The Gold Update

The Gold Update: No. 787 – (14 December 2024) – “Gold Does the Spike n’ Sink”

by

The Gold Update by Mark Mead Baillie — 787th Edition — Monte-Carlo — 14 December 2024 (published each Saturday) — www.deMeadville.com

“Gold Does the Spike n’ Sink“

Gold’s net change for this past week was a wee +0.4%; yet ’twas hardly mute en route.  Prior to settling yesterday (Friday) at 2666, price was boffed about by another geo-political “spike n’ sink”, further impinged by November’s StateSide inflationary data.  Here ’tis:

Briefly as to the geo-political “spike n’ sink” — and you regular readers well know this — when Gold “spikes” on geo-political nervousness as was the case this past week over Syria — price zooms upwards.  Then swiftly it “sinks” as such jitters fall from the headlines and short-term memories move on to the next event.

But when it comes to inflation — even as the FinMedia and investing community couch it as “benign” — you cannot fool the Dollar, nor the Bond, nor Gold.  For per the U.S. Bureau of Labor Statistics, inflation at both the retail and wholesale level is increasing, indeed moving further up and away from the Federal Reserve’s desired target of +2.0%.  Here’s what we have thus far for November:

Obviously to complete the above table, we await November’s “Fed-favoured” Personal Consumption Expenditures Prices Index due next Friday, 20 December, which conveniently for the central bank is two days after its Open Market Committee’s 18 December Policy Statement.  Regardless, what does our table thus far depict? 

At its foot we see the average 12-month summation of the elements is +2.8%; through October ’twas +2.6%… Whoops!  Moreover, the November annualized average is +3.6%; that for October was +3.0%… Whoops!  Time to pick up the telephone and call the Fed:  “Hey Jay!  We’re goin’ the wrong way!” 

And yet, they’ll likely lop another 25bps off the Funds Rate come Wednesday, as absent of math, the modern-day Fed apparently acts on optics.  “A cut is expected?  A cut we shall do!”  And given rate cuts effectively increase the money supply through the Fed window, more Dollars distributed into the monetary system (barring economic efficiency) lead to more inflation.  For more are worth less; the “wrong way”, indeed. 

However, to read the also math-challenged FinMedia, increasing inflation is not their take.  Hat-tip Bloomy, which in response to rising retail inflation (the Consumer Price Index) ran on Wednesday with “Stocks Rise After CPI Gives Fed Green Light to Cut”.  Really?  The CPI quickened its October pace of +0.2% to +0.3% for November … which annualized as noted is +3.6% … which further distances itself from the Fed’s +2.0% target.  That’s a green light to cut? 

But wait, there’s more:  into Wednesday evening Bloomy embellished its response by adding “US Inflation in Line With Forecasts Solidifies Bets on Fed Cuts”.  Really?  We can only guess that —  again mathematics aside — merely meeting forecasts is all that counts, even as inflation increases.  This is adroitly akin to contemporary stock market valuation:  the substance of earnings (or lack thereof) no longer has meaning, just as long as they “beat estimates”.  Thus Syria + CPI = Spike. 

‘Course come Thursday came the negative news.  Wholesale inflation (the Producer Price Index) for November recorded a +0.4% pace, the fastest across the past seven months…  Whoops!  But whilst the FinMedia rather skirted the issue, not so did the Dollar, nor the Bond nor Gold, the rationale being that perhaps the Fed shan’t cut.  In turn, the Dollar got the Bid, the Bond did the skid, and Gold hit the lid.  PPI + Rate Doubt = Sink.

So as we go to Gold’s weekly bars from a year ago-to-date, the rightmost closing nub shows barely a net change from a week ago — despite the “spike n’ sink” — as the parabolic Short trend continues.  Today at 2666, Gold sits -116 points below the ensuing week’s flip-to-Long level of 2782; thus if you’re scoring at home, given Gold’s expected weekly trading range is now 90 points, ’tis likely the Short trend shall still be in place in a week’s time:

Now as noted, we expect the Fed — wrongly — to cut.  ‘Tis even priced into the FedFundsFutures despite the firming of the Dollar — rightly — and attendant weakness in the Bond and Gold.  And truly for the trader, mis-valuation breeds opportunity; the trick however is to remain solvent until everyone else sees it. 

To wit for the Casino 500, its “live” price/earnings ratio settled yesterday at a spritely 47.8x.  Fundamentally, that is an overbought danger which has become indescribable.  Technically, we’ve also these year-to-date stats:  the S&P has recorded 241 trading days; ’tis been “textbook oversold” for just 28 days, at a neutral stance for 51 days, and “textbook overbought” for 162 days, including through 42 of the last 46 days.  To be sure, we’re taught “the market is a hedge against inflation.”  We just displayed annualized inflation running at +3.6%; the S&P year-to-date is +27%.  But we get it:  all that COVID-elicited $7T is still sloshing around in the stock market.

“Plus, it’s just in time for the Santa Claus Rally, eh mmb?” 

So sayeth conventional wisdom, Squire.  But it doesn’t always come to pass.  There remain seven trading days until Santa’s arrival.  How has the S&P historically fared for such seven days?  We went all the way back to 1980 (which for you WestPalmBeachers down there covers the past 44 years).  And yes, there generally is an upside bias for the seven trading days to Christmas, yet:  in 13 (30%) of those years, such seven-day stint was net negative for the S&P.  Thus “buyer beware”.

Either way, the frightening overvaluation of the S&P 500 reminds us yet again that “marked-to-market everyone’s a millionaire; marked-to-reality nobody’s worth squat.” 

Always worth its plot however is that of the Economic Barometer.  As many of you know, the Baro across its first 22 years essentially led the direction of the stock market as measured by the S&P 500.  But then came COVID after which such relationship ceased.  (Did we mention the S&P is overbought?)  Going inside the data of the past week’s 11 incoming metrics for the Econ Baro, period-over-period saw three improve, two maintain, and six worsen, the latter leaning in favour of a Fed cut as the analytics included a significantly lower revision to Q3’s Unit Labor Costs, plus the highest level of Initial Jobless Claims across the past nine weeks.  Besides, the FinMedia have already ordered (as usual) the Fed to cut its Funds Rate:

 

Indeed speaking of rate, that at which Gold did the “spike n’ sink” was quite quick this past week.  ‘Tis again very evident below in the left-hand panel of price’s daily bars from three months ago-to-date, the baby blue dots of trend consistency just Friday having kinked lower.  In the right-hand panel we’ve Gold’s 10-day Market Profile, the range of which spans 124 points; currently 2666, price sits just above its most commonly traded handle — labeled at 2664 — across the fortnight:

And we’ve the same drill for Silver, her “Baby Blues” at left also having just kinked lower yesterday.  Then at right per her Profile, she is sitting on her last bastion of near-term support at 31.00.  Hang in there Sister Silver!

Thus into a very busy “Fed Week” we go during which 19 metrics come due for the Econ Baro, 10 that are scheduled prior to the FOMC’s Policy Statement late Wednesday.  Since the FinMedia have assured us the Fed will cut, is that already priced into Gold?  But then again, hearsay has it the Bank come 29 January shall “pause” post-Santa Claus; so hold any applause.

And always make sure you’ve some Gold in your claws!

Cheers!

  …m…

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

The Gold Update: No. 786 – (07 December 2024) – “Gold Boring; S&P Warning”

by

The Gold Update by Mark Mead Baillie — 786th Edition — Monte-Carlo — 07 December 2024 (published each Saturday) — www.deMeadville.com

“Gold Boring; S&P Warning“

First, this tease:  the last time the S&P 500 reached (by our quant-crunching) such current duration of being extremely “textbook overbought”, the mighty Index fell …(drumroll)… -26%.  More on that later.

To Gold:  on the heels of last week’s brief missive, here we go as promised with what otherwise would normally be our “month-end “graphics-rich edition, in this case right up-to-date through yesterday, 06 December.  And as entitled “Gold Boring”, clearly for price ’twas a snoozer of a week, the -1.7% high-to-low range ranking fourth narrowest year-to-date toward our yellow metal settling yesterday (Friday) at 2655 in recording its fifth weekly loss in the last six.

Regardless, it now being a week past November’s month-end and with just four editions of The Gold Update remaining in 2024, let’s straightaway go to our BEGOS Markets’ Standings since New Year.  And as was the case at October’s end, the precious metals remain upon the top two steps of the podium followed by the zany, earnings-lacking, non-monetarily-supported S&P 500 in third place.  Too, from the “Gold Plays No Currency Favourites Dept.”, note the Dollar Index is nearly +5% year-to-date, with Sweet Sister Silver still leading the percentages pack:

But in turning to Gold’s weekly bars from a year ago-to-date, the present red-dotted parabolic Short trend has completed a fourth week in duration, something that has not occurred since the 14-week run of being Short back in 2023 from that year’s weeks ending 26 May through 25 August.  And per the graphic’s lower panel, to nix a fifth week of Short trend, price need trade up through 2786, (which is just -16 points shy of Gold’s 2802 All-Time High recorded this past 30 October).  Strictly by Gold’s expected weekly trading range of 88 points, 2786 at least imminently is “out of range”.  Either way, this year-over-year image remains fabulous, the yellow metal up +30%:

Now as would normally be our month-end wont, along with Gold’s +30% year-over-year gain, let’s next see how it compares with the performance tracks of highly visible precious metals’ equites. Thus from worst-to-first we’ve Newmont (NEM) +4%, Franco-Nevada (FNV) +13%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +21%, Gold itself as noted  +30%, the Global X Silver Miners exchange-traded fund (SIL) +41%, Pan American Silver (PAAS) +45%, and topping the list Agnico Eagle Mines  (AEM) +58%.  On three (one, two, three):  “Way to go, Agnico!”

Next we drill down into the 10-day Market Profiles for Gold on the left and for Silver on the right.  And per prices’ present positioning, we can see that Silver has been fairing a bit better.  Two weeks ago, the Gold/Silver ratio was 86.6x, having since been reduced to now 84.3x, substantiated by Silver having increased across said stint by +2.0% whereas Gold has slipped -0.6%.  ‘Course, it remains that Gold relative to Dollar debasement is very cheap and in turn, relative to Gold, Silver is super cheap.  That noted, here’s the rather congested (certainly for Silver) current view:

As to Gold more broadly, here’s our updated depiction of Gold’s layered structure across the past 15 years, the rightmost monthly bar being December’s initial week.  Our forecast high for this year — couched last New Year as “conservative” — was for a run from year-end 2023’s settle at 2072 to 2375; instead, Gold went well on to reach an All-Time High at 2802.

“Well, you were right until it passed 2375, mmb…”

Thanks, Squire:  we’ll take all the shameless plugs we can get, (courtesy of the “We Love It When We’re Wrong Dept.”)  Here’s the graphic.

Now as we glide toward our opening S&P tease — indeed a true scare for the unaware — let’s next go ’round the horn for all eight BEGOS Markets during the past 21 trading days (one month) along with each component’s grey diagonal regression trendline and “Baby Blues” which depict the day-to-day consistency of trend.  Obviously the best of the bunch has been the Bond, (for which in our 20 November Prescient Commentary we penned “…The Bond’s ‘Baby Blues’ [see Market Trends] have … moved above their key -80% axis:  thus we look to still higher Bond prices near-term…”  Notably, the trend of the S&P 500, too, is on the rise, albeit therein the “Baby Blues” are faltering.  Here’s the whole gang:

And so to the entitled “S&P Warning” we go.  As graphically follows, the S&P 500 is the red line along with the Economic Barometer from one year-ago-to-date.  Like you veteran readers and website devotees know, from its inception back in 1998 up to COVID in 2020, the Econ Baro would broadly lead the direction of the S&P.  ‘Course upon COVID and the subsequent mass printing of more money, such leading phenomenon has since ceased.  For with the +44% in additional Dollars swiftly injected into the StateSide liquid financial system came the like $7 Trillion increase to the market capitalization of the S&P 500, such that ’tis become impossible for it to go down, let alone materially despite the Baro having fallen through much of the year:

“But mmb, you said at the beginning something about a 26% fall in the S&P…”

So here’s the skinny, Squire.

Going away back to the days of AvidTrader (and indeed by this measure since the year 1980), when the S&P 500 gets a bit far afield from itself — either up or down — we quantitatively couch it as mildly, moderately or extremely “textbook overbought” or “textbook oversold”.

Through yesterday’s (Friday’s) S&P 500 settle at 6090, ’twas the eighth consecutive day of being extremely “textbook overbought”.  And across the past 45 calendar years, on a mutually-exclusive basis, such eight-day run has only occurred 14 other times.  Doesn’t sound like much right?

But wait, there’s more:  the last time this current condition came to fruition was in November 2021 from which the S&P’s fall within one year was -26%, (inclusive of recession fears — and the Econ Baro today is significantly lower than ’twas then).  The prior occurrence came in 2019 from which the fall within one year was -25%, (inclusive of the 2020 COVID mini-crash).

And yet the inevitable next time ’round, a like percentage drop might actually be considered small. Why?  Don’t forget:  had COVID never happened, the S&P today would at best be around 3000 and all would be as happy as clams.  Instead, today ’tis at 6000 with the honestly-calculated price/earnings ratio now 46.9x, which is double the norm, and triple what was taught as “acceptable” in B-school.  For you WestPalmBeachers down there, that means company earnings haven’t increased commensurate with stocks prices.  To wit we update this closing graphic of the S&P 500 across the past 50 years with the extrapolated regression channel had COVID never happened.  Fortunately however, earnings are no longer meaningful for stocks’ pricing:

‘Course, your “expert” all-in equites money manager has the appropriate protection in place, right?  (Pssst … and given the current $53T market cap of the S&P is supported by a liquid U.S. money supply of “only” $22T, broker-issued IOUs will be made available, right?)

“Got Gold?”

Cheers!

  …m…

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

The Gold Update: No. 785 – (30 November 2024) – “Gold in 60 Seconds (IV)”

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The Gold Update by Mark Mead Baillie — 785th Edition — Cortona, Arezzo, Toscana — 30 November 2024 (published each Saturday) — www.deMeadville.com

“Gold in 60 Seconds (IV)“

Saluti dalla Toscana!  As indicated a week ago, our missive this time ’round is a brief read, but to the point; (our usual month-end graphics content shall instead be to-date in a week’s time).

Gold settled the abbreviated trading week yesterday (Friday) at 2674, -128 points below its All-Time High of 2802 (30 October).  But price’s points volatility is well above normal:  the average high-low weekly trading range across these past four is 132 points, such like average not seen since that ending 09 April 2020 as COVID unsettled the investing world.

Regardless of Gold’s recent careening about, the current weekly parabolic Short trend just completed its third week.  And should price in this ensuing week not eclipse up through 2791 (i.e. +117 points above present price), such Short trend shall have completed a fourth consecutive week for the first time since that ending 25 August 2023.  Here are Gold’s weekly bars and parabolic trends from a year ago-to-date:

 

Also as anticipated in our prior missive, the Core Personal Consumption Expenditures Price Index would be this past week’s key metric.  Such “Fed-favoured” inflation gauge registered for October at +0.3%, which annualized of course is +3.6%, thus exceeding the Federal Reserve’s preference for a +2.0% pace.  And per our table for October’s inflation measures, the Core PCE’s actual 12-month summation of +2.8% too remains Fed-excessive, as does every cell in the graphic, save for the headline Producer Price Index:

Generally, Gold responds positively to Fed benevolence.  And come the Open Market Committee’s next Policy Statement on 18 December, whilst ’tis not set in stone for a FedFunds rate cut, the conventional wisdom “assumption” shall look to another -25bp reduction.  For after all, Fed policy tends — indeed is “expected” — to trend.  And a Fed cut ought redound well for Gold, perhaps reversing the weekly parabolic trend from Short back to Long and further to a new All-Time High just in time for Christmas.

Further, the Economic Barometer remains rather steady through recent months.  Were it instead to be rising, it might give pause for the Fed to — well — pause.  Moreover, 33 metrics still are due for the Baro prior to the next Fed meeting in two-and-a-half weeks’ time.  Alors, on verra.  Here’s the Baro:

Thus in brief this week for Gold, our bottom line is to remain wary of price — at least technically — sporting some degree of confusion given the aforenoted volatility.  To be sure, the weekly parabolic trend is Short, and by Gold’s page at the website, the 21-day linear regression trend is negative; however both Gold’s “BEGOS Market Value” and Market Magnet appear at present non-committal as to near-term direction.  Yet to better one’s analytical perspective, by our Market Rhythms page, there are presently 11 for Gold which qualify to make that list, (as updated daily).

‘Course — fundamentally — priced today at 2674 versus the opening Scoreboard’s debasement valuation of 3778 reminds us that broadly:  Gold is still ever so cheap!

Ciao!

  …m…

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

The Gold Update: No. 784 – (23 November 2024) – “Gold’s Contra-Trend Rally; S&P’s Earnings(less) Tally”

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The Gold Update by Mark Mead Baillie — 784th Edition — Monte-Carlo — 23 November 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Contra-Trend Rally; S&P’s Earnings(less) Tally“

Let’s begin with Gold, courtesy of the “We Love It When We’re Wrong Dept.” given price having just recorded its best week (by net points gained) in nearly 45 years!

For following last week’s piece (“ ‘Tis No Surprise, Gold’s Current Demise “) replete with our “…suggesting Gold revisiting the upper 2400s on this run…”, Gold instead posted five consecutive up days toward settling yesterday (Friday) at 2718.  Not only was it a beautiful “thAng”, but it also lends credence to our time-honoured quip that “Shorting Gold is a bad idea”.

Still — speaking of Short — the week’s five-day rally was not sufficient to flip the fresh parabolic Short trend on Gold’s weekly bars back to Long per this next graphic.  Indeed to so do in the ensuing week, price would need eclipse the 2797 level as below shown.  ‘Course as we’ve stated of late, Gold’s prior three weekly parabolic Short trends lasted but three weeks apiece.  And as fresh as is the new Short trend, nonetheless, ‘twas a terrific week for the yellow metal.  Price’s net gain on a percentage basis of +5.9% was the best since that ending 17 March 2023 — and by the net gain of +151 points — ’twas Gold’s best week since the “Wonder Week” ending 18 January 1980 upon price gaining +195 points from 628 to 823 (+31%).  A lot of today’s financial “pros” weren’t around then (and it shows) … yet we were, (as too, for you Silver buffs,  were Nellie, Willy and Lamar Hunt … but we digress).   Here’s the year-over-year graphic:

How wonderful to have been wrong, indeed!  And yet — until the weekly parabolic trend whirls back up to Long — we’ve entitled this past week’s fabulous rise as a “contra-trend rally”, (which for you WestPalmBeachers down there means Gold is rising within a broader down trend).  To wit, this next two-panel graphic is gleaned from what we refer to as our best Market Rhythms.  On the left is Gold by the day since 22 October:  notice the MACD (moving average convergence divergence) has just crossed to positive.  On the right, however, is Gold by the week since 06 June:  therein (as we first presented last week) the MACD had just crossed to (and remains) negative.

“So which one is up, mmb?”

Well, Squire, ultimately both!  But for the present, the ensuing week brings the Federal Reserve’s so-called favourite gauge of inflation:  Core Personal Consumption Expenditures Prices for October.  And the consensus there is it continues to run “hot” at an annualized pace of +3.6% which obviously surpasses the Fed’s ongoing target for +2.0%.

Too, there’s nearly four weeks to go before the Open Market Committee’s next Policy Statement (18 December), prior to which we’ll get the U.S. Bureau of Labor Statistics’ read on November inflation at both the retail and wholesale levels.  And should those metrics not be benign, does the Fed, rather than again cut its Funds Rate, leave a lump of coal in our Christmas stocking?  That would likely be a Gold negative.

Still, from the contra-trend conflict comes the website’s updated Market Value chart for Gold from a year ago-to-date.  When last herein viewed a week ago, price had negatively crossed beneath its smooth valuation line (borne of price movement relative to the five primary BEGOS Markets, i.e. the Bond  Euro / Gold / Oil / S&P 500), the “rule of thumb” there to expect further price decline.  But from the “Hold Your Horses! Dept.”, price this past week reversed course upward to positively cross back above the smooth valuation line.  Nothing like seeing broadly undervalued Gold getting the bid!  Here’s the graphic:

“But why the sudden turnaround, mmb?”

Squire, for all the usual “conventional wisdom” reasons, depending upon one’s media source.  “Oh there’s geo-political tension favoring safe-haven Gold!”  “Oh Bitcoin is pulling Gold higher ’cause Trump’s gonna pair ’em!”  “Oh Goldman Sachs says Gold $3,000!”  We’ll stick with the foundational truth:  currency debasement, even as nothing moves in a straight line.  To be sure, 1,132,033 December Gold contracts were purchased last week … meaning 1,132,033 were sold.

Meanwhile, speaking of Bitcoin, its December futures contract hit an all-time high yesterday of $101,100.  Come 27 December is the contract’s expiry, which unlike Gold is settled financially rather than physically, (just in case you’re scoring at home and think you have to make delivery of Bitcoin).  “Hey Mabel!  I thought you said you stacked it up in the closet!”

Not scoring as well at present is the Economic Barometer.  This past week brought but eight metrics into the Baro, only three of which improved period-over-period.  Notable amongst the retreaters was the lagging indicator of the Conference Board’s Leading Indicators for October.  The negative reading was, of course, warmly greeted by the S&P, which then spent the balance of Thursday and Friday moving higher, “because the Fed has to cut, ya know.”  Yeah, we know.  “Got Gold?”  Here (featuring some old “friends”) is the Econ Baro along with the S&P 500 from one year ago-to-date:

And of course as has been our wont seemingly forever, the “live” price/earnings ratio of the S&P 500 remains hideously high, now 44.6x.  It stays in such silly territory because as the S&P trades higher, earnings don’t keep pace.

Indeed, Q3 Earnings Season just concluded.  Of the S&P’s 503 entities, 447 reported within the seven-week stint.  64% of the bottom lines bettered themselves over Q3 of a year ago … which means 36% did not … which makes us wonder why they’re even in the world’s wealthiest index … which brings us to the following graphic.

It covers the last 30 quarterly Earnings Season for the S&P.  The violet line is the percentage of companies beating the broker’s marketing tool known as “estimates“.  The green line is the percentage of companies that actually made more money, (an aspect seemingly taboo for the broker to reveal).  And as for the dashed green line, ’tis the evolving average of percentage improvement from the prior year’s like quarter.  That average today is 66%.  Exclude COVID year 2020 and the average is 68% … which is why we’ve been regularly characterizing this past Earnings Season as “sub-par” … which is why the high P/E refuses to die … which is why our title includes “The S&P’s Earnings(less) Tally”, indeed.  Take heed:

Take heed, too, over Gold’s contra-trend rally.  ‘Twould be statistically off the end of the Bell Curve for Gold to record a further consecutive weekly parabolic Short trend of just three weeks duration.  That noted, one cannot argue with the following two-panel display featuring Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  Gold’s “Baby Blues” of linear regression trend consistency now curling upward without having quite reached down to their -80% axis is quite the bullish suggestion.  And per the Profile — atop which Gold sits — there are plenty of high-volume support prices as labeled:

Hardly as firm as that for Gold is the like picture for Silver.  Save for last Monday, her trading week at best was rather namby-pamby, albeit her “Baby Blues” (at left) piercing up through the -80% axis typically is a “buy” signal.  And per her Profile (at right) there is labeled volume support from 31.25 down to 30.75.  Further — as we relentlessly remind — Silver remains ever so cheap relative to Gold:  the century-to-date average Gold/Silver ratio is now 68.6x, whereas the actual ratio settled the week at 86.6x.  Thus with Gold at 2718, Silver by the ratio’s average “ought be” +26% higher at 39.64 rather than her actual present price of 31.41.  Again:  do not forget Sister Silver!

So into the StateSide Thanksgiving week we go:  11 metrics come due for the Econ Baro, including 10 packed into Monday through Wednesday, the PCE data surely to get the lion’s share of interest.

Moreover:  we’ve this heads-up for next Saturday’s edition of The Gold Update.  We shall be once again  “in motion”, this time through the treasured beauty of Tuscany.  Thus akin to the occasional “Gold in 60 Seconds”, next week’s piece shall be quite brief.  True, ’tis is a month-end edition, normally graphics-rich.  However, we’ll like save most of those for the ensuing 07 December missive.  Either way, Gold’s reaction to next Wednesday’s PCE shall be key.

As we thus prepare to embark for Golden Tuscany, ensure your tally totals a Golden Destiny!

Cheers!

  …m…

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

The Gold Update: No. 783 – (16 November 2024) – “ ‘Tis No Surprise, Gold’s Current Demise ”

by

The Gold Update by Mark Mead Baillie — 783rd Edition — Monte-Carlo — 16 November 2024 (published each Saturday) — www.deMeadville.com

“ ‘Tis No Surprise, Gold’s Current Demise ““

 

For you valued regular readers of The Gold Update, price’s demise across these past three weeks ought be no surprise.  Into Halloween week, Gold vis-à-vis its near-term smooth valuation line ran better than +150 points “too high”.  Then into the StateSide election, price — as herein penned a week ago — once trumped was then dumped.

