) today’s Neutral Zone: currently 22.70, should 22.32 trade, its weekly parabolic trend would also, like Gold, flip to Short. As for the S&P 500, its down-stint during these past two weeks has lacked “fear” as revealed our MoneyFlow page. Today’s metrics for the Econ Baro include August’s Pending Home Sales and the final read of Q2 GDP.
27 September 2023 – 09:06 Central Euro Time
The BEGOS Markets are at present mixed: both the Swiss Franc and Gold are below their Neutral Zones, whilst above same are both the Bond and Oil; volatility is pushing toward moderate. Gold is a disappointment: trading to as low as 1913, should 1905.1 (precisely) trade, the weekly parabolic Long trend shall provisionally flip to Short. As for Oil, despite it being up today, its “Baby Blues” did confirm settling yesterday below their key +80% axis: the price area of 87 to 85 shows some degree of structural support, whilst nearer Market Profile support shows at 90.50; and by Market Values, Oil’s smooth valuation line (in real-time) is 83.19. The Econ Baro looks to August’s Durable Orders.
26 September 2023 – 09:10 Central Euro Time
Red is the watchword for the BEGOS Markets, all of which at present are below their respective Neutral Zones for today. Session volatility is moderate across the board, which is refreshing given the otherwise narrower-than-average EDTRS (see Market Ranges). Oil (currently 88.69) has its real-time “Baby Blue” dot at +78%: if this provisional sub +80% level is confirmed by close, we look to lower price levels, just as was the case some five weeks ago, albeit the downside follow-through from that signal was muted; the average price follow-through of the four “Baby Blues” signals that have occurred from one year ago-to-date is 5.7 points, (which in that vacuum alone from here “suggests” the 83s, without regards for other measurings). The Econ Baro gets its week going with September’s Consumer Confidence and August’s New Home Sales.
25 September 2023 – 09:00 Central Euro Time
The Bond begins its week on a down note, at present trading below today’s Neutral Zone; the balance of the BEGOS Markets are within same, and volatility is mostly light. The Gold Update points to price’s still not being able to get off the mat even as the weekly parabolic trend enters its fifth week of being Long. As for Oil (currently 90.58), its “Baby Blues” (in real-time) have further slipped to the +86% level as we continue to watch for the +80% level to be breached, toward then anticipating lower price levels; at Market Values, Oil is +7.85 points above its smooth valuation line. The Econ Baro looks to 12 incoming metrics for the week, (with none due today), notably featuring the Fed’s favoured inflation gauge of the Core PCE Index for August come Friday.