Subsequently, Gold fully reverted south to said smooth valuation mean, and upon penetrating it to the downside, the stage was set (as is the rule of thumb) for still lower prices, our “average” anticipation level (as herein written last week) being 2555.  And indeed such price was reached this past Thursday en route to the week’s low of 2542, toward settling yesterday (Friday) at 2567.  Here’s Gold’s updated Market Values graphic from one year ago-to-date.  Therein note per the lower panel oscillator (price less valuation) whereas Gold by this near-term metric was “overvalued” back in April by +200 points, that ’tis now “undervalued” by half that distance at -100 points.  The wee “sell” label marks the crossover:

However, with respect to Gold’s weekly parabolic trend, we’d last written:  “…there’s a very realistic chance that in a week’s time we’ll herein find such trend having flipped to Short…” which in concert with price’s reversion to the smooth valuation line has also come to pass.  Here are the updated weekly bars, the rightmost encircled red dot confirming the commencement of the new parabolic Short trend:

 

‘Course, the buzz within the graphic reminds us that Gold’s prior three weekly parabolic Short trends (extending as far back as September a year ago) have each been just three weeks in duration.  But given current negative technical reads — plus fundamental Federal Reserve musings that continuous rate cuts are not necessarily in stone (especially should inflation be increasing its tone) — the notion of yet another Short trend of short duration may be short-lived.

But wait, there’s more (or contextually stated given price’s descent, “less“).  Whilst too few in the trading community at large follow deMeadville’s leading analytics, a technical study very visible to the otherwise “great unwashed” is the mouthful measure “moving average convergence divergence” (MACD), an expression of complexity tossed about over post-work martinis to impress those within ear-shot as “MAC-DEE”:  “Well ya know, the big guy and me always buy to the max using MAC-DEE!”  Oh gee.

Regardless, MACD is one of the five key “standardized” Market Rhythms (across 405 nightly studies) we run here at deMeadville.  And by Gold’s weekly candles, the MACD — along with price’s piercing of the smooth valuation line and parabolic trend flipping to Short — also just confirmed its own negative crossover as we rightmost next see:

So in again teeing off on Squire’s “How low is low?” query from a week ago, the above graphic depicts the amount of adversity one might expect from the present 2567 level, the “average” -75 points suggesting Gold revisiting the upper 2400s on this run.  Indeed doing the math across Gold’s price-structuring cluster from 03 May’s low of 2285 to 20 May’s high of 2454, the mid-point is 2370.  And as you seasoned techies know, cluster mid-points are oft ripe targets.

“So mmb, you’re saying another 100 points down from here is where Gold is going?'”

As you know, Squire, none of us ever know.  We can only put to use that which typically eventuates so as to have some degree of cash management guidance.

“But folks should still wait to buy, eh mmb?”

Our modus operandi (a little Latin lingo for you WestPalmBeachers down there) for buying into dips is to accept the risk (especially with respect to Gold) of getting aboard with an initial tranche, but budgeting to fully expect another buying opportunity further down.  In other words, by planning to be initially wrong, one doesn’t miss out when it all goes right.  To again reprise the resplendent Richard Russell:  “There’s never a bad time to buy Gold.”  And priced today at 2567 vis-à-vis the opening Scoreboard’s Dollar debasement level of 3740, obtaining Gold at a -31% discount to its long-term value ought be an attractive entry point for those of you scoring at home.

Speaking of scoring, the Dollar Index just completed its seventh consecutive weekly gain, en route reaching to as high as 106.990, a level not traded since 03 October of a year ago.  And as we approach the 15th anniversary of these weekly Saturday missives (since 21 November 2009), we’ve on occasion quipped that provenly “Gold plays no currency favourites”, albeit price typically trends contra-Dollar as has been the recent case.

To be sure, pre-election Gold was being grabbed as a safe-haven bid, in concert too with the Fed to that point having turned somewhat benevolent.  But so-called oxymoronic “Dollar strength” has a tendency to erode all eight elements of the BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500).  In fact during these recent days wherein a glance at the screen portrays all eight components in the red, we “know” a priori that the Dollar Index is higher.  ‘Tis just the way these markets both interact and react.

Moreover with respect to being in the red, the mighty S&P 500 (aka “Casino 500”) — which though this year’s first 42 weeks (to that ending 19 October) had net gains in two of every three — just recorded its third down week in the last four.  (Recall the Wall Street Journal piece pre-DotComBomb about less-experienced investors actually believing the stock market never went down?)  Yet, just how overvalued remains the S&P, even having lost -2.7% (high-to-low) in just past five trading days?  Technically, the Index through Friday is still “textbook overbought” through 23 of the past 27 trading days.  Fundamentally, the “live” price/earnings ratio is a whopping 44.4x.  But then again, portfolio theory has long-been passé:  either be a lemming, else be left behind.

Which brings us to the Economic Barometer, itself continuing to improve. And per today’s conventional wisdom, as things get better, the S&P gets worse:  because rather than earnings-driven, the contemporary market is Fed-driven.  And as aforenoted, the Fed is now conditioning the market so as not to expect the FedFunds rate to automatically be cut time and again.

Specific to just this past week, of the Econ Baro’s 14 incoming metrics, only four did not improve period-over-period, albeit those laggards included October slowing in both Retail Sales and Capacity Utilization.  But the month’s wholesale inflation (Producer Price Index) popped — which is a Baro positive, “the rising tide of inflation lifting all boats” — whilst rate shrinkage was reduced for both Industrial Production and September’s Business Inventories.  Too, November’s NY State Empire Index whirled ’round from -11.9 to +31.2, its largest month-over-month improvement since COVID-laced June in 2020.  Thus, up with the economy, down with the S&P:

Further as noted, when the Buck gets the bids, “everything else” goes on the skids, including ‘natch the precious metals.  ‘Tis not the happiest of two-panel displays, but here next are the last three months-to-date of daily bars for Gold on the left and for Silver on the right, along with their respective baby blue dots of trend consistency.  Cue our lead (pun intended) conductor with “Follow the Blues instead of the news, else lose yer shoes…“:

Too, we’ve the precious metals’ 10-day Market Profiles, price in both cases nearly buried at the bottom of each stack for Gold (below left) and Silver (below right).  The more dominant overhead volume prices are as labeled:

And so to wrap, let’s go with The Stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3740
Gold’s All-Time Intra-Day High:  2802 (30 October 2024)
2024’s High:  2802 (30 October 2024)
The Weekly Parabolic Price to flip Long:  2802
Gold’s All-Time Closing High:  2799 (30 October 2024)
10-Session “volume-weighted” average price magnet:  2656
Trading Resistance:  notable Profile nodes 2573 / 2620 / 2672 / 2696 / 2474
Gold Currently:  2567, (expected daily trading range [“EDTR”]:  43 points)
10-Session directional range:  down to 2542 (from 2759) = +217 points or -7.9%
Trading Support:  none notable per the Profile
The 300-Day Moving Average:  2268 and rising
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

‘Tis a fairly light, ensuing week for incoming Econ Baro metrics, the most attention-getting one to be the Conference Board’s compiled negative reading of October’s Leading Indicators, (which as led by the Baro we instead refer to as “Lagging”).  Too, ’tis the final week of Q3 Earnings Season, which as you know (should you follow its page and/or read the Prescient Commentary) is sub-par compared to average quarterly year-over-year improvement.  But as we’ve quite a bit quipped, earnings today are irrelevant to equities’ investing:  else the S&P 500 would be at but half its current level.

Otherwise, notwithstanding some further near-term demise, Gold remains ever so cheap for the wise … the bottom line thus being:

Got Gold?  Don’t be a chicken!  Get yourself some real nuggets and win!

Cheers!

  …m…

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

The Gold Update: No. 782 – (09 November 2024) – “Gold Trumped, Dumped”

by

The Gold Update by Mark Mead Baillie — 782nd Edition — Monte-Carlo — 09 November 2024 (published each Saturday) — www.deMeadville.com

“Gold Trumped, Dumped““

Gold’s +35.2% rally this year from 2072 to an All-Time High at 2802 might be couched catalytically as geo-political discomfort were (amongst other rationale) Vice President Harris to have defeated former President Trump, in turn installing her as the so-called “Leader of the Free World” come 20 January.

Whilst we understand significant angst is now running through the StateSide media over the election, on this Side of the Pond one senses relief being broadcast not so much that he won, but rather that she did not win, a reminder that Europe would still look to the U.S. in dire times.

Regardless, last Tuesday brought the reverse result, StateSide equities getting a sensational bid, and Gold — thus “Trumped” — was dumped.

So with respect to Gold, whenever it or any major financial market reaches levels of excessive near-term — or in the case of equities long-term — overvaluation, we provably know throughout history that it “corrects”, (or in simple jargon for you WestPalmBeachers down there, it “goes down”).

And typically, the distance back down reverts to one or more of the following:  a measured mean; a targeted cluster of previous price structure; a notable prior high or low; and/or a retracement as guided by the mathematics of one Leonardo Pisano detto il Fibonacci, (aka “Signore Golden Ratio“).

‘Course, in addition to the distance of adversity, the most commonly-asked question with respect to price commencing a fall is:  “When?”

Here at deMeadville, astride our many years of quantitative crunching, we like to think we’re ahead of the game in anticipating such overdue price movements — be they up from undervalued or down from overvalued — the bane of that being we’re oft just too damn early by such assessment to be timely for today’s trading community.  ‘Tis why, as stated on our homepage:  “…deMeadville is not for the low-information, short-attention span, instant gratification crowd…”, such lost souls otherwise permeating today’s Investing Age of Stoopid.

But in due course, quantitative analyses will out upon FinMedia dissemination of a “catalyst”, following which it all goes wrong for a spell.  (Indeed, some entities — as were WorldCom, Enron, Lehman, et alia — never recover).

Fortunately for Gold, it always recovers and demonstrably so since President Nixon nixed the Gold Standard back in ’71.  Thus when Gold swiftly dips as it just did within a six-trading-day stint — from Halloween into the StateSide election — by careening -151 points (-5.4%), ours is not to reason why.  For, (albeit a bit ahead of the curve), we’ve nonetheless been anticipating such a drop.  And if you read these weekly missives, you too already know — at least quantitatively — why.  Cue our Market Values chart for Gold from one year ago-to-date:

 

Through yesterday’s (Friday’s) settle at 2692, not only is Gold still above its smooth valuation line, but has now so been for 75 consecutive trading days:  that ties for the longest “above value” streak century-to-date, the longest prior being the 75 trading days during 2019 from 23 May through 09 September.  To be sure, Gold (barring a significant down day come Monday) appears poised to break that record.

As well however, Gold having recently been (on a closing basis) as high as +166 points above that smooth valuation line, ’tis now only +31 points above it.  Thus we sense in fairly short order (no pun intended, especially as shorting Gold is a bad idea), that price shall break below the line, the rule of thumb then being to expect still lower levels.

“Ok, you mentioned ‘distance’, mmb, so the other usual question is ‘How low is low?'”

Squire, in reviewing downside Gold penetrations of its smooth valuation line for nearly the past five years (2019-to-date), there have been 60 such occurrences.  In then measuring how low did price go within each instance’s ensuing 63 trading days (i.e. one quarter) the average adversity is -4.0%.  ‘Course as we hasten to point out, “average” is hardly “reality”:  but from the critical standpoint of cash management, “average” keeps us from being overly surprised by downside distance.  So as a back of the napkin scribbling from here:

  • Gold presently is 2692;
  • It’s smooth valuation line is 2661;
  • Thus a -4.0% further correction below that line would bring Gold down to 2555.

In turn, 2555 is an interesting level as ’tis near a prior minor high of 2570 (20 August) which remained in place for 15 trading days (three weeks) until 12 September.  Naturally, our preference is for Gold to instead move higher still from last Thursday’s 2650 low; but we’ll respect the leading qualities of the quant-crunching upon Gold’s inevitably slipping below its smooth valuation line, (such graphic updated daily at the website).

Then, too, are Gold weekly bars which per this next year-over-year display we’ve exemplified as “perfection”.  However:  the current parabolic Long trend appears all but done.  Had price this past week broken just five points further down under Thursday’s 2650 low, such trend would have already flipped to Short.  Indeed, present price at 2692 is +42 points above the ensuing week’s “flip-to-Short” level of 2650:  but Gold’s expected weekly trading range is now 75 points, (the daily alone being 39 points).  Thus there’s a very realistic chance that in a week’s time we’ll herein find such trend having flipped to Short — and in concert — price also having then slipped below the aforeshown smooth valuation line.  Here are the weeklies:

The good news is — even upon Gold’s weekly parabolic trend eventually flipping from Long to Short — that the prior three such Short stints (since the week ending 29 September 2023) have each been but three weeks in duration:  that’s it.  The intervening Long trends respectively have lasted 17 weeks, 16 weeks, and the current one now 17 weeks.  Perhaps a bit too much perfection there, but as crooned Steve “The Joker” Miller back in ’73 “I get my lovin’ on the run“ and certainly for Gold, such a run ’tis been!

As for the StateSide economy, ’tis been on balance rather run down, albeit the Economic Barometer has bounced and since stabilized from its August low.  You tell ’em there, Jay:

‘Course the graph’s most glaring stat is the ridiculously impossible, insanely inane “live” price/earnings ratio of the S&P 500 which by “trailing 12-months earnings” (“ttm”) settled the week at 46.5x*, the S&P en route having traded above 6000 for the first time ever.  (Ought we reword “The Investing Age of Stoopid” to that of the “Lobotomized”?  Just a thought…).
* For fun, we also queried Assembled Inaccuracy:  it replied 30.1x by “ttm”.  To AI you go with your dough?

As a very close friend and business colleague wrote to us this morning:  “I have no words for this market [nor] clue at this point what is going on.”  Another mate at this morning’s coffee remarked:  “It’s gonna go down 50%”.  Did we cite means reversion above?  Indeed we did.  And the reason for the P/E’s relentless rise?  An on-balance economic demise.  Thus the earnings aren’t there, but does anyone care?  As long as they beat estimates, right?  Ponzi personified.

But to our point, let’s go outside the Econ Baro box.  Back in 2017 when then President Trump took office, our “live” P/E of the S&P was 12% above its evolving lifetime median.  Today ’tis 58% above same.  Thus mathematically, earnings growth has been severely lagging the broad rise in stock prices.  And through all these years, we remain mindful of the fact expressed by long-time analyst Michael Holland that — at the end of the day — stocks are valued by earnings.  And they will again so be.  Yet:  “When?”

As to the on-balance economic demise, we decided to blow open the Baro a bit, something we’ve very rarely herein done.  But as the President of the United States generally is assigned responsibly over the economy, just how did the Econ Baro comparatively do during each four-year term of the past two Presidents?

Below we’ve the four-year tracks of the Economic Barometer for President Trump (in red from Q2 2017 through Q1 2021) and for President Biden (in blue from Q2 2021 extended through Q1 2025).  Whilst we never reveal the proprietary math of the Baro, ’tis been adjusted such that both tracks begin at the same level and are identically scaled.  Certainly the two tracks are on-balance in net decline from where they began, and both (flat-lining the blue track from today) also look to end up at the same level as each other.  Et voilà, the declining “Prez Baro” and therefore the reason why underlying earnings are not keeping pace with price:

‘Course, we know Gold looks to keep pace as does the Dollar debase.  Quickly doing the math per the opening Gold Scoreboard, today at 2692, the yellow metal is priced -28% below its Dollar debasement value of 3739.  Still as noted, our near-term analyses look for price to ease.  And in turning to our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right, you may sense similar negativity.  The baby blue dots of trend consistency are at present freely falling:  upon a blue dot eclipsing below the 0% axis, the regression trend shall have rotated from positive to negative.  Meanwhile per the Profile — key volume-dominant overhead resistors as labeled — the last nearby bastion of support is shown as 2674:

And ever so similar is the same construct for Silver, her “Baby Blues” (at left) just about to go sub-0%, whilst price by her Profile (at right) seeks support in the nested 31.85-31.25 area.  You may also have noted earlier in the graphic of Gold’s weekly bars that the Gold/Silver ratio — which just 14 trading days ago was 78.8x — has since sprung up to now 85.7x as Silver again suffers the scourge of sinking more swiftly than Gold.  Across that brief stint, the white metal has dropped -11%.  Poor ol’ Sister Silver!

Trumped if not dumped, in sum, we analytically expect both Gold and Silver to weather this near-term dip.  Either way, your key with them clearly is to maintain a Presidential grip!

Cheers!

  …m…

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

The Gold Update: No. 781 – (02 November 2024) – “Gold’s Highs; Inflation’s Rise”

by

The Gold Update by Mark Mead Baillie — 781st Edition — Monte-Carlo — 02 November 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Highs; Inflation’s Rise”

Gold’s Highs … Gold just recorded its 16th All-Time Weekly High within the 44 trading weeks that have completed the first 10 months of this year.  Price by Gold’s “continuous front-month contract” (at present that for December) tapped 2800 for the first time ever in reaching up to 2802 this past Wednesday.

‘Course — as has been our ongoing take of late — Gold whilst still long-term vastly undervalued per the above Scoreboard’s 3738 Dollar debasement level vs. yesterday’s (Friday’s) actual settle at 2746, price near-term remains overvalued per our following Market Value gauge.  Such measure assesses Gold’s typical movement relative to that of the primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500) which at present shows the yellow metal as +96 points “high” above its smooth valuation line to which inevitably price reverses:

Still, we maintain that Gold’s deviation from its BEGOS valuation merely underscores the run of justly due buying.  In fact, across these 16 years of producing The Gold Update, never do we recall so many folks whom we encounter on a day-to-day basis questioning us about Gold.  And given its significant undervaluation relative to currency debasement, we regularly point out that — despite Gold’s run of record highs — most broadly ’tis still cheap … as is Silver relative to Gold … the white metal indeed super cheap.  Updating the math there:  valuing Gold at 3738 and applying the century-to-date Gold/Silver evolving average ratio of 68.5x puts Silver at  54.57!  That is +67% above her present price of 32.58.  Why, even applying said average ratio vis-à-vis today’s Gold level of 2746 places Silver some +23% higher at 40.09, the actual ratio at present being 84.3x.  Thus we repeatedly reprise:  Do not forget Sweet Sister Silver!

As for Gold itself, by the weekly bars from one year ago-to-date, we can only cue Nat King Cole from back in ’51 with“Unforgettable…”:

And yet whilst Silver by valuation significantly trails Gold, year-to-date the white metal +35.6% again tops the table of our BEGOS Markets, the yellow metal a close second +32.5%, with the inanely overvalued “Casino 500” rounding out the podium placers +20.1%.  Note therein that the Dollar Index is actually positive (given yields backing up and the Bond being in the cellar):  just a friendly reminder that Gold plays no currency favourites:

To the precious metals’ equities we go, the graphic ever so exemplary of the adage “Live by the leverage, die by the leverage” notably with respect to Newmont (NEM).  The company’s Q3 earnings of 81¢/share more than doubled those of a year ago (36¢/share):  but the stock was taken out behind the woodshed for having missed the consensus estimate of 86¢/share.  Bummer.

Still from the top down by their percentage tracks from a year ago-to-date we’ve Agnico Eagle Mines +83%, the Global X Silver Miners exchange-traded fund (SIL) +59%, Pan American Silver (PAAS) +57%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +42%, Gold itself +38%, Newmont (NEM) +21%, and Franco-Nevada (FNV) back in the black +10%.  The equities perhaps are not for those faint of heart, but well-suited for the long-term smart:

Gold’s highs, indeed.  ‘Tis been thus far an amazing year.  But is inflation, dare we say stagflation,  perhaps to appear?

Inflation’s Rise … All the broad measures of inflation data are in for the month of September.  And with respect to the so-called “Fed-favoured” inflation gauge of Personal Consumption Expenditures, ’twas hailed by Dow Jones Newswires this past Thursday as follows:  “PCE inflation edges closer to Fed’s 2% target, keeping FOMC on track for next interest-rate cut.”  A bit of a stretch that, especially as we do the math.  To be sure, the headline PCE 12-month summation dropped from August’s 2.2% to 2.0%.  But then we’ve the big BUT:  that for the core PCE was maintained at +2.6%, — and moreover — the month’s annualized pace increased for the headline number from +1.2% in August to +2.4% for September.  Even worse, the core number rose from 1.2% as well to 3.6%.  Whoops! Here’s our updated table:

So following September’s leap in core PCE inflation came October’s job creation of a scant 12,000 non-farm payrolls (vs. the consensus expectation for 123,000 after 223,000 in September), and thus our justification for having mentioned the word stagflation.  Still, mitigative to that may be the recent rising of the Economic Barometer as shown here from a year ago-to-date, the red-line S&P 500 indicative of investors keeping stocks on their plate despite some mild selling of late:

“The S&P has been coming back down, mmb, but to call it ‘mild’?”

Nobody tees it up better than Squire.  His observance notwithstanding, the wee rightmost drop indeed is comparatively “mild” relative to the increase in the S&P year-over-year.  And of even further import, here (employing “trailing 12-months earnings”) is the truthfully “live” price/earnings ratio of the S&P 500, duly including these two most recent consecutive down weeks:

At least we can offer a hat-tip to the mighty Swiss-based UBS, whose Nicolas le Roux-led strategy team just penned the bank’s expectations “…for equities to cheapen relative to bonds…”  Perhaps Nico and company have been reading The Gold Update and the website’s daily Prescient Commentary both of which have gone on ad nauseum for months about same.  Just in case you’re scoring at home, the all-risk S&P yield is presently 1.293% whilst no-risk U.S. debt across the maturity spectrum yields better than 4%.  (Which means for you WestPalmBeachers down there … no, forget it … you’re too pre-occupied in trying to figure out how to do a ballot).

Meanwhile, it being month-end (plus one trading day), ’tis time to go ’round the horn for all eight of our BEGOS Markets from a month ago (last 21 trading days)-to-date, featuring their respective grey linear regression trendlines and “Baby Blues”, the dots denoting the consistency of said trends.  Focus here ought be on both the Euro and Copper, their “Baby Blues” having curled up from beneath the -80% level, the rule-of-thumb being to then anticipate higher price levels near-term:

Too, we’ve the 10-day Market Profiles for the precious metals, featuring Gold on the left and Silver on the right.  In both cases, their dominant volume price resistors are as labeled:

And as is our wont to write, ‘twouldn’t be month end (and a day) without the stratified Gold Structure by the month from 16 years ago-to-date.  Yes, Gomer, you tell ’em:  for our Gold of late ’tis been nothing but “SHAZAAM!” mate:

StateSide there’s an election next week.  Just as the frequency with which we’re asked about Gold these days has been inexorably on the increase, so too are we questioned:  “Who’s gonna win?”

‘Course, nobody knows, and sentiment varies based on one’s favoured sources of information, given that 99.999% of us have never actually met (let alone personally know) either the “current democrat” nor the “former democrat”.

But the one point upon which all seem to agree is — regardless of who “wins” or is “declared” the next President — there shall be an ensuance of StateSide chaos both in the markets and (hopefully still) civil society.  Gold, too, could certainly get banged about a bit:  again, ’tis near-term overvalued.  But because ’tis long-term undervalued — be it on the left or on the right — Gold is far and away the best candidate to keep your future bright! 

Cheers!

  …m…

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

The Gold Update: No. 780 – (26 October 2024) – “Gold Taps a Ten-Year Frontier”

by

The Gold Update by Mark Mead Baillie — 780th Edition — Monte-Carlo — 26 October 2024 (published each Saturday) — www.deMeadville.com

“Gold Taps a Ten-Year Frontier”

‘Tis taken ten years, but what just happened?

“Well, mmb, I’m gonna take a stab at this: for the 207 trading days so far this year, Gold has made a record high for 37 of ’em.”

A spot-on and well sussed-out observance there, Squire, but that’s not our highlight.  Rather, the answer is in the above Gold Scoreboard’s math.  Ready?  Here we go:

  • As shown, Gold settled out this past week yesterday (Friday) at $2,761/oz.
  • Gold’s valuation (even given its own supply increase) relative to debased M2 is now $3,736/oz.
  • The difference?  $2,761 – $3,736 = -$975.

Thus for the first time in ten years (since the week ending 25 July 2014), Gold at week’s end is now above the -$1,000 undervaluation frontier relative to where it ought be given Dollar debasement. ‘Tis all there to below behold across the past 45 years, the rightmost pip having just eclipsed that red frontier:

 

Gold’s firm rally so far this year (correctly incorporating Squire’s 37 days of All-Time Highs) has remained magnificently intact, indeed having well-exceeded our “conservative” (as ’twas couched at New Year) forecast high in 2024 of 2375.

So per the above graphic, having surpassed (at least for the moment) the -$1,000/oz. undervaluation frontier, does this mean Gold finally is en route in racing up to where it “ought be”, (i.e. at the horizontal green line)?

To be sure, Gold (cue the yucky woke word) “awareness” is certainly increasing at least per the pages of the FinMedia.  But is that translating into enough substantive buying to power Gold to its proper 3700+ perch?  A good many years ago on a Merrill Lynch “call to clients” in which a piece of our work was featured, the host opined that only some 5.0% of managed portfolios carried Gold exposure.  Then in more recent years, (Al Gore’s invention of the internet having since extrapolatively expanded), such number has been bandied down to as low as 0.5%.

We’ve thus decided to go with something assumed to be in the modern-day know:  “AI“.  So in specifically querying such “Assembled Inaccuracy”, the salient part of its responding was:  “…75 percent of private client discretionary investment managers have under 2.5 percent gold exposure…”, followed by the available sources “AI” scrounged, and in turn, its disclaimers.

‘Course for this to have any meaningful relevancy, we need know the status of the other 25%.  Otherwise  ’tis all (per The Stones from ’65): “…About some useless information, Supposed to fire my imagination, I can’t get no … Satisfaction…” let alone accuracy as to managed Gold ownership.

The bottom line being:  as long as stocks remain “the only thing”, Gold shan’t immediately the 3700+ bell ring.

Still, one can’t argue with the golden brilliance of price’s weekly bars from a year ago-to-date, the current blue-dotted parabolic Long trend having completed its 15th week with still plenty of room (154 points) between present price (2761) and the “flip to Short” level (2607, itself now rising at a rate of some +30 points per week).  Either way, wherein understanding range is critical to cash management, Gold’s expected weekly trading range is now 73 points; the daily range (see the website’s Market Ranges and/or Gold page) is currently 31 points.  So notwithstanding the near-term overvaluation note therein, our Gold graphic here points as positively as one could prefer:

As to the StateSide economy, our Economic Barometer points to it of late as trendless, the International Monetary Fund with a more optimistic view than that of the Fed per the latter’s Tan Tome for October released this past Wednesday.  And specific to the Baro, ’twas a very light “50/50” week with just six incoming metrics of which three bettered their prior period.  Amongst the batch was the Conference Board’s “Leading Indicators” (to which we refer as “lagging” because the Baro leads them) for September which were negative for the seventh consecutive month, and further, for the 28th negative month in the last 30.  (Recall as well from the Econ Baro a week ago the “WaPo” OpEd quote about this being “one of the best economic years of many Americans’ lifetimes” … but suddenly they’ve decided not to endorse “re-election” of the “current” Administration … That’s gonna bruise).  Here’s the Baro:

And stark in the Baro’s upper-right corner we’ve the “live” price/earnings ratio of 43.6x for the S&P 500.  Obviously toward approaching the midpoint of Q3 Earnings Season, there’s not been significant enough improvement to bring that ratio down.  In fact for those of you scoring at home, of the 503 S&P constituents, 161 have reported, of which 109 bettered their bottom lines from a year ago.  That is a 68% bettering pace which is “average” vis-à-vis recent years, even excluding 2020’s COVID profits-dearth.  One wonders how might ol’ Jerome B. Cohen (“in bull markets the average level would be about 15 to 18 times earnings”) might react to this data:  only 160 (32%) of the S&P 500 entities have P/Es less than 20, with 52 companies either exceeding 100x or without earnings at all.  (‘Tis again why — instead of the stock market — we prefer the safe, serene, security of the futures markets).  And if that’s too complex for you WestPalmBeachers down there, then we simply ask:  “Got Gold?”

Here’s Gold via our two-panel display, featuring on the left price’s daily bars from three months ago-to-date, whilst on the right is the 10-day Market Profile such that you can see which prices having been carrying the most trading volume.  For both panels, as herein inferred a week ago, ’tis hard to improve upon perfection.  Still, as aforementioned, we’re wary of near-term price reversion to its smooth valuation mean of presently 2644:

With the same drill for Silver, we might as well photocopy that for the yellow metal and merely change the colour to this for the white metal.  ‘Course, the important inference here is Sister Silver having been adorned in her precious metal pinstripes as opposed to her industrial metal jacket, (the latter being her preference when acting as the bad girl with Cousin Copper).  But that clearly is not the current case, the red metal’s own “Baby Blues” of trend consistency being comprehensively in the dumpster (per the website’s Market Trends and/or Copper page).  So stay sweet, Sister Silver!

Then there’s next week, for which the load of incoming economic metrics is massive(!).  17 reports come due for the Econ Baro, including the “Fed-Favoured” inflation gauge of Core Personal Consumption Expenditures Prices for September.  And the “consensus” expection is for it to have risen … we even read within the mist of the past week’s FinMedia the query (paraphrased) “What if the Fed instead raises rates?” come its Open Market Committee’s post-election meeting (06-07 November).  We’ll be updating our inflation table for next week’s piece.

Meanwhile, creativity abounds in the headlines.  Try this CNBS (truth be told) from yesterday:  “In this time of uncertainty, markets seem to rely on logic.”  Folks, you cannot make this stuff up, (except, they’re doing their best to so do).  If markets were relying on logic, today’s S&P 500 (5808) given its ghastly P/E would be half that (2904), whilst Gold (2761) would be ’round its Scoreboard valuation (3736).  True, the markets are never wrong, but misvalued opportunities abound!  Especially for the precious metals all ’round! 

 

Cheers!

  …m…

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

The Gold Update: No. 779 – (19 October 2024) – “Gold Up; Dollar Up; Yields Up — What’s UP?”

by

The Gold Update by Mark Mead Baillie — 779th Edition — Monte-Carlo — 19 October 2024 (published each Saturday) — www.deMeadville.com

“Gold Up; Dollar Up; Yields Up — What’s UP?”

‘Tis simple really.  Against all conventional wisdom (to the extent that any wisdom whatsoever remains as The Investing Age of Stoopid rolls merrily along), Gold is merely yet again proving — as on occasion is its wont — that it plays no currency favourites.

Too, ’tis great having returned following our travels amongst the wilds of easternmost England, to now be ensconced in the quiet confines of our otherwise palatial estate.  However, it does beg the pro-Gold question:  ought we perhaps travel more often?  For in the wake of last week’s brief “in-motion” missive “Gold in 60 Seconds (III)”, the yellow metal went on to record a series of fresh All-Time Highs, reaching yesterday (Friday) up to 2738 before settling at 2736.  And note the suggestion of Gold en route to closing the gap from its Dollar debasement value in the above Scoreboard’s right-hand panel.  Just an observance…

“But it’s not about you, mmb, so may we stick to the issues?“

Of course, Squire, duly noting our having been out-of-pocket without your skillful support last Saturday was a challenge.

But on with the show, beginning with the following two-panel graphic depicting several series of what are more usually Gold-negatively-correlated entities across the past 21 trading days.  On the left we’ve Gold from 20 September through 19 October along with the independently-scaled Dollar Index:  and yes, Virginia, as we’ve seen in the past, both Gold and the Dollar have been on the rise.  On the right for the same one-month stint we’ve the annualized yield of the U.S. 30-year Treasury Bond and the FedFundsFutures equivalent rate, also both on the rise.  Naturally, axiomatic fanatics argue this can’t occur, but (in again cuing Tag Team from ’93) “Whoomp! (There It Is)”:

‘Course, with Gold on the rise and also the Dollar and also yields, ’tis a no-brainer that equities must be in “Dire Straits” … however “Why Worry”(’85):  for the S&P 500 set another record high (5878) this past Thursday, the “live” price/earnings ratio settling the week at 43.7x, +72% above its inception a dozen years ago.  But as we’ve been stating time and again, earnings no long matter, (see the S&P 500 from 24 March 2000 through 10 October 2002).

“But obviously, mmb, the market always goes all the way back up and as you say, ‘beyond’, eh?“

Squire, throughout the 67-year history of the S&P 500, that has ultimately been the case.  But in this current age of the “low-information, short-attention span, instant gratification crowd“, patience would be vapid in weathering a 13-year, double-dip S&P 500 trough for a price gain of just 2% as we witnessed following 24 March 2000 until 10 April 2013.  It happens.

But let’s go to what truly of late has been “The Happening”(The Supremes, ’67):  by yesterday’s 2736 settle, Gold year-to-date is now +32%, second only to the BEGOS Market component Silver, she  now +41%!  Indeed, the white metal’s long-overdue “catching up” is in play to some extent, the Gold/Silver ratio — as below noted at the foot of Gold’s weekly bars graphic — having been reduced this past week to now 80.7x, its lowest reading since 16 July, (but still well above the century-to-date average of 68.5x).  Thus with Gold remaining very cheap relative to currency debasement — and Silver still a bargain relative to Gold —  here is the yellow metal from one year ago-to-date:

 

With a justifiable nod toward Gold jubilation and its still being ever so cheap from the long-term currency debasement perspective, as has been our prudent point of late:  Gold near-term remains “high” relative to its BEGOS valuation.  So again we next display Gold’s daily closes from one year ago-to-date astride its smooth valuation line — itself rightly rising — but suggesting price “ought be” (per the lower panel oscillator) some -111 points lower at 2625.  To be sure, ’tis a one-off valuation for Gold given its price movement relative to those of the other four primary BEGOS Markets; but obviously price and valuation inevitably meet … just in case you’re scoring at home:

Now this next graphic comes with a loss of words to substantively describe, if for no other reason than ’tis perfection for the daily bars across the past three months-to-date featuring Gold on the left and Silver on the right.  As noted, the yellow metal is at a record closing high of 2736, whilst the white metal at 33.93 is at its best daily settle since 29 November 2012.  Nuff said:

And thus segueing to the precious metals’ 10-day Market Profiles, it stands to reason that we find both Gold (below left) and Silver (below right) essentially at the top of their respective stacks, notable underlying volume-supportive prices as labeled:

Towards this week’s wrap, with The Washington Post opining that the 2024 StateSide economy may be amongst the best of our lives, we indeed turn to the Economic Barometer.  Of the 14 metrics taken in by the Econ Baro this past week, six improved period-over-period … meaning that eight did not improve.  The week’s notable winner was substantive growth in the pace of Retail Sales for September.  But amongst the stinkers came shrinkage in September’s Industrial Production from August’s +0.3% to -0.3% and a like erosion in the New York State Empire Index from +11.5 in September to -11.9 for October.  Still, “WaPo” says ’tis all on go.  Do you think so?  Here’s the Baro:

So “What’s UP?” indeed!  With Gold and the Dollar and Yields and even the stock market all on the rise, might we be facing a Fed surprise?  After all, as aforeshown, the rate equivalent of FedFundsFutures also is up of late. The Federal Reserve’s Open Market Committee issues its next Policy Statement on 07 November … which is a Thursday!  Why not on the usual Wednesday?  One guess may be that “they” (whoever “they” are out there) still shan’t have “declared” the winner of the Tuesday, 05 November Presidential Election.  “Well, there’s millions of mail-in ballots still to count, ya know…”  And of course ’tis The President who nominates the FedHead.  So might it behoove one to see who’s won before the next Fed policy is spun, lest it all come undone?

For in speaking of spin, hat-tip “Political Calculations” with this gem:

And keep your hat tipped to Gold as THE gem!

Cheers!

  …m…

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

The Gold Update: No. 778 – (12 October 2024) – “Gold in 60 Seconds (III)”

by

The Gold Update by Mark Mead Baillie — 778th Edition — Easternmost England — 12 October 2024 (published each Saturday) — www.deMeadville.com

“Gold in 60 Seconds (III)”

Our title’s Roman “III” is indicative of having used “Gold in 60 Seconds” now for the third time across these esteemed Saturday missives’ 15 years (previously on both 16 April ’16 and 08 March ’14).  Again, this time ’tis so apropos.  For as herein previewed a week ago…

Greetings from a remote, undisclosed, rural location in easternmost England, an area sufficiently primitive that in lieu of digital internet connectivity we are reliant upon the dear old analog telegraph to produce this week’s piece.  And with time to write this week at an extreme premium, let’s get salient straightaway with just the key graphics (to the extent they can visually be reproduced via the telegraph).

For all the hype over the past StateSide “Inflation Week” — which at the retail level (CPI) was more robust than consensus anticipation, yet at the wholesale level (PPI) relatively benign — Gold netted a gain for the week of (deep breath … ready?) exactly one point in settling yesterday (Friday) at precisely 2674.2 vs. the prior Friday’s 2673.2.  Here are Gold’s weekly bars from one year ago-to-date, the blue-dotted parabolic Long trend now 13 weeks in duration, even as price has made a “lower high” now twice in succession:

Per recent editions of The Gold Update — as well of late in the daily Prescient Commentary — we’ve been alluding to Gold’s being “high” relative to its smooth valuation line to which price inevitably reverts as we next see from this time a year ago to now.  The smooth line reflects a near-term valuation for Gold based on its movement relative to those of the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500).  The graphic’s lower panel oscillator (price less valuation) tells the tale that with price recently stalling, ’tis becoming more in line with valuation, the good news there being (as herein highlighted a week ago) the BEGOS valuation for Gold is rising:

Again, that’s merely a near-term view, for long-term by the opening Gold Scoreboard (which may appear graphically-challenged per said analog telegraph transmission), the yellow metal today at 2674 is undervalued by some -1069 points per its 3743 Dollar debasement value.  Dip Gold may near-term do, but long-term do not Gold eschew.

Meanwhile, the relentless S&P 500 made record highs both this past Wednesday and Friday, en route to settling the week at 5815.  ‘Course, its “live” P/E ratio remains staggeringly high at 43.6x, some +72% above its inception a dozen years ago.  But we reprise:  the S&P’s saving grace is earnings no longer having a role in “valuing” stocks.  “Les jeux sont fait; rien ne va plus.”  And as to near-term technicals:  through 197 trading days this year-to-date, the S&P 500 has been “textbook overbought” for 122 of them, including now.  (A word to the wise is sufficient).

In concert with the the one-way stock market is the Economic Barometer, albeit hardly are they in tune with one another as shown here year-over-year.  One cannot beat the modern day reality of a weakening economy being of benefit to the S&P 500.  As ’tis said “If it’s so easy, then everybody would do it.”  And indeed, they are.  But be it the “Look Ma, No Earnings!” crash — or worse — the “Look Ma, No Money!” crash, at some point, such unsustainability shall revert to the mean, as relative to earnings the S&P 500 has historically done since its creation 67 years ago in March of 1957.

Of this week’s total 60-seconds read, we’ve but 10 seconds left to offer.  Thus swiftly let’s bring up the two-panel display of Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right:  Therein, most key are the falling “Baby Blues” of trend consistency.  As penned in last Tuesday’s Prescient Commentary:  “…we’d look for lower precious metals prices near-term, perhaps for Silver right ’round 31 and for Gold 2620-2570…”: 

So there briefly ’tis for this week as we simply must scoot.  14 incoming metrics are due next week for the Econ Baro, plus Q3 Earnings Season starts to become more voluminous; (but be they better or worse, as noted, earnings today are simply passé).

Thus from the undisclosed wilds of easternmost England, we bid you “Good Day!”, and that many-a-good Gold trade come your way!

Cheers!

  …m…

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

The Gold Update: No. 777 – (05 October 2024) – “Gold Stands Idly By as Silver Nears a 12-Year High”

by

The Gold Update by Mark Mead Baillie — 777th Edition — Monte-Carlo — 05 October 2024 (published each Saturday) — www.deMeadville.com

“Gold Stands Idly By as Silver Nears a 12-Year High”

Welcome to edition “Triple-Seven” of The Gold Update, wherein we find the yellow metal having settled yesterday (Friday) at 2673, a -0.3% loss (-8 points) for the week.

Silver however for the same stint settled at 32.45, a +1.7% weekly gain (+0.53 points), achieving en route a nearly 12-year high of 33.23, such level having not traded since 13 December 2012.  Not even cajoling Cousin Copper could keep sweet Sister Silver down.  ‘Twas a beautiful thing as we here see per the cumulative percentage tracks of the BEGOS Markets’ “Metals Triumvirate” by the hour across this past week:

Silver’s sterling week (whilst Gold was essentially asleep) was enough to bring the (albeit still excessive) Gold/Silver ratio down to 82.4x, its lowest closing reading since 23 July.  Moreover, year-to-date expanded Silver’s leading position of the BEGOS Markets, the white metal now with a gain of +35.0%, (followed by Gold at +29.0% and then the S&P 500 +20.6% to round out the podium).

Specific to Gold and the murderous Mid-East mayhem, we were yet again reminded that the yellow metal’s swift upside reaction to geo-political barbarism was at best short-lived, price from late Monday into Tuesday being boosted from 2646 to 2695 only to then see it erode away into week’s end.  We’ve written rather extensively on Gold’s “momentary” spikes over geo-political jitters, price then regularly receding.

That in turn reminds us of Gold’s most foundational element of valuation:  ’tis not fearful events nor extravagant wedding seasons, et alia.  Rather ’tis the debasement of currency that gives lasting value to Gold.  And as our opening Gold Scoreboard shows, by Dollar debasement (even as adjusted to the creeping increase in the supply of Gold itself), the yellow metal today “ought be” fetching $3,741/oz.  So yes, for you WestPalmBeachers down there, priced today at $2,673/oz Gold remains cheap; and Silver still super cheap given the century-to-date average Gold/Silver ratio is but 68.5x.

Still in light of Silver’s robust week, Gold stand by rather idly as we here see by the weekly bars from one year ago-to-date. the blue-dotted parabolic Long trend nonetheless continuing to ascend:

Regardless, we’ve this ongoing reminder from the “Nothing Moves in a Straight Line Dept.” that Gold near-term is overvalued vis-à-vis its smooth valuation line (which is different from the broad-term Scoreboard value).  Here, the smooth line sets a value for Gold based on its movement relative to those of the five primary BEGOS Markets, namely the Bond, Euro, Gold, Oil and S&P 500.  Thus from the website comes that updated view, by which one ought anticipate price reverting to the smooth line which fortunately itself is on the rise and therefore, in part, supportive of Gold’s recent rally:

“Your chart says ‘excessive’, but what happened to your ‘Stock Market Warning’ mmb?“

To be sure, Squire, we issued said “Warning” a week ago.  Instead, the S&P 500 sported a +0.2% gain for the week.  ‘Tis the way ’tis as The Investing Age of Stoopid blissfully rolls along.  The mighty Index today stands at 5751, a mere -16 points below its 5767 all-time high, with FinMedia reports for 6000.  That is just another +4.3% up from here.  (Note for those of you scoring at home:  at 6000, the “live” P/E of the S&P would be 44.4x; ‘course, earnings in the modern investing era have becoming meaningless, so ’tis all good, even as the “non-event” Q3 Earnings Season commences on Monday).

Indeed speaking of “good”, as we work toward the Economic Barometer, how about that StateSide jobs report for September, courtesy of the Department of Labor Statistics?  The net “creation” of 254,000 Non-Farm Payrolls was hailed amongst the FinMedia as (ready?) “Blockbuster” and even more superlatively as a “Supernova”.  Why, we ourselves were so excited over this apparently history-breaking news that we decided (as you know is our wont) to do the math.  And here’s what we found:

  • Century-to-date (i.e. from January 2001), Friday’s monthly report was No. 285, for which such amazing job creation ranked as (ready?) 50th-best.  One strains to recall what adjectives were used for the prior 49 reports that were even better.

But yes, we get it:  ’tis election season and as the economy’s state ultimately redounds to the Executive Branch, “Labor” need ensure its survey results generate energized levels of electoral enthusiasm.  Cue The Cars from ’84: “Uh oh, it’s magic” And as an aside, specific to September’s private sector employment, “Labor” recorded a +78% month-over-month improvement whereas ADP’s report was only half that at +39% … (just one of those things that makes you go “hmmmmm…”)

Either way, we’re told the economy is humming right along, some indeed invoking the “Goldilocks” descriptor.  Really, does it get any better than the following?

‘Course in the midst of all this economic euphoria come the bits from the “You’re Not Supposed to Say That Dept.”, which from this past week include ongoing net contraction for September in both the Chicago Purchasing Managers’ and Institute for Supply Management’s Manufacturing Indices, a slowing in Hourly Earnings and the number worked thereto, a pickup in the prior week’s Initial Jobless Claims, and actual shrinkage in August’s Factory Orders.  But “Mum’s the word, Mum.”  Right.

As aforeshown, getting it right this past week was Silver, such that we’ll lead the two-panel displays this time ’round with the white metal.  Below on the left are her daily bars from three months ago-to-date; but be wary of her “Baby Blues” of day-to-day trend consistency, as upon their breaching below the +80% axis, one ought look to lower price levels.  Then on the right we’ve Silver’s 10-day Market Profile with the most dominantly-traded prices by volume tightly nested as labeled:

Too, we’ve the like drill for Gold.  Note on the left the “Baby Blues” similarly curling to the downside, whilst on the right the three labeled dominant prices are a bit more spread out than are those for Silver:

We shut down for this week with a heads-up for next week.  Our 778th consecutive Saturday edition of The Gold Update is to be composed from a remote, undisclosed, rural location in easternmost England, an area sufficiently primitive that in lieu of digital internet connectivity we must be reliant upon analog telegraph.  Indeed, next week’s piece — to literally go “out on the wire” (as dear old Grandpa used to say) from one telephone pole to the next and right ’round the world — shall be quite brief and perhaps even graphics-less. But having never missed penning a Saturday missive across these 15 years, the show must go on, just as does Gold being true money these 5,000 years!

So whilst Tut himself may be out on the town, again we’ll be hunkered well down close to the ground our next missive ’round!

Cheers!

  …m…

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

The Gold Update: No. 776 – (28 September 2024) – “Gold Surely Soaring; Stock Market Warning”

by

The Gold Update by Mark Mead Baillie — 776th Edition — Monte-Carlo — 28 September 2024 (published each Saturday) — www.deMeadville.com

“Gold Surely Soaring; Stock Market Warning“

Soaring indeed has been our Gold:  year-to-date, price has risen from last year’s settle at 2072 to as high as 2709 this past Thursday, to then settle the week yesterday (Friday) at 2681.  That is a net year-to-date gain of +29.4% to keep Gold on the podium per our BEGOS Markets Standings thus far for 2024:

 

Moreover, how lovely ’tis to see sweet Sister Silver topping the entire troupe.  We’ve herein pounded the table seemingly forever on Silver’s relative undervaluation to Gold, both precious metals of which — despite record Gold highs — still remain cheap by currency debasement:

  • Gold today at 2681 is nonetheless -28% below its Dollar debasement value (per the opening Gold Scoreboard) of 3739;

  • Silver today at 31.92 is attractively -18% below its pricing by the average century-to-date Gold/Silver ratio of 68.5x, the ratio itself today 84.0x:  but priced to that average ratio puts Silver instead at 39.16;

  • ‘Course, this then is the cherry on top:  price Gold today at its 3739 debasement value with Silver priced per the average Gold/Silver ratio of 68.5x and you’ve got Silver at 54.58 … just in case you’re scoring at home.

From Silver’s scoring to Gold’s soaring:  the yellow metal’s year-to-date +29.4% gain through the 187 trading days thus far in 2024 ranks far and away its best percentage increase specific to such stint across this century’s 24 years.  A distant second-best is 2016’s +24.9% gain through that year’s first 187 trading days; (the worst such year-to-date stint was -20.2% in 2013 as the wheels continued to come off following Gold’s  having “gotten ahead of itself” as we’d herein presciently penned back in 2011).

More toward “The Now”:  as well as Gold is soaring — yet still remaining cheap by Dollar debasement — price persists as “high” relative to near-term valuation vis-à-vis its smooth line borne of movements to those of the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500).  Here from the website is our Market Value chart of Gold from one year ago-to-date astride that smooth valuation line; the oscillator in the lower panel (price less valuation) shows Gold presently priced as +148 points “high”, with “means reversion” inevitably in the balance as you can see across the graphic:

Near-term “overvaluation” notwithstanding, Gold simply looks great by its weekly bars from one year ago-to-date.  Even were price to suddenly snap back down those 148 points as just shown (to 2533), ‘twould still be above the rightmost parabolic blue dot which per the weekly graphic is at 2478.  Again, great:

Staying with our year-over-year theme, here next is the percentage track of Gold along with those of its key equities brethren.  How’s the AEM leverage working out for ya?  That track of Agnico Eagle Mines is +81%, followed by the Global X Silver Miners exchange-traded fund (SIL) +53%, Pan American Silver (PAAS) +52%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +50%, Newmont (NEM) +45%, Gold itself +42%, and Franco-Nevada sorting through its Panamanian exasperation (FNV) -5%.  Still, that’s diversification, right there!

Meanwhile, on the heels of the Federal Reserve’s “Jumbo” -50bp FundsRate cut of a week ago, we’ve since received all the salient data to complete our inflation summary for August.  Remember:  those figures sporting the red backgrounds are running ahead of the Fed’s +2.0% inflation target.  So was “Jumbo” in hindsight rather “dumbo”?  FedGov Michelle “In the know” Bowman seems to think so, her dissenting Open Market Committee vote for “Jumbo” being “No”, preferring instead for -25bps to go.  Might the FOMC later say “Oh no…”?

What we do know is that the Fed’s -50bp FundsRate cut has been beneficial on balance for the BEGOS Markets, six of the eights components therein having since moved higher, (save for the Bond and Oil).  Let’s go ’round the horn for the whole bunch across their last 21 trading days (one month), replete with their respective grey trendlines and “Baby Blues”, the dots that depict the day-to-day consistency of each trend.  Therein, note the tight correlation of the Metals Triumvirate as the panels for Gold, Silver and Copper appear practically identical:

Particularly for the precious metals, next we’ve their 10-day Market Profiles featuring Gold on the left and Silver on the right.  Denoted are those respective prices having traded the most amount of volume during the past two weeks; such prices we regularly consider as support and resistance levels:

With but one trading day remaining in the month, indeed in Q3, ’tis time to bring up (literally) Gold’s structure by its monthly bars across the past 16 years, the stratified “memories” as labeled.  Whilst we all understand that “nothing moves in a straight line” — and that Gold as aforeshown is significantly “high” relative to its near-term BEGOS valuation — The Big 3000 is sitting on the table, a price certainly to be achieved given that the yellow metal historically always catches up to prior high levels of debasement value (again which at present is 3739):  ’tis merely about “The When”.  And from today at 2681, a “mere” +11.9% puts Gold at The Big 3000:

“All fine info, mmb, but your title mentions ‘Stock Market Warning’, so…“

Yessir, Squire, we’ve saved the juiciest (or better stated “scariest”) bit for last.  Let’s first go to the Economic Barometer, itself actually having notably improved over the past five weeks.  Indeed from 22 August-to-date, 63 metrics have come into the Econ Baro, 38 (60%) of which have improved period-over-period.  Thus the Baro has been boosted by better numbers combined with those “getting worse more slowly” –[P. Krugman, 02 May ’01].  Here ’tis, “flying high” (by some eyes), whilst the S&P 500’s red line blows through the skies:

But to our Stock Market Warning:  as Squire duly reminds us, so is stated in this missive’s title.  (Indeed for further analysis you may also refer back to the 712th edition of The Gold Update from 08 July 2023 entitled “Gold’s Downtrend Duly Dissed?  Stocks’ 10 Crash Catalysts!”).

To continue, hardly have we been silent on the year-in, year-out overvaluation of the stock market as measured by the S&P 500.  Simply stated by any historical gauge, earnings (or lack thereof) remain unsupportive of price, period!

  • We just queried “AI” (“Assembled Inaccuracy”) for the current price/earnings ratio of the S&P.  The “reply” was “29.2x” without respect to past or forward earnings.  ‘Course because as you ad nauseum know we do the honest math, the “live” cap-weighted P/E is actually 42.3x using trailing twelve-month earnings, (earnings-less companies being assigned the price of their shares as the P/E).  And since introducing such “live” P/E in 2013, it has increased +67%.  Whoops.

  • Again we quote J. B. Cohen:  “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”  To get down to such rational valuation, earnings at today’s S&P level need double if not triple.  Does the above Econ Baro suggest such robust growth?  Nope.  Or shall the policies of the next StateSide President?  Of course not.  Whoops.

  • The S&P 500’s market capitalization today is $50.3T for which the readily available money supply (M2) to cover is “only” $21.2T.  Whoops.

  • Had COVID never occurred (and thus neither the $7T of monetary infusion), the S&P today would be ’round 3000 (vs. today’s 5738) and everybody’d be happy as clams.  Whoops.

  • Geo-political disruptions (understatement).  Whoops.

“That’s lots of catalysts, mmb, but what do you think really sets it off?“

The oldest catalyst throughout market history, Squire:  flat out fear, influenced to an extent by the modern-day FinMedia which at times refers to a -5% correction as a “crash”;  now just add a zero, (which for you WestPalmBeachers down there makes -50%).  And today given there’re so many invested “first timers” (i.e. the happy, no-crash experience, marked-to-market millionaires), next time the fear shall be ferocious and future plans-altering. “Nobody Knows You When You Are Down and Out” –[Jimmie Cox, 1923].  Whoops.

And most importantly, overvaluation (to use a “woke” term) “awareness” is finally spreading.  A valued friend (formerly at the very apex of a major investment bank) in a just-issued interim report to investors  warned of a stock market correction reaching -50%.  Respected Gold analyst Jim Rickards recently said same.  Whilst we’re in the camp for a “milder” -35% skid, our excellent co-director here is in the -40% camp.  Indeed “The When”?  Before year-end?  Whoops.

Then (hat-tip The Times of India) for further “awareness”:

Or more accurately, aBEARness?  Got Gold??

Cheers!

  …m…

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

 

The Gold Update: No. 775 – (21 September 2024) – “Gold Flies as Dumbo* Whilst the Fed Goes Jumbo”

by

The Gold Update by Mark Mead Baillie — 775th Edition — Monte-Carlo — 21 September 2024 (published each Saturday) — www.deMeadville.com

“Gold Flies as Dumbo* Whilst the Fed Goes Jumbo”

Thursday’s Prescient Commentary opened as follows:  “We were wrong about the Fed, it having cut its Funds Rates -50bp rather than by our -25bp assertion; and as is our wont, when we’re flat out wrong, we fess up…”

Wrong indeed.  Through many-a-missive in this year’s early months, we went on about the Federal Reserve needing to actually make a further FundsRate increase, given the mathematical proof of inflation remaining well away from the Fed’s “preferred target” of 2%.

But then came the month of May and it all started to go wrong for the Economic Barometer.  So damaged became the Econ Baro that come the Federal Open Market Committee’s 31 July Policy Statement, we asserted that they’d have to vote to reduce the FundsRate by -0.25% from the then 5.25%-5.50% range to 5.00%-5.25%.  Yet instead, the FOMC surprisingly stood pat.

Now just came the FOMC’s most recent vote this past Wednesday.  Contrary to the FinMedia’s fervoured anticipation of a “Jumbo Cut”, we adamantly put forth time and again ‘twould be a -0.25% cut rather than a mouth-foaming -0.50% cut (even as the latter was already priced into the FedFundsFutures) for three key reasons:

  • Unexpected inflation pop:  for August, the “core” inflation readings at both the wholesale (Producer Price Index) and retail (Consumer Price Index) levels came in at an annualized +3.6% pace vs. consensus for +2.4%; pop goes the wallet;

  • Poor Fed optics: as herein penned back on 24 August:  “Our case for a rate cut back on 31 July did not come to pass, which lends credence to a two-pip reduction on 18 September.  But then the optics would be poor for the Fed being too slow, thus we think ’twill be but one pip they’ll go.” But no, ’twas instead “Jumbo”;

  • Rate cut history:  So far this century — save during times of extreme financial distress — rate cuts otherwise have always been in units of -0.25%.  The three exceptional periods were 1) 911 and the DotComBomb; 2) the FinCrisis; and 3) COVID.

Such logic circumvented, as Squire would say, ’tisn’t about us.  Simply stated we were wrong; so let’s move on.

“But hang on mmb, ’cause maybe the Fed now thinks ‘extreme financial distress’ is coming…“

Oh come now, dear Squire.  With “Old Yeller’s” Treasury Trillions desperately coming due, an electorate bent on lack of so-called “Presidential timber” even as the civil society collapses, and the S&P 500 truly trading at 41.9x earnings with a market cap of $49.8T supported by s StateSide liquid money supply (M2) of “just” $21.1T, what could possibly go wrong?  Nothing to see here.  So again, let’s move on … to Gold!  Here’ tis, flying as does Helen Aberson’s and Harold Pearl’s fabulous Dumbo from 1939, (*later to be trademarked by what today is Disney Enterprises, Inc.):

Suitable for framing is the above graphic of Gold’s weekly bars from one year ago-to-date.  And yes, price having settled yesterday (Friday) at an All-Time Closing High of 2647, as therein noted ’tis still stunningly cheap relative to the debasement of the Dollar.  Indeed per yesterday’s record intra-day high of 2651, Gold trades at a -29% discount to its 3727 debasement value, per the opening Scoreboard.

And then there’s Silver:  per the graphic’s table, the Gold/Silver ratio of now 84.0x is well-above its century-to-date average ratio of 68.4x, so much so that were Silver to snap-adjust to such average, rather than priced today at 31.50, she’d be +23% higher at 38.67.  Moreover, whilst Gold is at an All-Time High, Silver’s current 31.50 level is -37% below her own All-Time High of 49.82 recorded away back on 25 April 2011.  Ad nauseum:  “Don’t forget Sister Silver!”

Fortunately for the aforementioned Econ Baro, its multiple months (May into August) of nausea waves have morphed into somewhat blessed relief.  Having bottomed one month ago to the day (on 21 August), the Baro has since been climbing out nicely.  For this past week alone, nine of the Baro’s 14 incoming metrics improved period-over-period, notably including September’s New York State Empire Index and that for National Association of Homebuilders, plus August’s Housing Starts and Building Permits, as well as Industrial Production.

Still stumbling however (and not surprisingly so given the overall downward track of the Baro) was the Conference Board’s negative “lagging” indicator of Leading Indicators; (for you newer readers, we regularly refer to them as “lagging” given the Baro significantly leads them).  Still, with the StateSide economy’s recent advance, add in the Fed’s “Jumbo” rate cut and what’ll we get?  Renewed inflation?  Yet if the economy resumes folding, indeed stagflation?  (Right, we’re not supposed to go there…)  Here’s the Baro:

‘Course, all the post-Fed excitement is over the stock market’s “Going to a Go-Go” –[The Miracles, ’65].  But as we “X’d” (@deMeadvillePro) last evening, the MoneyFlow of the S&P 500 — as regressed into S&P points — is vastly underperforming the Index itself.  Be it by the latest weekly, monthly, or quarterly measure, the euphoric buying to a record high (5734) is at best thin as we below see per one of our favourite market-leading indicators.  We thus anticipate lower S&P levels near-term; after all, ’tis the first day of “fall”; (write it down):

Specific to Gold, as does Dumbo, ‘twould be great to see it continue flying high in the sky.  However price is getting somewhat stretched above its “smooth valuation line” relative to movements vis-à-vis those components comprising our five primary BEGOS Market (Bond / Euro / Gold / Oil / S&P 500).  Per the panel at lower left, we see Gold denoted as presently being +134 points “high” by the oscillator (price less valuation).  Obviously that is a near-term trading measure, given that Gold most broadly (as earlier noted) is better than -1000 points below its debasement value.  Too, within this near-term trading vein, the panel at lower right is Gold’s EDTR (Expected Daily Trading Range), presently set for Monday’s session at 34 points.  (Naturally, you can view all the daily updates to these metrics at the website):

Next let’s go to Gold’s two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  To be sure, the “Baby Blues” of trend regression consistency have been spot-on brilliant:  as we on occasion quip:  “Follow the Blues instead of the news, else lose yer shoes”.  Meanwhile, the Profile clearly shows 2607 as Gold’s firmest near-term volume-supportive price:

Looking ever more similar to Gold is Silver by her daily bars (below left) and Profile (below right).  Still, given Sister Silver’s wayward tendencies to go waltzing off with Cousin Copper, we’re not that confident about 31.00 holding as the denoted dominant near-term trading supporter, (albeit Copper has been firming through the past six weeks).  But as we’ve said, whereas Gold broadly is still cheap, Silver remains super cheap(!)  Here’s the graphic:

Having opened with the Fed, let’s close with same.  Over here, financial friends with whom we spoke almost all agreed that the Fed’s rate cut would be -0.25% (as, in fact, voted FOMC member Michelle Bowman), although a case was made for -0.50%, if for no other reason than a shift from the prior 5.25%-5.50% target range to now 4.75%-5.00% wasn’t that material of a change, (whereas from say 1.50% to 1.00% would be quite significant).  But again as earlier cited, should the economy be garnering some renewed strength with money now a bit easier by which to come, then shall inflation add to a higher sum?  Better to not be a dumbo without Gold, but fly as Dumbo with that which you hold.

Which brings us to this cool view of Disney’s Dumbo 1/4oz. Gold coin:

Now that really is the only way to fly:  Gold High!

Cheers!

  …m…

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

The Gold Update: No. 774 – (14 September 2024) – “Fresh Gold Highs for Buyers Wise”

by

The Gold Update by Mark Mead Baillie — 774th Edition — Monte-Carlo — 14 September 2024 (published each Saturday) — www.deMeadville.com

“Fresh Gold Highs for Buyers Wise”

Seasoned supporters of Gold well remember the late, great Richard Russell (decd. 2015), who said, (as on occasion herein reprised):  “There’s never a bad time to buy Gold.”  Surely in his ascended state, his spirit veritably senses vindication of such declaration.

Indeed:  Gold per the December contract settled yesterday (Friday) at 2606, its highest-ever closing price, en route having traded up to 2615, +45 points above the prior All-Time High recently recorded on 20 August at 2570.  And thus The Gold Update’s nearly 15 years of querying “Got Gold?”, too, is being vindicated.

Since our first edition dated 21 November 2009, the price of Gold is +126% from 1151 to now 2606.  Oh to be sure, the Great American Savings Account (aka The S&P 500, “Casino 500”, “Airhead 500” et alia) is across the like stint +415% from 1091 to now 5626, (plus all those dividends en route).  Yet as we regularly caution from “The Means Reversion Dept.”, the S&P’s “live” price/earnings ratio today is 41.6x which is +70% above its inception (in 2013) at 25.4x, whereas Gold today at 2606 is -30% below the opening Scoreboard’s debasement level of 3726

“So why are you going on about all this, mmb?”

Because simply, Squire, were both Gold and the S&P to revert to such means at this instant, the yellow metal would instead be +224%, ahead of the “Casino 500” +215% (again, before dividends).  Still, not much difference there, however means reversion eventually recurs and shakes emotive folks out of stocks, whereas Gold buyers do otherwise.  (“Tick tick tick goes the clock clock clock…”)

And given the yellow metal’s recent run to these record high skies, Gold buyers clearly have been wise.  The following chart is of Gold by the month from the year 2020-to-date.  The key here is the region of the lower panel thus far in 2024.  Each green bar is the month’s profit per Gold contract purchased.  So thus far through the nine trading days of September, the height of the rightmost bar as noted is $7,020/contract, had you bought one at the month’s opening precise price of 2536.0.  The gain to the current precise price of 2606.2 is +70.2 points which by the leverage of $100/contract yields that $7,020; (for you home-scorers, that is a nine-day gain of +60.8% given a per contract margin requirement of $11,550).  But the point is: the year-to-date buying participation in Gold is the best ’tis been since COVID kicked in back in 2020.  In fact, per the barely visible red bars since a year ago, for Gold ’tis been all monetary inflow:

‘Course, beyond the catalyst of currency debasement, ours is not to reason “why” Gold is getting the buy.  In a sense, the Federal Reserve’s initial -0.250% FundsRate cut this next Wednesday (18 September) ought by now be “priced-in”.  As to some degree, too, is further global instability per the pending StateSide election outcome.  Let’s cue it again:  “Got Gold?”

We’ve got Gold right here in turning to its weekly bars and dotted-parabolic trends from one year ago-to-date.  And are the strings of blue dots ever one’s friend … barring your being one of those Smart Alec Shorts.  Welcome to 2600:

Meanwhile, trying to un-squeeze itself is the Economic Barometer, it having received a boost these last few weeks.  And given “the rising tide of inflation lifts all boats”, August’s newly reported levels thereto at both the wholesale (Producer Price Index) and retail (Consumer Price Index) levels on balance pipped back up a bit, notably in their “core” readings.  This adds to our aforementioned assessment that — come Wednesday — the Fed shall only cut their FundsRate by 25 basis points rather than by 50, albeit the latter curiously is still sought per the FedFundsFutures.  But let’s see if that trade unwinds as we work toward Wednesday.  Here’s the Baro:

You tell ’em, Yellen; but more aptly by the Baro, it instead appears “deep into a recession”.  (Just sayin’, but that’s Washington…)

Next we go back to the precious metals, the following two-panel graphic featuring on the left Gold’s daily bars from three months ago-to-date, with same on the right for Silver.  For the yellow metal ’tis been “all on go”, whilst for the white metal — despite her recent rightmost up-kick — she’s been more aligned with red metal Copper these recent months.  Further, Sister Silver by price continues to lag Gold:  the century-to-date average Gold/Silver ratio is 68.4x … but the actual ratio at present is 83.9x.  And yes, just as both Gold inevitably reverts to its Dollar debasement value and the S&P 500 to its average P/E ratio, so too does the Gold/Silver ratio revert to its mean:  which with Gold today at 2606 in turn prices Silver +23% above her current 31.07 level at 38.08.  Thus as we yet again ask “Got Gold?”, we in kind also reprise “Do not forget the Silver!”  Here’s the graphic:

As to the respective 10-day Market Profiles, here they are for Gold (below left) and for Silver (below right).  Whilst ’tis nice to see no overhead trading resistors, there are for both metals dearths of volume activity below current levels, which for you WestPalmBeachers down there means don’t expect these two markets to keep moving up in a straight line.  Too, should you peek at the website’s Gold page, you’ll see that price by the “Market Value” metric is +114 points above its smooth valuation line (as therein described).  Either way, these Profiles at present are pretty:

So with respect to fresh highs for Gold,  let’s update the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3726
Gold’s All-Time Intra-Day High:  2615 (13 September 2024)
2024’s High:  2615 (13 September 2024)
10-Session directional range:  up to 2615 (from 2504) = +111 points or +4.4%
Gold’s All-Time Closing High:  2606 (13 September 2024)
Trading Resistance:  none per the Profile  2341
Gold Currently:  2606, (expected daily trading range [“EDTR”]:  32 points)
Trading Support:  nearby per the Profile 2605 / 2596 / 2582, then 2544-2526
10-Session “volume-weighted” average price magnet:  2545
The Weekly Parabolic Price to flip Short:  2415
The 300-Day Moving Average:  2159 and rising
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

Thus into the new week we go, with 14 metrics due for the Econ Baro, plus of course the Federal Open Market Committee’s Policy Statement on Wednesday.  More broadly, bear in mind that:

  • Equities per the S&P 500 remain exceedingly (understatement) expensive given the lack of supportive earnings generation;

  • Gold despite new All-Time Highs remains cheap relative to Dollar debasement;

  • Silver relative to Gold remains super cheap!

And so to segue from those closing notes:

Indeed be buyer-wise with Gold (and Silver!) as the prize!

Cheers!

  …m…

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

The Gold Update: No. 773 – (07 September 2024) – “Gold Stodgy; Stocks Dodgy”

by

The Gold Update by Mark Mead Baillie — 773rd Edition — Monte-Carlo — 07 September 2024 (published each Saturday) — www.deMeadville.com

“Gold Stodgy; Stocks Dodgy”

Per our prior missive on Gold having recorded its second-narrowest trading week of 2024 (by percentage distance between high and low), now this last week’s performance perhaps is best categorized as “stodgy”, which by the Oxford English Dictionary (for you WestPalmBeachers down there) in part is defined as “lacking in spirit or liveliness.”  To wit, by entering this past trading week with an EWTR (“expected weekly trading range”) of 81 points, Gold’s actual range from low-to-high was just 70% of that at 57 points, price settling yesterday (Friday) at 2527, despite all the “Fed” this, and “Jobs” that, and stocks’ “Worst Week” in a year, suddenly replete with FinMedia fear.

In turn, that 2527 price level is (for those of you scoring at home) -32% below Gold’s Dollar debasement valuation of 3726 as above depicted in the upper panel of the Gold Scoreboard.  Yes, we regularly harp upon such undervaluation if for no other reason than Gold historically catches up to its supply-adjusted debasement value (i.e. per the Dollar’s green “M2” money supply line) as shown in the Scoreboard’s righthand panel.  Do not lose sight of that fact, lest you end up in the vast “woudda shoudda coudda” crowd who are without Gold once it justifiably really takes hold.

Still, stodgy as it seems, our broader graphic of Gold’s weekly bars from one year ago-to-date remains robust and cheerful.  Here ’tis:

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

‘Course, the Buck’s upside pluck into September 2022 per the above weekly chart clearly came in tandem with the Fed raising its Funds Rate.  But now that the Open Market Committee per its 18 September Policy Statement shall initially reduce said rate by -0.250%, the bang for the Buck is starting to wane.  Yes, the nattering nabobs of Gold negativism love to swiftly point out that the yellow metal offers no yield.  But given Gold’s aforementioned undervaluation of -32%, that “catch-up yield” by price alone looks excellent to us.

Meanwhile “catching-down” (if you will) is the “dodgy” stock market.  ‘Tis always entertaining to read the FinMedia freak-out whenever the market puts in even just a pimple of a correction.  “S&P 500 tumbles Friday to post worst week since 2023” trembles CNBS, (our being more precise, since that ending 11 March 2023).  True, the S&P’s net loss for the past week was -4.2%.  But let’s put that in context:

  • from the year 2000-to-date — through the DotComBomb, FinCrisis, and CrazyCovid — this past week’s net loss for the S&P 500 was its 54th worst across those 1,288 weeks.  “Oh dear!”

Hardly ho-hum, but the fear elicited through the FinMedia was both formidable and (for us) fun.  And it shows just how complacent have become the “youngsters” of modern-day Wall Street.  Let’s again reprise BTO from ’74 with “You Ain’t Seen Nothing Yet” 

“Well, it is September, mmb…”

So ’tis, Squire, and yes, across the 54 years from 1970 through 2023, by average net monthly percentage change, September does rank as the year’s worst month for the S&P 500, followed by February; the best two months are April (surprise!) and November.  (The once highly-vaunted month for the “January effect” ranks fourth-best of the 12 all told).

But in support of Squire’s point, September is the notorious month of so-called tax-loss selling season and fiscal year-end for many a mutual fund.

Yet today, the S&P 500 more broadly refuses to be severely shaken.  The ongoing “out-of-sight, out-of-mind” level of our “live” S&P 500 price/earnings ratio eternally living in the 30s and 40s remains inanely uncanny.  Again remindful of one J. B. Cohen:  “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”  However:  that for the summation of the 503 S&P constituents settled yesterday at 38.2x (price ÷ trailing twelve-month earnings x market cap weighting, with earning-less stocks ascribed a P/E of their stock price).

‘Course the culprit supporting it all is the $7T COVID monetary injection essentially (as we’ve mathematically proven) having ended up in the stock market.  And ’tis still there, refusing to go anywhere:  thus the bubble.  Risk-free debt is boring and doesn’t work well in showing off at cocktail parties.  As for all those talking marked-to-market millionaires … one day they’ll morph into head-hanging thousandaires.  ‘Tis only fair … but beware:  the next P/E means reversion shan’t be a happy excursion.

However, fairing a bit better of late is the Economic Barometer.  In just the past holiday-shortened StateSide week, of the 13 incoming metrics for the Econ Baro, nine improved period-over-period, the notable standouts being July’s Factory Orders, Q2’s revision to Productivity, and for August both Hourly Earnings and The Institute of Supply Management’s Services Index.

Noted however, was the really rotten ADP read on August’s Employment:  for the past post-COVID 36 months, the average monthly jobs gain had been 278,000; this time ’round the number was just 99,000, some -34% below consensus, not to mention the July reading being revised lower as well.  But “Labor’s” number (dare we say “of course”) improved, as on balance did the Baro:

So does all such stalwart economic improvement ward off recession?  From the “Dept. of Say It Ain’t So, Joe” we’ve this (hat-tip Dow Jones Newswires):  “The bond market just flashed a reliable recession signal.”  Glad to see them just now figuring this out.  The Econ Baro’s been portraying such for the past half year … (but as you know, it leads everything else).  “Fuses as usual in the white security box.” –The RAF’s unnamed Air Vice Marshal, “Thunderball”, ’65]

Still, anything but thundering is stodgy old Gold.  In below viewing our two-panel graphic, on the left with price’s daily bars from three months ago-to-date we’ve Gold’s baby blue dots of trend consistency dropping off, not even have achieved the key +80% axis, whilst on the right in the 10-day Market Profile, the 2540-2560 zone shows as overhead volume resistance.  As noted in recent missives, our forecast high for the year of Gold 2375 we now view as mid-structural price support:

Silver’s drill is similar, albeit with a weaker bent.  Like those for Gold, Silver’s “Baby Blues” (below left) are falling, whilst her Profile (below right) depicts major volume resistors at 29.15, 29.90 and then the 30.30-30.45 zone.  And with the Gold/Silver ratio now back up to nearly 90x (presently 89.4x), what can one say other than “Poor ol’ Sister Silver!”

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

We earlier mentioned the stock market’s buoyancy given the presto-chango $7T post-COVID money supply injection, indeed there being so much dough sloshing to and fro that — save for stocks — there’s ostensibly no where else for it to go in this Investing Age of Stoopid à go-go.  But then, too, is the stark reality of S&P 500’s market cap having settled yesterday at $47.3T supported by a liquid StateSide money supply (M2) of “only” $21.1T, i.e. not nearly enough dough!  Whoa!  And yet, you’d love to see your kid become a Wall Street pro?  Oh pity the poor floor specialist, don’t you know…

Better instead, buddy-boy, go buy some Gold!

Cheers!

  …m…

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

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

by

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

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

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

“Questioning the Bureau of Economic Analysis, mmb?”

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

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

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

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

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

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

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

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

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

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

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

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

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

And so we wrap we these three notes:

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

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

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

 

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

Cheers!

  …m…

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

 

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

by

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

“Gold Gradually Grips as the Dollar Decidedly Dips““

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

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

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

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

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

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

“They won’t get that at all, mmb…“

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

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

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

But ’twas hardly a surprise to the wise who monitor the Baro, for ’tis been plainly bad, (which is why we regularly refer to said report as “Lagging” rather than “Leading”).  And for the Fed (as ’tis said) “being behind the curve”, clearly that is the case.  Our case for a rate cut back on 31 July did not come to pass, which lends credence to a two-pip reduction on 18 September.  But then the optics would be poor for the Fed being too slow, thus we think ’twill be but one pip they’ll go.  Either way, as you know, the truth remains in the Baro:

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

Add in the fact that the S&P is now seven trading days “textbook overbought” along with a “live” price/earnings ratio of 41.5x and The Herd is facing GERD, (a little medical lingo there).  Healthy, however, is Gold, below for which we’ve the two-panel display of daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  The baby blue dots of linear regression trend consistency are just now running out of puff, which coincides with the notion of near-term price pullback following this year’s marginal All-Time Highs.  Still by the Profile, there’s volume trading support from 2511-to-2493, (but we’ll see…):

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

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

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

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

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

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


“You tell ’em, mmb!”

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

Cheers!

  …m…

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

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

by

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Let’s therefore wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3707
Gold’s All-Time Intra-Day High:  2548 (16 August 2024)
2024’s High:  2548 (16 August 2024)
10-Session directional range:  up to 2548 (from 2406) = +142 points or +5.9%
Gold’s All-Time Closing High:  2546 (16 August 2024)
Trading Resistance:  none per the Profile  2341
Gold Currently:  2546, (expected daily trading range [“EDTR”]:  43 points)
Trading Support:  various per the Profile, but notably the 2511-2493 range
10-Session “volume-weighted” average price magnet:  2473
The Weekly Parabolic Price to flip Short:  2339
The 300-Day Moving Average:  2121 and rising
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

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

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

Cheers!

  …m…

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

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

by

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

“Hilarious Herd Hysteria; Gold Holds Its Area““

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

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

     

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

     

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

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

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

  • Business Standard:  “Stock Market Crash“;

     

  • Fortune:  “Share price bloodbath“;

     

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

     

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

     

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

     

  • Et alia “ad infinitum”.

Now here’s the really hilarious part… Ready?

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

 

 

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

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

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

     

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

     

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

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

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

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

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

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

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

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

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

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

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

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

But don’t you get thrown a hysteria curve…

…rather with Gold maintain your verve!

Cheers!

  …m…

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

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

by

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

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

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

“Meaning, mmb?“

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

  …m…

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

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

by

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

“Gold Gets Gut-Punched … Again“

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Still always worth at least a peek is our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left, and 10-day Market Profile on the right.  The baby blue dots of regression trend consistency clearly have turned tail:  upon their passing down through the 0% axis, such trend shall have rotated from positive to negative.  As far as trading support and resistance, we’ve the former notably at the Profile’s 2374 apex, whilst the latter’s levels are as labeled above current price:

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

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

Cheers!

  …m…

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

The Gold Update: No. 766 – (20 July 2024) – “Another Gold Pop n’ Flop”

by

The Gold Update by Mark Mead Baillie — 766th Edition — Monte-Carlo — 20 July 2024 (published each Saturday) — www.deMeadville.com

“Another Gold Pop n’ Flop“

Upon Gold’s record run this past Tuesday into Wednesday’s fresh All-Time High of 2488, we gave pensive consideration to entitling this week’s piece as “The Joy of Being Wrong”.  After all, given Gold’s recent weekly technicals having been imbued with a rather negative bent, we’ve been prudently wary of a run down to test our oft-mentioned 2247-2171 structural support zone.

Not to beat up on ourselves too much, for the prior two weekly missives have pointed to Gold’s positive fundamentals admirably gaining more sway than the negative technicals.  And we were instinctively joyous at the metal’s new high given the positives — at least for a moment — having won out over the negatives.  For come that new 2488 All-Time High, Gold had once again proved its pop … only to flop in the balance of the week, price settling yesterday (Friday) at 2403 for a net weekly loss (despite the new record high) of -13 points (-0.5%) … worse within which was a high (2488)-to-low (2396) drop of -92 points (-3.9%).

To wit, let’s straightaway start with our two-panel graphic of daily bars for the past three months-to-date for Gold on the left and for Silver on the right.  With both precious metals, the rightmost three bars show the story, Silver suffering the worse of the two by the Gold/Silver ratio rising back above 80x to now 81.7x:  poor ol’ Sister Silver!

 

As to Gold, call it a “bad news All-Time High” with which however comes a “good news parabolic flip to Long”.  The “bad news” is of course Gold yet again swiftly dropping following the new record high, similarly as we twice saw during last Spring’s “double top”.  Regardless, the “good news” per the encircled dot below in blue is the parabolic trend flipping to Long despite the down week, suggesting one can grab more Gold ’round here on the cheap should price “expectedly” zoom right back up again.  Therein note (and arguably prematurely) we’ve nixed the 2247-2171 structural support zone.  Indeed specific to Gold’s brand new parabolic Long trend, its “flip to Short” level beginning at 2305 is essentially at the base of price’s trading range across the past 15 weeks:

 

To be sure, all five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500) netted losses for the past week, (the latter deservedly so given its ongoing massive overvaluation sans earnings support; but Stoopid shan’t sell until far lower still).

Digression aside, what really pops out in the above graphic is Gold’s last three red-dotted parabolic Short trends all having respectively lasted just three weeks apiece.  That’s Gold Power!

Sufficiently intriguing is this notion such that we decided to pull together the following chart of “parabolic performance” by cumulative weekly duration for each of Gold’s last ten Long and Short trends.  And as stated:  when the blue line is rising, watch for Gold to be trending upward, else when the red line is rising, watch for Gold to be trending downward.  (Obviously for you WestPalmBeachers down there, when one line is rising, the other line stays flat).  This is why we emphasize the state of Gold’s weekly parabolic trend in every one of these missives.  For ’tis nice to “know” which way Gold is gonna go; (just don’t forget the cash management should the “know” turn out as “no”).  And therein you can see the recent dominance of the blue Long line breaking higher:

Therefore, despite Gold having taken a bit of a blow for the week, the fresh parabolic Long trend “ought” see yet another All-Time-High, shall we say, “sooner than later”.  Across the past ten Long stints, the “median maximum” price increase for Gold is +6.5%, which (in that vacuum) from here would bring 2559, a nice leap above the latest All-Time High of 2488, (just in case you’re scoring at home).

As to the StateSide Economic Barometer, ‘twas finally afforded at least some leap.  But for the week’s 14 reports issued, period-over-period, seven improved and seven were worse.  Still, the Baro did turn upward, which – because ‘tis an oscillator rather than a pure index – can occur as “things are getting worse more slowly” –[Paul “The Notorious” Krugman, 2001].

A distinct element therein was the Conference Board’s disclosure of so-called “Leading Indicators” for June, (to which you regular readers know we refer to as “lagging” given the Econ Baro is always well ahead of said stead).  And as anticipated given the Baro’s having been comprehensively boffed these recent months, such “Indicators” shrank at a -0.2% pace.  But that was an improvement over the May shrinkage of -0.4%.

“So things then are getting worse more slowly, eh mmb?“

Squire, not to throw the baby (or in this case the Baro) out with the bathwater, there were some positives, notably for June’s ex-auto Retail Sales, Housing Starts and Permits, Capacity Utilization, and July’s Philly Fed Index.  In fact, the latter (after being a lowly 1.3 in June) reached 13.9, its best level since that for April, and thus in turn, its second-best reading in the past 26 months.

But to the extent such Baro bounce continues, the new week’s set of 10 key incoming metrics includes the first peek at Q2 Gross Domestic Product:  might it actually be negative given the Baro’s broad-based break-down?  The consensus for +1.9% seems a bit optimistic.  Too, to round out June’s inflation data comes the “Fed-favoured” Core Personal Consumption Expenditures Price Index.  Does the Federal Reserve’s Open Market Committee vote on 31 July to reduce The Bank’s lending rate?  The on-balance plunging Baro suggests “yes”, but as we’ve quipped, we don’t think the behind-the-curve Fed actually sees it.  Yet, maybe the International Monetary Fund does, (hat-tip New York Times from last Tuesday):  “I.M.F. Sees Signs of Cooling in U.S. Economy“  At least one entity is paying attention.  En tous cas, on verra… (a little French lingo there).

As for the “deviation” comment in the graphic, will the Baro one day return to directionally leading the S&P 500 as it used to so do for some 22 years pre-COVID?  Here’s the year-over-year view:

 

Also note a wee bit of correction by the S&P 500 (the red line), the Index finally seeing some selling after having been “textbook overbought” for 28 consecutive trading days.  At present, the honestly-calculated “live” price/earnings ratio of the S&P is 41.2x:  that is a +62% increase from its inception in January 2013, meaning (obviously) hardly have earnings kept pace.  Indeed with Q2 Earnings Season underway, of the 52 S&P 500 constituents having thus far reported, just 65% have improved their year-over-year bottom lines; (but 88% have beaten the sneaky investment bankers’ magic trick known as “estimates”, so ’tis all good, right?).  Got Gold?

Here’s Gold (below left) by its 10-day Market Profile, along with that for Silver (below right).  We’ve mentioned of late the “conflict” between the yellow metal’s positive fundamentals and recent negative technicals, and ’tis exemplified in the Profile as no one trading area is overwhelming dominant.  And even as Gold’s weekly parabolic trend now is officially Long, the MACD (moving average convergence divergence) remains Short through a sixth consecutive week.  Whereas for Sister Silver, the white metal’s 31.20 level had well been her home over the past fortnight until this week’s late selling became her plight:

Now prior to our wrap ’round CRWD’s MSFT update trap, here next we’ve the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3715
Gold’s All-Time Intra-Day High:  2488 (17 July 2024)
2024’s High:  2488 (17 July 2024)
10-Session directional range:  up to 2488 (from 2357) = +131 points or +5.6%
Gold’s All-Time Closing High:  2474 (16 July 2024)
10-Session “volume-weighted” average price magnet:  2420
Trading Resistance:  notables per the Profile 2414 / 2420 / 2470  2341
Gold Currently:  2403, (expected daily trading range [“EDTR”]: 36 points)
Trading Support:  notables per the Profile 2401 / 2387 / 2367
The Weekly Parabolic Price to flip Short:  2305
The 300-Day Moving Average:  2090 and rising
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

Wrap warning:  do not read the following whilst drinking, lest — in a fit of laughter — the liquid spout from your nose.

“Everybody everywhere” is aware of yesterday’s CrowdStrike security update that rendered useless many a Microsoft (et alia) platform.  (Indeed we were directly affected, a trading algorithm firing off a S&P futures Short signal, but the code was unable to connect to the broker …  ““Mama said there’ll be days like this” ” –[The Shirelles, ’61]).

But to our point:  shares of CRWD took an -11% Friday tumble.  Yet when briefly visiting MSFT’s “Bing” search engine, it therein displayed for CRWD the following snippet, appropriately annotated with our red ink (put your glass down):

Honestly:  who on earth pays $797 for something that earns $1?  And yet ’tis a “Strong Buy”??  Is it any wonder we regularly refer to this as the Investing Age of Stoopid???

‘Tis immeasurably better to pay 2403 for something worth (by our opening Scoreboard) 3715:  GOLD!

Cheers!

  …m…

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

The Gold Update: No. 765 – (13 July 2024) – “Gold Fights the Negatives; Eyes Higher Determinatives”

by

The Gold Update by Mark Mead Baillie — 765th Edition — Monte-Carlo — 13 July 2024 (published each Saturday) — www.deMeadville.com

“Gold Fights the Negatives; Eyes Higher Determinatives“

Recall a week ago (per “Gold Gives Thanks as the Economy Tanks”) our having itemized an array of fundamental Gold positives, albeit there still continue technical Gold negatives, price thus having been somewhat conflicted.  However, as rightly therein written:  “… at the end of the day — regardless what technicals shout — ’tis by fundamentals Gold will out …”

And that recently appears to be the case.  True, by its weekly technical measures, Gold just concluded its third consecutive week of parabolic Short trend — and moreover — fifth consecutive week of negatively disposed MACD (moving average convergence divergence).  But in settling yesterday (Friday) at 2416, ’twas Gold’s highest weekly close since that ending 17 May — and further — its third straight weekly gain.

Also, of substantive import by trading range, Gold stands just -38 points below its All-Time Intraday High of 2454 (20 May) in the context that price’s expected weekly trading range is now 79 points.  In other words (for you WestPalmBeachers down there), Gold is well within range of recording a fresh All-Time High in the ensuing week.  Too, this past week’s contract volume was the most for an up week since than ending 19 April.  Here ’tis by the weekly candles year-to-date:

Indeed, one might take those other negative technicals and actually “dispose” of them.  For with inflation having been tamed (depending on one’s media source of choice) in June as ’twas in May, cue the Federal Reserve to merrily say “Olé!  Let’s cut rates today!”  Or at least come their Open Market Committee’s 31 July Policy Statement.

Thus Gold gets the bid as this past week it did, notably so on such cited supportive volume.  For Gold to truly get up and go, it requires that kind of improved participation (dare we use the “woke” word “awareness”).   And the more who are aware the StateSide economy (as we’ll see) is crumbling — plus Gold by the opening Scoreboard’s valuation of 3713 being presently priced at but 65% (2416) of that meaasure — the sooner Gold can materially “get off the schneid”.

Notwithstanding all this mirth, from the “Keeping Our Feet on the Ground Dept.” we’ve Gold’s weekly bars below from one year ago-to-date.  Therein we’re mindful of these three highlights:

  • Recall Gold’s “double-top” from this past April-May:  the two light blue markers need be eclipsed;

     

  • The red-dotted parabolic Short trend, now three weeks in duration, also need be eclipsed;

     

  • The 2247-2171 structural support remains a viable test at least until the next fresh All-Time High.

But on balance by this graphic, Gold looks poised to break out to the upside, certainly supported (understatement) by its aforementioned fundamental positives:

Now in concert with the FOMC almost certainly — indeed obligedly –voting to cut rates at its 30-31 July meeting, let’s next update the teased “crumbling” Economic Barometer.  Indeed in morphing from less hawkish to more dovish FedSpeak this past week — notably so from FedChair Powell at his Congressional Humphrey-Hawkins (no pun intended) testimony — we’re thinking that some of you valued readers actually did fax the prior missive’s Econ Baro to the Fed, for which you’ve done the monetary world a favour.  To wit in paraphrasing The Chair:  maintaining the current “high” level of Fed interest rates could adversely affect the economy.  (Really?)

To be sure, despite NBC’s Christopher Loffredo Hayes having just on Friday stated  “When you consider where we stood in 2020, Biden’s tenure has been the most successful macroeconomic stewardship of any president in my lifetime”, the math belies that:  the Baro’s 50-day trading plunge from 29 April through 11 July is its worst drop across any like period since ’twas created in 1998.  And as for Gross Domestic Product achieving an annualized 2% growth rate for Q2, we’ll believe it when we see it (on 25 July).  In the interim:  “Got Gold?”

Too, there’s the punch-drunk S&P 500, which this past week traded to a record-high 5656, the “live” price/earnings ratio settling Friday now 43.8x with a dividend yield of 1.311%; that for the U.S. Three-Month Treasury Bill is 5.198%.  ‘Course, when it all goes wrong, folks love to commiserate when crying in their beer.  To quote one Bopper Bip:  “Ya know, I was gonna sell at the high [yeah right], but then doubled way too soon on the dip…”  Breaking News:  A third 50% means-reversion “dip” in this still young century wouldn’t be an unlikely trip, (just in case you’re scoring at home, Mr. Bip).

“But there’s all that liquidity in the system so stocks can’t go down, mmb…“

Or is there really, Squire?  The S&P finished the week with a market-capitalization of $49.1T supported by a liquid U.S. money supply (M2 basis) of $20.1T.  That ostensibly means there’s 2.3x as much money invested in the S&P 500 than readily exists.  Hence our oft-quipped moniker for anticipating the “Look Ma!  No Money!” crash.  “Hey Mabel!  The broker says their IOU is still good for another 18 months as long as we commit to buy some GameFlop!”

Hardly looking to stayed paired with any negative technical flop are the precious metals.  Turning to our two-panel graphic of the daily bars across the past three months-to-date for Gold on the left and for Silver on the right, both metals’ tracks appear quite healthy since late June, their baby blue dots of regression trend consistency scampering along to the upside:

Too, we have the dual-panel display for Gold’s 10-day Market Profile (below left) and that for Silver (below right).  The yellow metal’s two nearby volume support prices are 2387 and 2367 as labeled, whilst for the white metal, although 29.65 would seem safe, getting back above 31.20 — her most commonly traded price of the past fortnight — would allow for more upside ““Room to Move” ” –[John Mayall, ’69]:

Now to wrap ahead of 14 incoming metrics due next week for the Econ Baro, we (being from a media family) are reminded that one’s choice of news source doesn’t necessarily convey truth.  Recall above we alluded to inflation as “having been tamed in June”.  Oh to be sure, at the retail level, June’s headline Consumer Price Index was a deflationary -0.1% pace, its first negative reading since that from the COVID Spring (double entendre) in 2020.  However:  ’twas a different story for wholesale inflation, the headline Producer Price Index rising from a pre-revised -0.2% pace in May to June’s +0.2%.  “Whoopsie…”  True, the PPI is more erratic than the CPI; but the former does have a leading tendency over the latter.  Anyhooo, to our media point with these two quotes:

  • Hat-tip Dow Jones Newswires:  “Wholesale prices tame in June, PPI finds, and also point to lower inflation”;

     

  • Hat-tip Breitbart Business Digest:  “Producer inflation surges much higher than expected; Core inflation hits worst level in a year”.

To the second quote, before you say “No way!”, let’s once again do the math:  the 12-month summation of Core PPI through June is at its highest level (+2.6%) in 14 months.

“Well that wasn’t on the TV, mmb…“

Squire, we wouldn’t know, having abandoned FinTV long ago.  Either way, let’s cue for our parroting FinMedia colleagues some wisdom from the eternally-iconic Charles M. Schultz:

Whilst at the end of the day the media’s life-blood is advertising revenue, when it comes to your wealth management:  do the math determinative and keep Gold in the affirmative!

  …m…

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

The Gold Update: No. 764 – (06 July 2024) – “Gold Gives Thanks as the Economy Tanks”

by

The Gold Update by Mark Mead Baillie — 764th Edition — Monte-Carlo — 06 July 2024 (published each Saturday) — www.deMeadville.com

“Gold Gives Thanks as the Economy Tanks“

Through recent missives we’ve been near-term negative on Gold, indeed looking for a move down to test the 2247-2171 structural support zone.  Such read remains in concert with price’s weekly MACD (moving average convergence divergence) still adversely positioned.

But gritty Gold refuses to fold, price settling yesterday (Friday) at 2400, all told!  And when the yellow metal trumps that which is technical, we’re reminded that Gold’s ultimate value is fundamental, that it “sees” what is about to economically unfold!  Thus a Federal Reserve rate cut to behold?  Or does the Fed not (yet) “see” the economy getting rolled?

In other words:  will the Fed be behind the descending curve as ’tis usually?  FedSpeak of late, whilst not necessarily hawkish, has been nonetheless cautious toward an otherwise imminent rate cut come the Open Market Committee’s Statement on 31 July.  And if previously you’ve therein read this phrase once, you’ve read it a bazillion times:  “…the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks…”

Well folks, with respect to Gold’s reality being fundamental, here as a heads-up to the not-ahead Fed is the incoming data, its evolving outlook, and hence a bleak balance of risks via the Economic Barometer.  And as you long-time readers know, the Baro is borne of some 50 incoming metrics per month across 26 years as a tried-and-true leading indicator, at which (‘twould so seem) the FedFolks don’t look.  But as we herein mused a week ago:  come 25 July, might the first read of Q2 annualized Gross Domestic Product actually be negative?  Cue Murray Head’s ballad from back in ’75     ““Say It Ain’t So, Joe” ” and have your own look:

 

‘Course when rates plop, Gold oft gets a pop.  Moreover, a bevy of Gold positives are coming to the fore.  However, first let’s update the stance of Gold’s weekly bars from a year ago-to-date, wherein we see a second week of parabolic Short trend now complete.  But as was the case with the prior two red-dotted Short trends, shall this one also be “short-lived”?  Either way — as has now been the case for some 13 weeks —  price basically is ebbing and flowing ’round our year’s forecast high of 2375:

True, we just mentioned there are Gold positives for “The Now”, inclusive of the opening Gold Scoreboard’s currency debasement valuation already up at 3712 (i.e. 55% higher than the present price of 2400).  Here are a few more immediate Gold positives upon which to chew:

  • Monetarily:  inflation “magically” vanished in May; ’tis over, and thus the Fed ought cut; Gold Positive;
  • Fundamentally:  the StateSide economy is tanking; ’tis sick and thus the Fed must cut; again, Gold Positive;

     

  • Globally:  U.S. Vice-President Kamala Devi Harris likely assumes the role of President between now and 20 January (regardless of her party’s nominee and ensuing election), thus becoming Commander-in-Chief of the armed forces at a time when global hotspots are ever so fragile and expanding; be that President perfectly capable or otherwise unproven, the world will become more nervous; clearly Gold Positive.
  • Technically:  despite the fresh weekly Gold parabolic Short stance and still-negative MACD, just yesterday came confirmation of the following Gold Positive:

If you follow the website’s analytics, the above graphic is updated daily on both the Gold and Market Values pages.  And the rule of thumb is:  when price breaks above its smooth valuation line, still higher price levels (by rule rather than exception) are to be expected.  Yet, within the context of proper cash management, we obviously now have conflicting signals.  But at the end of the day — regardless what technicals shout — ’tis by fundamentals Gold will out.  No, we shan’t now disregard a test of the oft-of-late mentioned 2247-2171 structural support zone; however should a new All-Time High instead be nigh in concert with the next weekly parabolic flip to Long, then ““I Want to Take You Higher” ”shall be Gold’s song –[Sly and the Family Stone, ’69]

Next we go to Gold’s two-panel display of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  The last two daily bars are sufficiently upside robust such that upon the baby blue dots of trend consistency crossing above the 0% axis, their foundational 21-day slope shall have rotated from negative to positive.  And in the Profile we’ve labeled those prices of notable volume-trading support:

Similar is Sister Silver’s drill.  Her “Baby Blues” (below left) are well in sync with those for Gold.  And her Profile (below right) shows a myriad of supports.  As noted early in the graphic for Gold’s Weekly Bars, the Gold/Silver ratio is now 76.1x versus 79.4x a week ago, indicative of Silver garnering interest as she remains exceedingly cheap vis-à-vis Gold, (the average century-to-date ratio being 63.3x).  Indeed whilst Gold today at 2400 is just -2.2% below its All-Time High (2454), Sister Silver now at 31.53 is -36.7% below her All-Time High (49.82).  So do not forget her:

In closing for this week, guess what commences on Monday?

“Q2 Earnings Season, mmb.“

Exactly right, Squire.  And surely you duly noted in the aforeshown Economic Barometer the “live” price/earnings ratio of the S&P 500 is an essentially valueless 43.5x.  Who owns the S&P 500 at such an historically extreme level?  Look again at the Econ Baro:  to bring the P/E in line with any measure of past P/E means, do we really expect bottom lines to have doubled in Q2?  Of course not!  And yet, the S&P 500 — void of supportive earnings and comparatively little yield (1.316%) — continues to set record highs, reaching on Friday up to 5570.

‘Course the last thing the Fed wants to see (beyond the demise of the Almighty Dollar, which is the Fed’s mandate to maintain in equilibrium) is the inevitable crash of the Great American Savings Account (aka “The Stock Market”).  But you S&P futures traders with long memories (and you know who you are out there) may recall from the “Conspiratorial Truth Dept.” the sole reason which keeps the market from crashing:  the Fed (so it used to be said) has a trading account on the futures floor:

“Dat’s right, you keep hittin’ dem offers dere, Jay baby!”

But can the Fed then print its way out of a margin call when it all goes wrong?  Folks:  you can ultimately crash and burn along with the rest in this Investing Age of Stoopid … or instead give thanks for Gold!

Cheers!

  …m…

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

The Gold Update: No. 763 – (29 June 2024) – “Gold Looks to Support as Our Key Trend Goes Short”

by

The Gold Update by Mark Mead Baillie — 763rd Edition — Monte-Carlo — 29 June 2024 (published each Saturday) — www.deMeadville.com

“Gold Looks to Support as Our Key Trend Goes Short“

“And so we are halfway.”   In this case ’tis not Fräulein Irma Bunt to James Bond (in the guise of Sir Hilary Bray) whilst walking upon the snowy flanks of Switzerland’s Schilthorn –[O.H.M.S.S, UA, ’69], but rather for our purposes the mid-point of 2024’s trading year.  (Yes, we are aware that the precise mid-point is not until this Tuesday’s settle when with 126 trading days in the books there’ll remain 126 in the balance).  Nonetheless, ’tis the end of June and thus time for our monthly view of it all.

And bang on time in stride with our negative near-term bent for Gold — whilst settling yesterday (Friday) at 2337 for a whopping weekly gain of +2 points — on Wednesday, Gold’s anticipated damage was done as price broke below 2320 such as to flip our key 16-week parabolic Long trend now to Short.  (Expected as ’twas, ’twasn’t a beautiful thAng, even as we then “X’d” [@deMeadvillePro] notice of said flip).  Regardless, as scored by Chicago back in ’69:  ““Where do we go from here?” ”

‘Course, you regular readers already know the answer to our musical query.  For waiting in the wings as herein depicted via recent missives is Gold’s 2247-2171 structural support zone.  Below ’tis with the weekly bars from a year ago-to-date.  And encircled therein is the rightmost red dot heralding the start of the new parabolic Short trend:

Still, as we oft and rightly quip, “Shorting Gold is a bad idea” given opening up-gaps et alia can cancel one’s trading account.  Moreover as our friend in the above graphic muses, the prior two parabolic Short trends have lasted but three weeks each.

Yet with a proper eye toward cash management, similar to Gold’s negative weekly MACD crossover as confirmed two weeks ago, in now reviewing the past dozen weekly parabolic Short trends (which date back to 04 March 2019), the average downside price adversity is -90 points (the median being -71 points).  So as was demonstrated for the current MACD case, an “in that average vacuum” move from here at 2337 similarly would place Gold smack on the upper boundary of the 2247-2171 zone.  No, you cannot make this stuff up.

“But mmb, with the economy tanking and inflation kinda gone, price should skyrocket, right?“

Which, Squire, presumes our recent notion that the Federal Reserve must cut rates commencing 30 July, (albeit SanFranFedPrez Mary “Don’t!” Daly inferred this past Monday that it may still be too soon to move).  But rate reductions do elicit more lending, the Fed-sourced proceeds of which resume debasement of the money supply, in turn adding to Gold’s valuation (presently by the opening Scoreboard’s 3711 vs. the current price of only 2337).  ‘Course until such rate cut actually happens, Gold’s negative technicals can well will out as typically they do (which is why we do the math toward reasonably guesstimating how low is low).  Still either way, as liquid markets go, nobody really knows.

However what we do know is that inflation has started to slow.  Having yesterday received the “Fed-favoured” Bureau of Economic Analysis’ Personal Consumption Expenditures Price Index for May, we can complete that month’s inflation table which also incorporates the Bureau of Labor Statistics’ reads for both its Consumer and Producer Price Indices.  And here’s what we see:

The right-hand column is key as ’tis the annualization of May’s inflation pace for all six measures.  In other words for you WestPalmBeachers down there, this is the “What’s happenin’ now” way of looking at it.  And the average rate of annualized inflation solely per May’s paces is only +0.2% as shown.  Yes, the left-hand column’s 12-month inflation summations are all above the Fed’s precious +2.0% target; but given the (arguably magical) disappearance of inflation in May, clearly the trend must be down, right?  (Please no email about “But mmb, we just went to the store and, and, and…”  Believe us, we truly understand).  We’re merely capsulizing that disseminated by the stated StateSide government bureaus.

Now in Squire’s having initially mentioned inflation, so too did his question include the “tanking” of the economy.  So severe has been the Economic Barometer’s plunge — notably through this year’s second quarter — ‘twould not surprise us one wit that come 25 July the first read of Q2 annualized Gross Domestic Product shall be negative.  Just a thought, but don’t forget ’twas barely positive for Q1 at +1.4%, the lowest GDP reading since climbing out of COVID during the Spring of 2022.  Here’s the year-over-year graphic, the so-to-speak “earningsless” S&P 500 well up in the sillysphere:

Specific to the Econ Baro, ’twasn’t all bleak last week.  The Chicago Purchasing Managers’ Index for June — whilst still in net contraction for 21 of the past 22 months — nonetheless improved to 47.4, its best reading since that for November of last year; (yet a reading below 50 still signifies manufacturing contraction).  Too, Personal Income for May increased +0.5%, tying it for the second-best increase across the past 12 months.  But is that inflationary, (nudge-nudge, hint-hint, wink-wink, elbow-elbow…)

Hardly inflationary has been Silver’s rise to the top of our BEGOS Market Standings year-to-date.  Best of the bunch as she is, Sister Silver remains cheap!  The Gold/Silver ratio is now 79.4x:  but the century-to-date average is 68.3x; were Silver thus priced by that yardstick today (just in case you’re scoring at home), rather than being now at 29.44, she’d be +16% higher at 34.22.

Then in second spot lies (appropriate verb there) the S&P 500, its being purely herd driven on Investing Age of Stoopid delusion.  Cue that recorded in 1929 by Memphis Minnie and Kansas Joe McCoy: ““When the Levee Breaks” ” Remember what also happened that year?  When the “Look Ma! No Money!” crash hits, ’twill be pure herd fear, whilst Silver and Gold are held dear:

Now it being month-end, let’s go ’round the horn for all eight BEGOS Markets by their bars across the past 21 trading days and “Baby Blues”, the dots that depict the day-to-day consistency of each component’s respective grey trendline.  If it all appears a fundamentally misvalued mess, you are correct.  But:  the markets [truly] are never wrong, (even as the S&P today trades at nearly double its earnings support and Gold at arguably half its currency debasement value).  Sleeping well, are you?  The S&P 500 market capitalization is now $47.7T buttressed by a liquid US money supply of only $21.0T.  (Did we mention the “Look Ma! No Money!” crash?)  Got Gold?

Similar to this time a week ago, we again find Gold on the left and Silver on the right both presently priced a bit below the mid-point of their 10-day Market Profiles.  For Gold, 2338 clearly is the near-term support/resistance price, whereas same for Silver is pretty much a hodge-podge of the 29s:

And with June now in the books, ’tis time to assess Gold’s year-over-year percentage growth relative to that of its equities brethren.  So from high-to-low we go with Pan American Silver (PAAS) +40%, Agnico Eagle Mines (AEM) +35%,  the Global X Silver Miners exchange-traded fund (SIL) +23%, Gold itself +22%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +16%, Newmont (NEM) +2%, but Franco-Nevada (FNV) -13%.  If you love rollercoasters, the metals’ equity leverage is for you!

Also as we tend to quip at month-end, ‘twouldn’t be so without Gold’s layered chart for the past 16 years by the monthly candles.  Whilst we hope we’re well wrong about this year’s forecast high (2375), so far ’tis relatively holding there in the sky:

Thus with half the year gone, in the proverbial nutshell:  Gold broadly looks great to go, but near-term technicals initially say no.  Either way, we’ll see what shows.  Indeed, how much Gold have you got stowed?

Cheers!

  …m…

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

The Gold Update: No. 762 – (22 June 2024) – “Gold Fundamentally Seeking Grip; Technically Still Facing Dip”

by

The Gold Update by Mark Mead Baillie — 762nd Edition — Monte-Carlo — 22 June 2024 (published each Saturday) — www.deMeadville.com

“Gold Fundamentally Seeking Grip; Technically Still Facing Dip“

To be sure, our recent missives have been near-term negative for Gold, at least technically so, an eye to the 2247-2171 zone apropos.  Still, as you know, Gold these past two weeks has been fundamentally grappling to gain grip, albeit settling this past week yesterday (Friday) down a dip at 2335.

First, the Bad News:  from the standpoint of Gold’s weekly “textbook” technicals (esoteric as they may be), the MACD (moving average convergence divergence) has furthered its negativity, and the Price Oscillator — whilst positive — is eroding, as too is the Moneyflow, its net inflow having completed a fifth consecutive week of weakening.  Also as we’ll later see, Gold’s 16-week parabolic Long trend is all but at its end.

Second, the Good News:  from the standpoint of Gold’s fundamentals — the most basic being currency debasement per the above Gold Scoreboard — we now sense the Federal Reserve is going to be forced to move with a rate cut per the Open Market Committee’s Policy Statement on 31 July.

Why?  Because as stagflationary as a rate cut shall be, the Economic Barometer already has fallen well into jeopardy.  Once both the Fed and FinMedia figure that out, “Cut!” shall be the clarion shout.

‘Course, we all know inflation didn’t just suddenly vanish in May, despite Labor’s sway.  The once mighty Barron’s rightly referred this past week to inflation as “sticky”, with Richmond FedPrez Thomas “Hearken!” Barkin inferring that ’tis still lingering.

But:  must the Fed now cut if only for optics to rescue the economy?  For as we “X’d” (@deMeadvillePro) this past Thursday, our Econ Baro is in comprehensive, abject plunge, even as this Investing Age of Stoopid rolls right along:

Yet how relieved we are that the S&P 500 (red line above) no longer is led by the Econ Baro!  Else stocks would have crashed months ago!  For as you veteran fans who’ve been with us since the 1990s know, throughout the Baro’s 26 years of existence, it provably had led the S&P 500 through the first 22 of those years, right up to COVID in 2020.  Then the Fed flooded the monetary system with $6.7T — an increase to the StateSide liquid “M2” money supply of +43.8% in just two years  — and as we’ve previously mathematically demonstrated, the market capitalization of the S&P increased by same:  which means (duly acknowledging the benefit of hindsight) that the Fed never really had to print anything!  And thus today with the system bloated in equities’ liquidity, the stock market is unable to crash.  Reprise:  “We’re in the money, we’re in the money…” –[Dance of the Dollars, Dubin/Warren, Gold Diggers of 1933, Warner Bros.]  Still graphically, the S&P seems a little bit stretched, what?  Hip-hip:

Still as regards the stagflating economy, as we herein penned a week ago:  “… ’twill be interesting to see just how negative for May the Conference Board’s Leading [i.e. “lagging”] Indicators shall be come next Friday…” followed by yesterday morning’s Prescient Commentary:  “The Econ Baro, which has taken a terrific hit this week (indeed across the past two months), looks to May’s … Leading (i.e. “lagging”) Indicators, … [as] potentially quite negative given the dive in the Baro itself.“  That is because throughout the Econ Baro’s history, it regularly leads by weeks the Conference Board’s (with all due respect) misnomered “Leading Indicators” report.  Worse, one wonders about the underlying consensii of economic “experts” properly doing their math:  when we saw their May expectation for -0.3%, we anticipated a far dire result given the plummeting Baro … and so such came to pass at -0.5%.

Thus cue Captain Obvious:  an economy in decline (understatement) upon comforted with a rate cut is a Gold Positive as it enhances the debasement of currency through the “creation of wealth” (i.e. loan-making).  So as technically sensitive as the yellow metal may now be, fundamentally we decree:  Buy Gold!

“But to buy ‘knowing’ — as you expect anyway — that the price may soon go lower, mmb?“

Squire, recall the late great Richard Russell:  “There’s never a bad time to buy Gold.”  ‘Tis the perfect place to put excess, unearmarked cash.  After all, the Internet’s main sewer line (aka “social media”) goes on ad nauseum about everybody being so rich.  Better still, timing the Gold market, (barring your being an in-and-out futures trader), is hardly a critical Gold-owning matter given that price (as historically eventuates) catches up to debasement value, again per the opening Gold Scoreboard.

Or to put it in easier perspective for you WestPalmBeachers down there, let’s quote Jack Lemmon in the role of Hogan from “Under the Yum Yum Tree” –[Columbia Pictures, ’63]:

“Well, it’s an economic necessity. The bank requested that I get rid of excess cash.  It’s cluttering up their vaults.”

Yo, you rock, Jack baby:  Go for the Gold!  (‘Course, ’twasn’t Gold which Jack sought; but we’ll leave that to your viewing curiosity).  The point is:  as it all goes wrong economically, ’tis good to have a little (or a lotta) Gold.

As to Gold’s “now”, we turn to the weekly bars from one year ago-to-date.  Note therein the three rightmost blue dots of the parabolic Long trend:  price thrice saved by the dots!  But now with just a wee 15 points separating price (2335) from its “flip-to-Short” level (2320), to maintain this uptrend that we love, Gold basically needs a straight-up week, else ’tis over.  For as sang Martha Davis with The Motels back in ’82: “Take the ‘L‘ out of ‘Lover’ and it’s ‘over’…” :

And for those of you scoring at home, 15 points of “wiggle room” is very little to keep Gold’s Long drive alive:  price’s expected weekly trading range is now a very volatile 83 points.  Thus ’tis quite viable Gold  soon visits the graphic’s outlined 2247-2171 structural support zone, should the parabolic (that 2320) this week break.

Now to our two-panel Gold display featuring on the left price’s daily bars from three months ago-to-date, the trend consistency therein denoted by the baby blue dots, and on the right the 10-day Market Profile of volume traded per price.  As the “Baby Blues” rise toward their 0% axis, the trend becomes less negative (rotating to positive upon crossing the axis).  However by the Profile, the 2030s appear as the last bastion of near-term support:

The like graphic for Silver is much the same, albeit at left the white metal’s “Baby Blues” were more beaten down than those of the yellow metal; and at right, Sister Silver’s Profile shows the mid-to-low 29s as her last support lines:

For the wrap, here is the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3690
Gold’s All-Time Intra-Day High:  2454 (20 May 2024)
2024’s High:  2454 (20 May 2024)
Gold’s All-Time Closing High:  2430 (20 May 2024)
Trading Resistance:  per the Profile 2344 / 2353 / 2375 / 2377
10-Session “volume-weighted” average price magnet:  2341:  2341
Gold Currently:  2335, (expected daily trading range [“EDTR”]: 37 points)
Trading Support:  per the Profile 2333 / 2330 / 2323 / 2313
The Weekly Parabolic Price to flip Short:  2320
10-Session directional range:  down to 2305 (from 2406) = -101 points or -4.2%
Structural Support:  2247-2171
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The 300-Day Moving Average:  2067 and rising
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

So as we glide into next week which culminates with the “Fed-favoured” Personal Consumption Expenditures Price Index, let’s give Jack the final word:

Cheers!

  …m…

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

The Gold Update: No. 761 – (15 June 2024) – “Gold Firms; Fed Squirms”

by

The Gold Update by Mark Mead Baillie — 761st Edition — Monte-Carlo — 15 June 2024 (published each Saturday) — www.deMeadville.com

“Gold Firms; Fed Squirms“

First to Gold, then the economic mold (its detritus, all told).

As herein anticipated a week ago:  Gold’s weekly MACD (moving average convergence divergence) has now confirmed crossing to negative, despite price’s +1.6% up week in settling yesterday (Friday) at 2348.  We shan’t rehash all the math behind like instances as detailed per the prior missive, other than to reiterate price probably produces a down run from ’round here toward the center of the 2247-2171 structural support zone as below shown, notably with no space left for another parabolic Long trend blue dot, (barring Gold leaping from this spot):

 

‘Course the above analysis is purely a nearer-term technical read which has historically led to lower price levels.  From a broader-term fundamental perspective –certainly so given inflation having just abruptly stopped — the Federal Reserve absolutely must cut its Funds Rate come 31 July, right?  A Gold positive, to be sure.  And in turn that puts to bed our year-to-date musings for a Fed hike, right?  “Curiouser and curiouser!” cried Alice.

Toward economic mold (including more on the sudden absence of inflation), initially we’ve these two sentences from The Federal Open Market Committee’s Policy Statement of 12 June 2024:

  • First paragraph, opening sentence –> “Recent indicators suggest that economic activity has continued to expand at a solid pace.

     

  • Second paragraph, closing sentence –> “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”

So is the Fed sensing an economic inflection point?

But wait, there’s more:  hat-tip Dow Jones Newswires from the ever-ebullient Ayahn Kose (who is the World Bank’s Deputy Chief Economist as everyone knows) came his 13 June prose –> “U.S. growth is exceptional”.

Your having thus absorbed all that parroted wisdom from on high, here’s the Economic Barometer, borne of the math beneath it all.  Indeed, “Go ask Alice…” –[Slick/Jefferson Airplane, ’67]:

 

And yes, also go ahead and quote one John Patrick McEnroe:  “You canNOT be SERious!!”  For 29 April-to-date is the worst plunge for such time frame in the Econ Baro’s 26-year history!

To see the Econ Baro so plunge, one ought think the Fed — as it did under Chairman Greenspan pre-“911” both on 03 January 2001 and 18 April 2001 — make an emergency rate cut straightaway.  For after all, along with this economic erosion, inflation within the one mere month of May just comprehensively went away!  “Don’t delay, cut today!”  Yet for some unforeseen reason, the Fed doesn’t see the Econ Baro; neither do CNBS, Bloomy nor Foxy.  But in staying the “no inflation” proclamation:

  • At the retail level, the Consumer Price Index showed no inflation (0.0%) for May, the 12-month CPI summation now +3.1% (and “core” +3.5%) … courtesy of The Bureau of Labor Statistics;

  • At the wholesale level, the Producer Price Index showed deflation (-0.2%) for May, the 12-month PPI summation now +1.9% (and “core” +1.8%) … courtesy of The Bureau of Labor Statistics.

However, recall a week ago also courtesy of The Bureau of Labor Statistics:  May’s unexpected upside explosion in Payrolls’ creation was accompanied by an inflationary doubling of the increased pace of Hourly earnings from +0.2% to +0.4%.  So fortunately, there’s no inflation, (let alone stagflation), right?

“Well, it is an election year, mmb, and this is the Labor Dept…“

Avoiding any book-cooking notions there, Squire, (this being a financial treatise rather than one political), you know and we know and everyone from Bangor, Maine to Honolulu and right ’round the world knows that hardly has inflation slowed:  “Been to the store lately?”  Moreover, were Gold to react to inflation having suddenly vanished, price would be rate-cut-influenced moon-bound rather than (at least technically) indicative of moving down.

To be sure, ’tis said the Fed is typically “behind the curve”, indeed today in a state of squirm.  For the Fed to opine (at best ‘twould seem) that “economic activity has continued to expand at a solid pace”, we’d say their analysis has (in Formula One lingo) “gone beyond the edge of adhesion and into the Armco!”

And as for the tumbling Econ Baro:  ’twill be interesting to see just how negative for May the Conference Board’s Leading [i.e. “lagging”] Indicators shall be come next Friday (21 June).  Economic mold, indeed.

Too, there’s earnings mold, our live price/earnings ratio for the S&P 500 settling the week at a historically unsupportable 41.4x.  But until real fear hits, everything’s great, right?  As is our wont to quip:  marked-to-market, everybody’s a millionaire; marked-to-reality, nobody’s worth squat.

From such mold, back to firm Gold.  Whilst price near-term may be a bit challenged, the broader picture remains most positive  — perhaps technically too positive — but fundamentally there’s so much currency debasement ground to gain, (our opening Scoreboard valuation of 3690 versus Gold currently just 2348).  

That noted, we go to Gold’s daily closes and 300-day moving average across the past 13 years, (the graphic still remindful of those tiresome 1200s-1400s during the prior decade).  Therein, our green-line forecast high for this year (2375) has thus far held reasonably well, notwithstanding the brief, recent spike to 2454.  And by this big picture, Gold’s sub-2000 days really do now appear permanently histoire, with an inevitable run to 3000+ in the balance “As time goes by…” –[Hupfeld ’31 … Wilson, Casablanca, ’42]:

Drilling down into the precious metals, here next we’ve their daily bars from three months ago-to-date with Gold on the left and Silver on the right.  Their respective baby blue dots of trend consistency trace nearly identical patterns, suggesting that Sister Silver is aligned with Gold, adorned in her precious metal pinstripes rather than her industrial metal jacket when aligned with Cousin Copper; however, should you peek at the website’s Copper and/or Market Trends pages, you’ll find the red metal’s “Baby Blues” are not that dissimilar from those of the white and yellow metals.  Thus for the Metals Triumvirate, all three are at present in linear regression downtrends, our precious two in this view:

As to the 10-day Market Profiles, both Gold (below left) and Silver (below right) have positioned themselves above last week’s lows … but given the near-term negative trends, we’ll simply have to see how it goes:

To close, yes the Econ Baro looks terrible, again in its worst plummeting streak we’ve ever recorded.  However, perhaps there’s happier news on the horizon:  of the 14 metrics scheduled to hit the Baro in the new week, 10 by consensus are expected to have improved period-over-period.  ‘Course, to be factored in as well shall be prior period revisions with which to weigh one’s decisions.

But when it comes to increasing one’s Gold buying program, as Bogey said, “Play it again, Sam!”

Cheers!

  …m…

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

The Gold Update: No. 760 – (08 June 2024) – “Inflation’s Strain Remains Gold’s Bane”

by

The Gold Update by Mark Mead Baillie — 760th Edition — Monte-Carlo — 08 June 2024 (published each Saturday) — www.deMeadville.com

“Inflation’s Strain Remains Gold’s Bane“

We start with inflation.  Year-to-date we’ve diligently documented that ’tis nowhere near the Federal Reserve’s sought 2% target.  And not that you need be reminded, but with May inflation readings commencing next week, let’s briefly reprise April’s inflation summary as herein presented a week ago.  The data speak for themselves:

Now a week hence, yesterday’s StateSide jobs report for May had “inflation” written all over it:  per the Bureau of Labor Statistics, the pace of Hourly Earnings doubled from +0.2% in April to +0.4%; the net increase in Non-Farm Payrolls was the largest year-to-date and incorporates those higher wages; and yet (wait for it…) the rate of Unemployment nonetheless ratcheted higher from 3.9% to 4.0%!  How does that happen?  Cue the late great Bullet Bill King:  “Holy Toledo!”

Query too, how does this happen?  On Thursday, the Governing Council of the European Central Bank cut 25 basis points on each of its Deposit Facility, Main Refinancing Operations, and Marginal Lending Facility rates … even as the leader of their pack Mme. Christine “Risky” Lagarde stated that “domestic inflation remains high” despite increased confidence for a “disinflationary rhythm”, (which she shan’t find on our Market Rhythms page, but we digress…)

Still, the annualized pace of inflation on this side of the Pond increased from +2.4% in April to +2.6% in May.  Regardless:  the ECB cut,  (following ten across-the-board rate hikes dating back to 27 July 2022).

The bottom line in our mind:  the optics are the ECB cut rates not because ’twas the right thing to do, but rather because they’re expected to so do.  Oooooh.  And will that come back to bruise?  Or shall the Fed dare follow suit?  We think not (yet), but stayed tuned…

Still being bruised as anticipated is Gold:  our near-term negative stance remains in force as it has been through the prior two missives.  Per this week’s title “Inflation’s Strain Remains Gold’s Bane”, hardly can the Fed this coming Wednesday (12 June) release the rate reins.  Moreover, that above table suggests — dare we say “obligatorily” — to tighten said reins.  But then again, the Economic Barometer is getting comprehensively skewered.  Near-term inflation may be restrictive for advancing Gold as it keeps any Fed rate cut on hold … but broader-term stagflation for Gold shall make its price bold!  Cue Old Yeller:  “Hey Jay?  We need another Dollar mold!”  To wit, the Econ Baro below:

For the week just past, the Econ Baro took in 15 metrics of which just five garnered period-over-period improvement.  Indeed measuring the Baro from its most recent peak ’round the S&P 5000 level, ’tis the worst 30-trading-day drop since that ending nearly 12 years ago on 05 July 2012, following which the FedFunds rate effectively remained at 0% for better than three additional years.  Does history repeat?  Inflation back then was continuously sub-2%.  Not now, given the current FedFunds target range of 5.25%-5.50%  So cut the rate and really stagflate, inflation further not to abate!  Got Gold?

Admittedly as noted, our Gold view near-term is negative:  fundamentally so with the Fed still on hold; technically so per our weekly chart below.  To be sure, the year-over-year dashed regression trendline remains positive.  But the rightmost blue parabolic Long dot shall pop given price’s plop.  Too, as a special addition to this week’s graphic, we’ve inserted Gold’s weekly MACD as it is now negatively crossing to the downside, price having settled Friday at 2311:

“And even if, like you say mmb, that ‘Shorting Gold is a bad idea’, these MACD signals usually work, right?“

Historically ’tis true Squire.  From April 2018 through today there have been for Gold 12 negative weekly MACD crossovers, the average downside follow-through being -93 points.  Strictly within that vacuum from here at 2311, that bodes for 2218 which is nearly the center of the depicted 2247-2171 structural support zone.  Upon the parabolic flipping from Long to Short, the average fall from there across the past five years is similarly -90 points.  No, we’d rather price not go there, but such lower excursions Gold on occasion does fare.

‘Course for the Gold bull, hope springs eternal; otherwise, hardly would we be penning these weekly pieces.  So fragile now is the state of the economy, the state of the stock market (“ridiculously overvalued” per a mainstream FinMedia piece a week or so ago), and the state of the world in many respects.  Therefore Gold is the place to be!  Indeed specific to stocks, here’s our honest “live” P/E calculation for the S&P 500 on the trailing twelve month basis; (for you WestPalmBeachers down there, “live” means right now):

Not surprisingly however, upon querying AI for same, it replied:  “The trailing twelve month Price-to-Earnings (P/E) ratio of the S&P 500 is currently 24.79.”  More on such “Assembled Inaccuracy” in our closing wrap.  Indeed contextually, the “live” P/E is now +58% higher that ’twas at its inception a dozen years ago.  And for those of you scoring at home, you know “means reversion” always occurs.  (Have a nice day).

Not having a nice day yesterday were Gold and Silver.  First to the yellow metal which traced the entirety of its two trading weeks in a single session on Friday.  High-to-low by both points (-103) and percentage (-4.3%), ’twas Gold’s worst trading day since last 04 December.  ‘Tis why in Gold’s 10-day Market Profile (below right) every price bar is highlighted in Gold as they all traded.  And with Gold’s “Baby Blues” of trend consistency now falling beneath their 0% axis (below left), this means the 21-day linear regression trend has confirmed rotating from positive to negative:

Second to the white metal, Sister Silver suffering Friday her worst high-to-low day (-2.45 points, -7.7%) since 02 February 2021.  Below on the left are Silver’s daily bars from three months ago-to-date:  her plunging “Baby Blues” (barring an unexpected upside Fed cut rocket shot) surely in the new week shall see her trend, like that already for Gold, also rotate from positive to negative.  And below on the right is her 10-day Market Profile, price itself at the very base of the stack:

With the Federal Open Market Committee’s Policy Statement and Powell Presser due Wednesday, we’ll wrap with this from the “Retraction/Correction/Blew It Dept.” given reference to the aforementioned brilliance of AI.

In last week’s missive we performed quite the song and dance over how $34T might be “visualized”.  And via proper math we concluded that $34T in One Dollar bills laid end-to-end essentially equated to 5.5x the distance from Earth to Neptune.  However, we fell afoul of the cardinal rule not to depend on stoopid source material.  Indeed, rather than scrounge round through a wallet-full of Euros in search of a stray One Dollar bill for our measuring tape, we instead queried:  “How many One Dollar Bills laid end-to-end make one mile?”  And now after further review following email spew, Assembled Inaccuracy didn’t have a correct clue.  (So what else is new…)

Start with the wrong number … End with the wrong number!  For the correct answer and proper use of brain function, we leave it to you StateSiders to get out a buck, your ruler, and do the math from there.  And you’ll still find the number unfathomably impossible.

‘Course, near-term negativity notwithstanding, the one number to grab is Gold! 

Cheers!

 
 …m…

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

The Gold Update: No. 759 – (01 June 2024) – “Gold’s Double-Top Primes Price Plop”

by

The Gold Update by Mark Mead Baillie — 759th Edition — Monte-Carlo — 01 June 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Double-Top Primes Price Plop“

Notwithstanding +23 points of fresh premium as COMEX Gold rolls from the June contract into that for August, there’s no mistaking price having formed a classic near-term double-top.  Here ’tis:

The above chart tracks Gold by its 12-hour bars from nearly the beginning of this year-to-date.  (The inset at lower right is by Gold’s daily candles specific to the August contract for the past two months).  And stark thereon is the double-top (both being chronological All-Time Highs) achieved at 2449 on 12 April and again at 2454 on 20 May.  The rationale for displaying the double-top per 12-hour bars is — that by price’s 12-hour MACD (moving average convergence divergence) — such study presently ranks as Gold’s best Market Rhythm for taking signals followed by profit.  Green bars indicate price when the MACD is Long and red bars when Short, the latter as you know being a bad idea; (profitability results of this study are included on the website’s current Market Rhythms list).

The key point of course is that double-tops in major markets are prime for selling (be it by humans or algorithms), which — in spite of our being broad-based bullish on Gold — has been our near-term bearish analytical slant given the abrupt downtrend from that 20 May All-Time High at 2454.  Indeed since then, Gold has dropped (basis the June contract) from 2454 to as low as 2321 (-133 points or -5.4% in just eight trading days).  Now by the August contract having settled yesterday (Friday) at 2348, should 2309 go, the 21 March high of 2263 ought come into play … just in case you’re scoring at home.

More importantly, what’s coming into play in the words of Bloomy last Wednesday is “Revived Hike Chatter”.  For some irrational reason, the FinWorld just seems to be figuring that out now.  However, we’ve regularly herein been musing since the start of this year about the Federal Reserve ~~perhaps~~ having to raise rather than cut interest rates.  The difference between “Us and Them” –[Pink Floyd, ’73] is simple:  we do the math; the FinWorld parrot one another.  And by the math, inflation remains on the move as below summarized in our April table:

Therein are the three major measures of StateSide inflation:  the Consumer Price Index (CPI), Producer Price Index (PPI) and “Fed-favoured” Personal Consumption Expenditures Price Index (PCE), all listed with both their headline and attendant core readings.  The left column is each category’s 12-month summation and the right column is April’s data annualized.  Now look at the two averages, bearing in mind the Fed’s inflation target is 2%:  for the 12-month summation ’tis 3.5%; but for April’s annualized paces  ’tis 4.2%.  Which for you WestPalmBeachers down there means:  “We’re going the wrong way…”

So is the StateSide economy.  Recall our penning a week ago:  “…the Baro looks to be lower still in a week’s time as stagflation creeps ‘cross the nation…”  Cue Tag Team from back in ’93: “Whoomp! (There It Is)””

‘Course, the FinMedia are all excited — assuming you neither eat nor drive — that the Fed-fawned-over Core PCE for April was only 0.2%, (i.e. the annualized 2.4% in the aforeshown inflation table).  Nevertheless:  the economy by the Econ Baro is fading, whilst living costs are rising.  Stagflation.  To be sure:  “revived hike chatter” may lend to near-term Gold negativity on the notion the Fed could actually raise rates; but the emboldened “S“-word firmly lends to broad-based Gold positivity given the need to print dough to keep everyone whole … especially should U.S. Secretary of the Treasury Janet “Old Yeller” Yellen yet again be yelling she’s short of funds to pay interest on the nation’s $34T in outstanding securities, (riskless though they are, right?).

“So mmb, how can we visualize $34T?“

Simply by math, Squire.  One Dollar bills lined up end-to-end take $2,276 to cover one mile.  So, to line up $34T would cover 14,938,488,576 miles.  The annual average distance from Earth to Neptune is 2,703,959,960 miles.  Thus the “dollar distance” of $34T is 5.5x that distance to “Big Blue”; ’tis a lot of dollars.

Now it being month-end, we’ve still more graphic richness to present.  And if memory serves, never have we seen the BEGOS Markets’ Metals Triumvirate dominate the Standings year-to-date:  atop the framed podium — and ever-deservingly so — is Sister Silver, followed by Copper and then Gold.  ‘Tis such a beautiful thing that we’re actually tearing up a bit:

Whilst in vein (but never in vain) with our BEGOS Markets, drilling down into the past trading month (21 days) here are their bars with the ever popular “Baby Blues” that depict the day-to-day consistency of the grey trendlines.  To wit, save (barely) for Oil, the Blues ’round the horn are in descent.  And “when money is coming out of everything”, ’tis anticipative of the oxymoron “Dollar Strength”.  That in turn hints at higher interest rates, albeit upon the Federal Open Market Committee’s Policy Statement a week Wednesday (12 June), their sitting-on-hands likely continues.  Regardless, here’s the “What’s happenin’ now”:

Specific next to Gold’s weekly bars, the rightmost one benefits from the aforementioned +23 points of August contract premium, (which over these next two months shall whittle away at a rate of about -0.5 points per trading day).  Either way, this year ago-to-date “continuous contract” graphic is indicative of Gold having had a modest up week (+13 points) when in fact it had a modest down week (-10 points).  But at the end of the day, given Gold’s EDTR (expected daily trading range) is now 36 points, that difference at best is noise.  Note therein the blue-dotted parabolic Long trend (now 13 weeks in duration) shall flip to Short above the remindful 2247-2171 structural support zone:

 

Staying with the year ago-to-date theme, our pro-metals’ equities readers are finally getting some desired vindication.  In recent month-end missives wherein this like graphic appears, Gold oft has been ahead of its equites brethren.  Yet now, ’tis getting out-performed by a few of the crew.  From least-to-best by their percentage tracks we’ve:  Franco-Nevada (FNV) -15% (but in a recent uptrend), Newmont (NEM) +3%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +14%, Gold itself +19%, the Global X Silver Miners exchange-traded fund (SIL) +29%, Agnico Eagle Mines (AEM) +34%, and Pan American Silver (PAAS) +44%.  Suffer by leverage, but live well by same:

Meanwhile, similar to what we saw a week ago, by their respective 10-day Market Profiles price remains low in the stack for Gold (calibrated to the August contract) on the left and for Silver on the right:

And as ’tis our wont to say, ‘twouldn’t be month-end without our big picture view of Gold’s stratified structure by the month across these past 16 calendar years:

To wrap:  with each passing week, more and more internet information (or “bilge” if you will) builds toward financial end-times, part and parcel of which would include our “Look Ma, no money!” S&P crash.  ‘Course this being big election years coinciding both on this side of the Pond (five-year Parliamentary) and StateSide (four-year Presidential), the hype of “Well, it’s the election, you know…” already is quite rife.  But even were it not, the following macro-prudential fact remains:  the S&P 500 is priced at nearly double its earnings support, whilst Gold is priced at nearly half its Dollar debasement valuation.  And as we’ve demonstrated ad nauseum throughout 16 years of these weekly missives, price inevitably reverts to valuation.  Therefore, near-term price plop or not:  hopefully your Gold is well-guarded when sought!

  
 
Cheers!
 
 …m…

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

The Gold Update: No. 758 – (25 May 2024) – “Gold’s Marginal High and Habitual Cry”

by

The Gold Update by Mark Mead Baillie — 758th Edition — Monte-Carlo — 25 May 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Marginal High and Habitual Cry“

We start with this from the “Pat on the Back Dept.”  Per the prior missive penned a week ago (“Another Gold All-Time High is Nigh”), ’twas therein stated that Gold (then 2420) was exhibiting sufficiently daily trading range such that one could reasonably expect a fresh All-Time High (above 2449) to occur as soon as last Monday … which is precisely what happened, the yellow metal trading up to 2454 … but that was it.

So let’s thus transit from that department to the “Pass the Hankie Dept.” as Gold’s new All-Time High was at best “marginal”.  And All-Time Highs recorded by Gold since at least the COVID years-to-date have then — oft with promptness — seen price go through “habitual” selling.  To wit:  following Monday’s 2454 high, the yellow metal this past week hastily traded down -128 points to as low as 2326 before settling yesterday (Friday) at 2335.  So yes, you may cry.

Yet we offer this broader-based solace.  Century-to-date, Gold has amassed 5,887 trading days, of which All-Time Highs have been registered on 268 occasions.  For those of you scoring at home, that means across these past 24 calendar years, Gold averages a fresh All-Time High every 22 trading days, which essentially is once per month, albeit that is far from linear:  for the nearly nine-year stint from 07 September 2011 to 27 July 2020, nary an All-Time High was notched, price in that duration dropping as much as -46% down to 1045 on 03 December 2015.

‘Course more recently, not every incremental All-Time Gold High since the COVID outbreak in 2020 has then been swiftly sold off.  And yet, an inevitably habitual pattern of selling certainly is made manifest by the following chronological table of just how far Gold — following a run of All-Time Highs — has then declined within one month:

 

And the low row in the above table reflects last Monday’s All-Time High at 2454.  Note therein the decline with only four trading days having since passed, price already having come off by as much as -5.2%.

Now hardly are we bearish on Gold:  but ‘twould not be untoward to see price glide lower still given Gold having just crossed below our Market Values “smooth valuation line” for the first time since 28 February.  As you seasoned website followers know, eclipsing that line to the downside (be it for any of the five primary markets which comprise BEGOS, i.e. the Bond / Euro / Gold / Oil / S&P) regularly leads to further selling as we below show.  Note this latest negative price crossover as encircled in red, (the lower panel oscillator being price less valuation):

Specific to the current crossover, ’twas confirmed as of Thursday’s close at 2331.  Year-over-year, ’tis the ninth such downside crossover.  For the prior eight, the average negative penetration within one month is -65 points, (the median being -56 points).  Thus in that vacuum alone, we’d see Gold 2275-2266 over the near term.  ‘Course, rarely is “average” reality:  there is pricing congestion for Gold from 2364-2285 to at least initially limit any truly material downside from here (2335).  Still, we’re again placing for perspective purposes the underlying structural support zone of 2247-2171 on Gold’s weekly bars graphic — the crybabies notwithstanding — from one year ago-to-date.  (Note at lower-right an Investing Age of Stoopid intruder…):

“Yeah, it snuck right past me, mmb“

Well, Squire, they’ll do anything and everything to convince you to dump Gold for “GameFlop” (GME, p/e 950x).  But true to ongoing form, such Investing Age of Stoopid continues to run its inevitably-ending course, the “live” price/earnings ratio of the S&P 500 (aka “Casino 500”) now 39.4x and yield 1.380% versus the U.S. annualized three-month rate of 5.245%.  The S&P’s market-capitalization is now $46.3T supported by a liquid U.S. Money Supply (M2) of only $21.3T.  ‘Course when you WestPalmBeachers are sufficiently shaken to sell along with the rest of the herd, your brokers shall all be good for the money, right?  (Recall, too, the ten stock market crash catalysts itemized in Gold Update no. 712 from last 08 July:  today, all ten remain firmly bona fide).

Speaking of crash catalysts, we’ve some good news as regards the StateSide economy.  Incoming metrics this past week for the Economic Barometer were so sparse (just five inputs), that it suffered limited additional damage.  Next week is again rather light as well with just nine metrics due, notably including the Fed-favoured inflation gauge of Personal Consumption Expenditures for April which is not expected to have slowed from March’s annualized pace of +3.6%.  But net-net by consensus, the Baro looks to be lower still in a week’s time as stagflation creeps ‘cross the nation:

Hardly was Gold’s decline this past week at a crawl.  The yellow metal’s net two-day drop (from Tuesday’s settle at 2425 to that for Thursday at 2331) was -94 points:  that ranks ninth-worst by points for any two-day span century-to date; (the like -3.9% drop has been worse on many two-day occasions, the most extreme being -13.3% in mid-April 2013).  Still, the week’s fallout was enough to drive price from nearly the top of its 10-day Market Profile toward the bottom per the below right hand panel.  The left-hand panel of Gold’s daily bars from three months ago-to-date depicts the baby blue dots of trend consistency having just turned lower.  Again as aforementioned, the 2364-2285 area is price-congestive, and thus for now, supportive:

As for Silver, her two-day (Tue-Thu) drop was -5.8%.  But unlike Gold, hardly did she hoover her whole Market Profile, basically finishing in the center of that two-week stack (below right).  Too, her “Baby Blues” have (yet) to lurch lower per the three-month stint (below left).  Indeed ’tis heartening to see Silver Silver getting some degree of respect lately.  Further, she remains quite cheap relative to Gold, even as the Gold/Silver ratio (as noted a week ago) has moved sub-80x.  Today ’tis 76.5x … however the century-to-date average is 68.3x.  So priced at that average with Gold at 2335 today, Silver would be +12% higher than her current 30.54 level at 34.21:

Our takeaway is:  ‘twould be folly not to anticipate lower Gold prices near-term.  In addition to price having just crossed beneath the aforeshown smooth valuation line, we’ve the following technical negatives:  Gold’s daily Parabolics flipped from Long to Short effective yesterday’s open as did the MACD (moving average convergence divergence); the daily Price Oscillator is dwindling and the Moneyflow is nearing a cross from inflow to outflow.

Still, with prudent cash management always paramount — and acknowledging that “shorting Gold is a bad idea” — let’s wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3769
Gold’s All-Time Intra-Day High:  2454 (20 May 2024)
2024’s High:  2454 (20 May 2024)
Gold’s All-Time Closing High:  2430 (20 May 2024)
10-Session “volume-weighted” average price magnet:  2385
Trading Resistance:  various per the Profile from here at 2335 up to 2440
Gold Currently:  2335, (expected daily trading range [“EDTR”]: 38 points)
10-Session directional range:  down to 2326 (from 2454) = -128 points or -5.2%
Trading Support:  none per the Profile
The Weekly Parabolic Price to flip Short:  2263
Structural Support:  2247-2171
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The 300-Day Moving Average:  2046 and rising
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

‘Course the bottom line is, regardless of its marginal high but then habitual cry, don’t miss out when Gold goes to the sky!

  
 
Cheers!
 
 …m…

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

The Gold Update: No. 757 – (18 May 2024) – “Another Gold All-Time High is Nigh”

by

The Gold Update by Mark Mead Baillie — 757th Edition — Monte-Carlo — 18 May 2024 (published each Saturday) — www.deMeadville.com

“Another Gold All-Time High is Nigh“

One week ago we herein opened with this query:  “Is Gold’s near-term correction completed?”  Given the yellow metal’s upside price action since then, we can now answer in the affirmative, (which for you WestPalmBeachers down there means “Yes”).

As for employing the word “Another” in this week’s title, ’twasn’t that long ago in milestone missive No. 700 (15 April 2023 with Gold then 2018) we wrote “Gold:  The Next All-Time High is Nigh“, which of course obviously came to pass, indeed on 16 daily occasions since then.  Now Gold is merely on go to do it again.

Our Mighty Metal settled at an All-Time Weekly Closing High yesterday (Friday) at 2420, just -29 points shy of the most recent All-Time Intra-Day High of 2449 this past 12 April.  Further, given Gold’s “expected daily trading range” (per the website’s Market Ranges page) is 36 points, price is within such range of reasonably reaching above 2449 as soon as Monday, (just in case you’re scoring at home).

True, a week ago — at least technically — we were reserved about Gold’s then imminent direction, price having completed a perfect Golden Ratio retracement, from which at 2386 it swiftly sank in the new week to 2338.  To wit as we penned in Wednesday’s Prescient Commentary:  “…until the former clears … the Golden Ratio retracement … the recent near-term correction would technically remain in place…”  But having then since risen higher still, there’s really not that much pricing congestion now between here (2420) and there (2449).

“And so the question becomes ‘How high is high?’, right mmb?“

That is a critical knowledge point there, Squire.  To be sure, Gold has already surpassed our forecast high for this year upon achieving 2375 this past 09 April; (recall such prognosis having been made last 30 December in “Gold – We Conservatively Forecast 2375 for 2024’s High”).

Yet to Squire’s query as to “How high is high?” — at least fundamentally — we can see per the opening Gold Scoreboard that by Dollar debasement (even accounting for the annual increase in the supply of Gold itself), we’ve the yellow metal’s value at 3767, or +56% above today’s “lowly” price at 2420.

But given this ceaseless Investing Age of Stoopid wherein — save for central/sovereign banks — Gold is considered “passé”, determining the inevitable “when” for 3767 (and beyond) is subjective.  The art of designing Fibonacci retracements per our prior missive may be one thing:  but, the art of future Fibonacci extensions we leave to you “seers” out there.

Either way, ’tis a pleasant gaze at the past via this view of Gold’s weekly bars from one year ago-to-date, again the rightmost nub being an All-Time Weekly Closing High.  Indeed through these first 20 trading weeks of 2024, this past one ranks fifth-best by both points (+53) and percentage (+2.2%) gains.  As for the more skeptical amongst you — and price is arguably “too high” above the rising dashed regression trendline —  we’ve again depicted the green-bounded 2247-2171 structural support zone, within which is the current “flip to Short” price of 2236.  (But let’s not go there…)

And no, that Gold/Silver ratio at the foot of the above graphic is not a typo:  76.2x champions Silver’s stellar week wherein price rose +3.27 points (+11.5%), the white metal’s best weekly gain by both measures since that ending 07 August 2020.  ‘Tis why we oft quip:  “Don’t forget Sister Silver!”

Whilst speaking of metals, surely you saw Copper having reached its own All-Time High at $5.128/pound this past Wednesday, which may give further boost toward Gold’s next All-Time High.  For be it lore, or substantively more, ’tis said the red metal leads the yellow metal.  Here are their respective daily percentage tracks decade-to-date:  just one of those things that makes you go “Hmmmm…”

But next we go to something guaranteed to make you go “Ugghh…”:  the stagflating StateSide Economic Barometer.  Its outright dump just in this past week is the worst for such stint since April a year ago.  Moreover:  for the nearly 26 calendar years that we’ve maintained the Econ Baro, such five-day fall ranks in the 99th percentile of worst plunges.  Here’s the year-over year view:

‘Course, this can make Gold quite happy, for now the Federal Reserve must be forced to cut its Bank’s Funds rate … except that April’s just-reported inflation numbers belie that notion.  First at the wholesale level (Producer Price Index) the 12-month summation is spot-on the Fed’s +2.0% target … except that April’s pace annualized was +6.0%.  Second at the retail level (Consumer Price Index), it slowed by one percentage pip … except that the 12-month summation is well above target at +3.2% (and +3.7% core), with April alone annualized at +3.6%.  And by now you well know the formula:

  • Inflation + Shrinkage = Stagflation

“But mmb, is it really fair to say the economy is actually shrinking?“

As opposed to its growth merely slowing, Squire?  We shan’t see the Bureau of Economic Analysis’ first read of Q2 Gross Domestic Product until late July.  And already per their initial Q1 read, the annualized pace fell from +3.4% to just +1.6%.  As well, the Conference Board’s “U.S. Leading Economic Index” (which we regularly quip is in fact “lagging” given the Econ Baro is always well ahead of it) has reported only one month of growth (for February of this year) since March of 2022(!)  Is it any wonder the broad tilt of the above Baro is negative?  No, ’tisn’t.

However, we sense what “is” is a fresh Gold high soon nigh.  Let’s go to the two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and same for Silver on the right.  Therein per the baby blue dots of trend consistency, our thought is that present upside price momentum can pull the “Baby Blues” for both precious metals up above their respective +80% axes.  Again, “Follow the Blues…”:

 

Also we’ve the two-panel graphic of the 10-day Market Profiles for Gold (below left) and Silver (below right).  Whether marching or looking up toward higher highs, ’tis what our analysis implies:

Let’s wrap with our assessment of Q1 Earnings Season.  As just ended “by the calendar”, for the S&P 500 — which also set a record high on Thursday at 5325 — we count 439 constituents having reported.  Of those, 64% improved their bottom lines over Q1 of a year ago, (meaning that 36% did not so do).  Excluding the four COVID quarters of 2020, the average year-over-year improvement runs ’round 69%:  thus this past Earnings Season might be couched as rather sub-par.  Yet upon its start back on 08 April, the S&P was 5204 and its “live” price/earnings ratio 46.1x.  Today they are respectively 5303 and 39.9x:  so some relative progress was made there in getting the p/e down a bit.  Yet by any historical yardstick — especially in this positive interest rate environment — the p/e of 39.9x remains treacherously (understatement) high.

‘Course, ’tis made all the more complicated by this, (hat-tip Hedgeye’s hilarious Bob Rich):

 

So goodness gracious, with a new high nigh, stay gripped to Gold … and Silver bold!

Cheers!
 
 …m…

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

The Gold Update: No. 756 – (11 May 2024) – “Gold Garners a Groovy Golden Ratio Retracement”

by

The Gold Update by Mark Mead Baillie — 756th Edition — Monte-Carlo — 11 May 2024 (published each Saturday) — www.deMeadville.com

“Gold Garners a Groovy Golden Ratio Retracement“

Is Gold’s near-term correction completed?  If so, it lasted 16 trading days spanning from the recent All-Time High of 2449 (12 April) down to 2285 (04 May), a loss of -164 points or -6.7%.

Moreover, renewed buying interest in Gold did not even let price reach down to test the 2247-2171 structural support zone, (which of course remains a viable consideration).  But Gold buyers clearly came to the fore these past few days as COMEX contract volume recorded its fifth-most substantive week in well over a year, (indeed going back to that ending 20 March ’23).

So after two consecutive losing weeks, Gold scored a winner in settling yesterday (Friday) at 2367, its highest weekly close since that ending 19 April (then 2414), where upon we straightaway penned “Gold Fit to Pull Back a Bit” which it so did lickety-split.  (That courtesy of the “We Hate It When We’re Right Dept.”)

As for the entitled “…Groovy Golden Ratio Retracement”, ’twas quintessentially Fibonacci perfection for Gold on Friday.  Now as you long-time advocates of The Gold Update know, hardly do we ever dwell upon nature’s pristine paragon of numerical sequencing as uncovered by Leonardo Bigollo “Fibonacci” Pisano away back into the turn of the 13th Century.  Yet on occasion, that infamous 61.8% Golden Ratio as determined by The Fibster can elicit astonishing precision for markets’ price reversals.

Simple stated for those of you scoring at home, as noted, Gold’s All-Time High is 2449 and the low since then 2285.  The 61.8% Golden Ratio retracement from that low back up toward the high is 2386:  ’twas the precise high Gold reached on Friday before settling at the classic 50% retracement price of 2367.  Perfection personified.  To wit, look at the rightmost candle per this view of Gold’s daily bars from March-to-date, yesterday’s high at the 0.618 label and the close at the 0.500 label.  A worthy tool to keep under your cash management hat:

‘Course, the question then remains:  has the near-term downside Gold correction run its course?  Or is the perfect Fibonacci Golden Ratio retracement and subsequent same-day pullback signaling the resumption of such downside?  To be sure, Gold’s daily “textbook technicals” (MACD, Price Oscillator, Moneyflow) — which a week ago were leaning lower — are just now bending up a bit.  And yet per both the website’s Market Values and Gold pages, price is still +69 points above its smooth valuation line, (it has not been below same since 28 February).  Also fundamentally, in a week almost completely bereft of incoming metrics for the Economic Barometer, save for some arguably “hawkish” FedSpeak to end said week, there’s really not that much upon which to critique.  Yet as we all know, “the trend is your friend”, and as we next go to Gold’s weekly bars from a year ago-to-date, both the rising dashed linear regression trendline and blue-dotted parabolic Long trend look great.  Warily however, prior to Gold next scoring a fresh All-Time High at 2450+, it may be a bit premature to start dancing to The Chipmunks “Funky Monkey“:

Speaking of the Econ Baro, here ’tis by the day from one year ago-to-date along with the obscenely overvalued “Casino 500” (red line), the honestly-calculated “live” price/earnings ratio for which is now 39.1x and the yield 1.404% versus the U.S. Three-Month T-Bill’s annualized yield of 5.243%.  But since fee-churning is everything to your investment banker, “Stocks are where it’s at, baby!”  (Friendly reminder:  lock-limit down for the S&P 500 futures is -7%, the last three such occurrences coming astride COVID back in March 2020):

Oooh, and guess to what word the financial community is finally awakening?  “Stagflation”. Thus far in 2024, we first mentioned it ten missives ago on 02 March with “Gold Grabs Center-Stage as Stagflation Starts to Rage”.  But in this age where no one does the math to be properly informed, it takes awhile for “stagflation” to get parroted up to the higher echelons of the FinMedia.  To wit yesterday, (hat-tip Bloomy):  “S&P 500 Runs Out of Steam Amid Stagflation Chatter.”

As for running out of steam (really?), the S&P has gained better than +4% in just the past seven trading sessions, (yes, it has again become “textbook overbought”).  And with but a week to run in Earnings Season for Q1, growth hasn’t materially improved (which for you WestPalmBeachers down there means in this case hasn’t “lowered”) the aforementioned P/E of the S&P.  “Stagflation” indeed:  coming to an economic squeeze near you. Further, with 18 metrics due in the new week for the Econ Baro, we’ll know more on the staging of “stagflation”.

Clearly staging a rally into week’s end was Gold.  To our two panel graphic we go featuring on the left Gold’s daily bars from three months ago-to-date and on the right price’s 10-day Market Profile.  Note the sudden up-lurch in the “Baby Blues”, (and you know the drill:  “Follow the Blues… else…”).  Meanwhile by the Profile, Gold’s fattest volume support price is 2324:

With the like graphic for Silver, her “Baby Blues” (at left) already have been lurching higher, with present price just tucked in there above the 28.35 Profile bar (at right).  As earlier noted in the graphic of Gold’s weekly bars, the Gold/Silver ratio is now 83.4x versus the century-to-date average of 68.2x, i.e. Silver comparatively remains El Cheapo, (and Gold markedly so by currency debasement, in turn making Silver Super Cheapo).  So don’t you be a Cheapo by forgetting Sister Silver!

Toward the wrap, let’s go to the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3765
Gold’s All-Time Intra-Day High:  2449 (12 April 2024)
2024’s High:  2449 (12 April 2024)
Gold’s All-Time Closing High:  2391 (11 April 2024)
10-Session directional range:  up to 2386 (from 2285) = +101 points or +4.4%
Trading Resistance:  2374
Gold Currently:  2367, (expected daily trading range [“EDTR”]: 37 points)
Trading Support:  various from 2333 to 2298, most notably therein 2324
10-Session “volume-weighted” average price magnet:  2328
Structural Support:  2247-2171
The Weekly Parabolic Price to flip Short:  2213
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The 300-Day Moving Average:  2028 and rising
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

“So, mmb, we got your closer ready to go!“

And thank you, Squire, ’tis as rich as they come.  We’ll spare (to benevolently save embarrassment) such pundit’s identity, but here we go.  Ready?  Hat-tip Dow Jones Newswires from last Monday:

  • “Gold is overvalued now and won’t help you beat inflation in coming years.”

(Even the “doggy” can’t believe that one!)

Write it down and diarize to review, given ever-groovy Gold 3700+ is already overdue!

Cheers!
 
 …m…

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

The Gold Update: No. 755 – (04 May 2024) – “Own Gold with Reason into Bank Failure Season”

by

The Gold Update by Mark Mead Baillie — 755th Edition — Monte-Carlo — 04 May 2024 (published each Saturday) — www.deMeadville.com

“Own Gold with Reason into Bank Failure Season“

Not to overly dwell — let alone predict — by subject title, however if we search our recollect (thank you Ken Starr), was it not by this time a year ago that we’d witnessed a few banks go?  Whilst not first, First Republic failed.  And now a year hence, Republic First has failed.  How palindromic its that?  Or from the “What’s in a Numerological Name Dept.” ought we now be concerned about Old Second National, or dare we say, Fifth Third?  (Not to panic as both those two institutions appear quite solvent, whereas New York’s Fourth National went defunct 110 years ago, but we digress…)

Regardless, we read this past week with interest (get it?) of a report wherein Klaros Group — their having analyzed some 4,000 StateSide banks — deduced that 282 (7%) of them are “stressed”, (the word of a co-founder and partner of noted consulting firm, albeit he qualified that hardly is insolvency an imminent issue).  Still, Fitch’s Christopher Wolfe (Managing Director and Head of North American Banks) said per a mid-week CNBC(S) piece:  “You could see some banks either fail or at least … dip below their minimum capital requirements…”  Just something upon which to chew rather than Gold eschew, (which one ought never do), even as its near-term down move looks to continue.

That noted, Gold now through 18 weeks in 2024 recorded for just the third time back-to-back down ones in settling yesterday (Friday) at 2310.  And given Gold’s near-term technicals are tilting more negatively, ‘twould appear the 2247-2171 structural support zone as herein cited a week ago can more realistically come into play.  Indeed Gold’s EDTR (“expected daily trading range”) is now 44 points and the weekly measure 75 points:  so from today’s 2310 ’tis not that far down to at least tap 2247.

And so to Gold’s year ago-to-date weekly bars we go, upon which we’ve placed the green-bounded 2247-2171 support zone.  ‘Course that area may be moot should an otherwise waiting trading community get fired up over the next bank default:

“But as you say, mmb, the technicals remain down, eh?“

Near-term that is the case, Squire.  In fact, per our linear regression math, the 21-day trends for both Gold and Silver this past week rotated as we anticipated from positive to negative.  You can see it “in motion” per the following animated graphic of the precious metals’ respective 21-day trading days (one month) as they progressed from one week ago to now.  Again as we’ve oft said:  “Follow the Blues instead of the news, else lose your shoes” as clearly depicted here, the trendlines turning negative as the “Baby Blues” fall through their centered 0% axes:

And as you core followers know such that you can keep track, the stance of the “Baby Blues” for all of our markets are updated daily at the website.  Too, toward assessing Gold’s negative technical bent, let’s also update price vis-à-vis its smooth valuation line.  As we next look below on the left at Gold from three months ago-to-date, the excess of price above its smooth valuation line (borne of price changes relative to those of the five primary BEGOS Markets:  Bond / Euro / Gold / Oil / S&P 500) has eroded from more than +200 points now to just +50 points.  In this same construct, on the right we’ve the S&P 500, which you sharp-eyed readers shall recall we deemed some two weeks ago as having become “textbook oversold”, when also ’twas certainly low vis-à-vis its smooth valuation line:

Still, whilst Gold near-term (i.e. the trader’s view) had become “too high” and the S&P “too low”, we all (hopefully) know that broadly (i.e. the investor’s view) Gold by currency debasement remains vastly undervalued whilst the S&P 500 by earnings generation continues as immensely overvalued.  Oh to be sure, this Q1 Earnings Season for the S&P has thus far reduced its “live” price/earnings ratio from the mid-40s to now 37.7x:  but given the low-20s as an “acceptable mean” — especially in this 5% risk-free interest environment — the potential fallout for equities remains massive.  Remember:  had COVID (and all of its attendant money printing) not occurred, the S&P 500 today by its 50-year regression channel would be ’round the 2900 area, and the investing world very pleased with that level.  But priced today at 5128, the “Casino 500” is that namesake.  And throughout the S&P’s history as dated from its creation in March 1957, the P/E always reverts to its mean, (hint hint, nudge nudge, wink wink, elbow elbow).  Or ad nauseam reprising J. B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”  Again, we’re now basically double that.

In the midst of all this, the Federal Open Market Committee on Wednesday released their expected “do-nothing” Policy Statement, following which FedHead Jerome Powell said:  “I think it’s unlikely that the next policy rate move will be a hike … I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time. That’s not what we think we’re seeing.”  

Here’s what we’re seeing, having herein ruminated since New Year that the Fed potentially need raise rates.  Our following updated table summarizes StateSide inflation now through all of the key March measures of the Consumer Price Index (CPI retail inflation), Producer Price Index (PPI retail inflation), and Personal Consumption Expenditures (PCE Fed-favoured inflation).  Be it by 12-month summation and/or March itself annualized, red indicates inflation running well ahead of the Fed’s 2% target:

‘Course we all understand that ’tis the Fed’s notorious tradition to be “behind the curve”.  And the above table proves it.  But the Fed maintains significant credibility, as it is watched, read and parsed word-by-word.  The FinMedia suck it all in.  The folks managing your money suck it all in.  Moreover, ’tis oft thought the Fed is desperate to keeping the stock market from crashing.  Also, consider the plight of those aforementioned “stressed” banks, (“No, thanks!”)

But let’s look at what’s happening:  Chair Powell desires inflation receding down to “2% over time”; FedFunds have been in the 5.25%-to-5.50% target range since last 26 July:  that’s more than nine months ago; how much “over time” is being considered?  Or is the sudden, abrupt downturn in the Economic Barometer bang-on-time to aid the Fed’s stead? 

This past week, 16 metrics came into the Econ Baro, of which a mere four improved period-over-period.  And the cost of labour is on the move:  not only did Q1’s Employment Cost Index increase, but Unit Labor Costs — which were flat back in Q4 — lurched +4.7% in Q1.  Is it any surprise Payrolls’ growth really slowed in April, Unemployment ticked higher, and the Institute for Supply Management’s Services Index crossed from expansion in March now to contraction?  No, ’tisn’t.  (Then there’s the “S”-word:  stagflation. … but we’re not supposed to say that).

Neither is it a surprise to note all the overhead pricing resistance for the precious metals.  Here (below left) is the 10-day Market Profile for Gold with same (below right) for Silver.  Volume-dominant price apices are as labeled:

To wrap, we mentioned earlier with respect to the Fed those who fawn over every word, which may well include they who manage your money, i.e. the “pro” you know.  But wait, there’s more:  hat-tip Bloomy from just over a week ago when the “Casino 500” was weathering a minor correction:  “Wall Street Humbled as Fast-Reversing Markets Confound the Pros.”  Is that not oxymoronic?  Any “pro” worth his or her salt ought hardly be “confounded” by anything the market does, certainly so when it declines from these ridiculously overvalued levels.  Certainly stated:  rather than “confounded”, a true “pro” ought be “expective” of significant (understatement) downside risk.  Right?  What are they missing?

“Math skills, mmb?“

Oh Squire, you’re just too good.  But be it rate uncertainties, debased currencies, bank failures, “stoopid” equity values, geo-political jitters or the “confounded pro” whose hands are on your money…

…maintain sound reason and your wealth domain with Gold!

Cheers!

 …m…

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

The Gold Update: No. 754 – (27 April 2024) – “Gold Falters, Treads Water”

by

The Gold Update by Mark Mead Baillie — 754th Edition — Monte-Carlo — 27 April 2024 (published each Saturday) — www.deMeadville.com

“Gold Falters, Treads Water“

Per a tongue-in-cheek note this past week to our StateSide Investors’ Roundtable, we apologized for single-handedly having “crashed” the precious metals’ markets with last Saturday’s missive (“Gold Fit to Pull Back a Bit”) following which on Monday — directly out of the chute — the yellow metal suffered its third-worst intraday high-to-low loss (-2.7% or -$62/oz.) in better than 14 months…

Too, Sweet Sister Silver’s simultaneous stint saw a -5.7% slam.  Damn!

We nonetheless plead innocent for merely going with the math, a valued leading science which few anymore seem to do.  For recently we’d written ad nauseum:  “…near-term Gold is very over-extended; but broad-term Gold remains very undervalued…”  And for you WestPalmBeachers down there, “near-term” plays out prior to “broad-term”, the former being exactly what Gold is now enduring, (i.e. ’tis going down).  Or for those you scoring at home:  mere math + historical repetition = leading knowledge.  Hardly the “holy grail”, but given prudent cash management, ’tis on balance beneficial to one’s trading account.  “Try it, you’ll like it!” –[Alka-Selzer, ’72].

Oh to be sure, Gold through just the first third of this year has already achieved our forecast high of 2375, indeed reaching up to 2449, albeit price settled yesterday (Friday) below both of those levels at 2350.  And whilst we’re on record to not upwardly re-forecast a revised target, we’d be surprised should Gold not trade higher still as the year unfolds, even if the Federal Reserve raises rates.  ‘Course, you regular readers know we’ve be musing since the start of this year over the Fed actually needing to again raise rates, contra to the non-math parroting crowd’s having called for as many as three rate cuts during 2024, (such expectations having lately been reduced to just one cut toward the end of the year).

But even should the Fed dutifully raise, such move — as we’ve in the past shown — wouldn’t automatically deter Gold from moving higher.  Recall the three-year stint from 2004 through 2006:  the FedFundsRate rose 425 basis points … and Gold rose +69%.

Thus whilst Gold is positioned just fine (thank you very much), when it comes to the stock market, it seems as if we’re in a constant state of hand-holding.  On days when the S&P 500 rises +1%, FinMedia responses range from neutral to happy.  But toss in a -1% down day, and many-a-headline goes catastrophic:

  • “Markets Roiled by FedSpeak!”
  • “Markets Plunge on Powell!”
  • “Markets Tumble on Earnings Trouble!”

Good grief.  The telling optics are that the FinMedia folks today have no concept of “Roiled”, “Plunge” nor “Tumble”.  They weren’t around in ’87, ’02, ’09, et alia.  Reprise The Temptations from ’66:  “Get Ready”. 

And although we’re not predicting what would be a third -50% “correction” in just this century for the S&P, by math (oh-no, say it ain’t so) the setup is sitting there:

  • Neither earnings nor yield are supportive of price;
  • Twice as much money is invested in the S&P than exists (by “M2”); and
  • Risk-free dough pays triple the S&P’s yield.

Back in “our day”, a stock was purchased to benefit from a methodically rising price based on earnings generation — plus for high-quality companies — a dividend yield.  Today, stocks are purchased on expectations of their quickly quadrupling.  ‘Tis why we regularly term this “The Investing Age of Stoopid”.  Have a nice day.

Meanwhile, although April has been a losing month for the S&P, ’tis been a good month for Gold, as you know price having reached an All-Time High of 2449 (at precisely 07:15 GMT on the 9th).  And with but two trading days remaining in April, ’tis close enough to month-end to bring up our BEGOS Markets Standings essentially through this year’s first quadrimestris.  Therein, red-hot metal Copper –which a month ago had been sixth in this stack — is now leading the pack (a sign of continued inflation expectations), having even surpassed Oil, with Gold still on the podium scantly ahead of what is undoubtedly a pouting Sister Silver, just one-tenth of a percent behind in fourth:

Too, from the “Gold Plays No Currency Favourites Dept.” note that despite the Dollar Index being +4.9%, Gold nonetheless is +13.4%.  (Just because “That can’t happen”, ’tis).

And as Gold indeed is “What’s Happenin’!”, let’s go to the weekly bars from one year ago-to-date, wherein we see the blue-dotted parabolic Long trend now eight weeks in duration.  Moreover, in spite of last Monday’s price falter, Gold has since tread water by closing well off the week’s low (2304) per the closing nub (2350) on the rightmost bar:

Here comes the however:  the near-term “math” suggests we’ll see lower levels still.  For instance, we’ve the following two-panel display.  On the left is a graphic with which by now you’ve become quite familiar:  ’tis our BEGOS Markets near-term valuation (smooth line) for Gold based on its price movements relative to the other four primary BEGOS components (Bond, Euro, Oil, S&P).  And at present per the lower left section, price is still better than +100 points above valuation.  On the right we’ve Gold’s daily “candles” for the past 21 trading days (one month) wherein we find the parabolics having flipped to Short (per the red-encircled dot of last Monday).  Such flip was anticipated in last week’s missive — (“Too from the technical tent, Gold…is approaching a flip of the daily parabolic measure from Long to Short”) — and so it came to pass:

In terms of how far further Gold may fold from here, the 2247-2171 zone appears structurally supportive, (i.e. a drop from here of another -100 points wouldn’t be untoward).  And that technically trues up nicely per the above graphic wherein price is just over +100 points above valuation.  See how easy this is?  (Hopefully we’re wrong and Gold simply zooms back up the road).

Meanwhile:  “How ’bout ‘dem miners!”  Long overdue to get on the move, so have they been doing of late, albeit they too shall deflate should Gold near-term further slip from “Great!”.  Indeed here’s our usual month-end chart of Gold’s year-over-year daily percentage track along with those of its key equities brethren.  From worst-to-first we’ve:  Franco-Nevada (FNV) -19%, Newmont (NEM) -9% (but sporting a very robust, earnings-induced up move this past week), the VanEck Vectors Gold Miners exchange-traded fund (GDX) +4%, the Global X Silver Miners exchange-traded fund (SIL) +7%, Pan American Silver (PAAS) +12%, Agnico Eagle Mines (AEM) +17%, and Gold itself +18%.  As we go to the graphic, let us — for the equities — appropriately cue “The Agony and the Ecstasy”, –[Heston, Harrison, 20th Century Fox, ’65]: 

Next we go ’round the horn across the past 21 trading days for all eight BEGOS components.  The “Baby Blues” therein reflect the day-to-day consistency of each market’s respective grey trendline.  And as noted in yesterday’s Prescient Commentary, there’s the old adage “Follow the Blues instead of the news, else lose your shoes”, which specific below to both Gold and Silver is yet another technical case for further price fallout near-term.  But does that in turn mean we buy the Euro, its dots curling upward?  Given the Federal Open Market Committee’s pending “do nothing” Policy Statement and Powell Presser (on Wednesday, 01 May), any “hint” of a rate cut delay (if not outright suggestion of a rate hike), ought only serve to further strengthen the Dollar:

Moving on to the 10-day Market Profiles for the precious metals, we’ve Gold (at left) and Silver (at right).  Simply per this construct, there is quite a bit of overhead volume resistance with which to deal.  Those prices levels of volume domination are as labeled:

And of course it being month-end (save for two trading days), here we’ve Gold’s structure across the past 16 years.  Note the forecast high (2375) having been achieved (and then some), followed by price’s pullback.  Still, we’ve added scaling space up toward 2600, just in case, (wink wink, nudge nudge…):

As for the StateSide Economic Barometer, the two most eyed items of the past week were the first peek at Q1 Gross Domestic Product and March’s Personal Consumption Expenditures.  First to the GDP:  its annualized nominal Q1 growth rate was +4.7% … but … +3.1% of such growth was pure inflation so the … net … real GDP growth was at best a tepid +1.6%.  Again, can you state “stagflate“?

Second to the “Fed-favoured” PCE for March:  both the headline and core readings maintained their +0.3% February paces, which when annualized comes to +3.6%, (nearly double the Fed’s targeted +2.0%).  Can you say “raise“?  Nevertheless, March’s Home Sales (both New and Pending) improved, as did Personal Income and Durable Orders, the Baro in turn getting a boost:

Notwithstanding our ever-ongoing aforementioned misgivings about the terrifically overvalued stock market as measured by the S&P (aka “Casino”) 500, note in the Baro the “live” price/earnings ratio is now 45.0x (by trailing twelve months) which as we near the half-way mark of Q1 Earnings Season hasn’t — on a cap-weighted basis — declined a material wit, (’twas 46.1x at the start of Earnings Season).

Yes, some 64% of S&P constituents have thus far reported year-over-year earnings increases:  but that impossibly supports a P/E of such level, indeed nearly double that of a dozen years ago.  Also, the “all-risk” Casino’s yield is now 1.413% versus the “no-risk” annualized U.S. three-month T-Bill’s 5.238%.  And yet the week was replete with such FinMedia headlines as (hat-tip Bloomy) –> “Magnificent Seven Roar…”, “Big Tech Surges…” and “AI Craze Powers Best Week…”  Thus the great game of “Equities Chicken” continues.

Oooh, and we shan’t then close without mentioning this from the “Which Came First? The Chicken or the Egg? Dept.”  (Hat-tip NewsMax) –> Engineers from The University of Colorado “Go Buffs!” at Boulder have conclusive research that folks over the age of 65 tend to slow down as it takes more energy to move than it does those younger.  Which has us seriously considering a new career in the field of such paid-for research of obvious conclusion.

Either way conclusively, don’t you be a chicken:  use our weekly research to buy and hold Gold!

Cheers!

 …m…

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

The Gold Update: No. 753 – (20 April 2024) – “Gold Fit to Pull Back a Bit”

by

The Gold Update by Mark Mead Baillie — 753rd Edition — Monte-Carlo — 20 April 2024 (published each Saturday) — www.deMeadville.com

“Gold Fit to Pull Back a Bit“

Two missives back we penned “Gold ‘Overbought’ is Great!” and so ’tis been.  These past couple of months have finally seen a long overdue repricing of Gold from some three years of being range-bound in the 1700-2000 zone to now up through our forecast high for this year of 2375 and onward to a new All-Time High at 2449 recorded just over a week ago (on 12 April).

And yet whilst championing this latest ascent, we’ve warily pointed throughout the extent to which Gold has become technically stretched such that we “know” retrenchment is to be expected.  And we say that with 100% respect due the opening Gold Scoreboard’s Dollar debasement valuation of 3723, given price settling this past week yesterday (Friday) at “only” 2407, itself an All-Time Weekly Closing High.  Yet to repeat that from a week ago:  “…near-term Gold is very over-extended; but broad-term Gold remains very undervalued…”  We can’t quintessentially put it any better than that.

‘Course a key metric we regularly watch as is the case for all five components which comprise the primary BEGOS Markets, (Bond / Euro / Gold / Oil / S&P 500) is Gold’s smooth valuation line which specifies a near-term value based on price’s day-to-day movement relative to the other four BEGOS components.  (The website’s Market Values page displays same for all five markets).  Indeed invariably through a generation (which for you WestPalmBeachers down there is 25 years) of calculating Market Values, ’tis axiomatic that price and valuation regularly re-meet.  And per the following left-hand panel of Gold’s daily closes from three months ago-to-date vis-à-vis the smooth valuation line, price at present (per the difference of price less value) is right now +195 points “too high”.  (The right-hand panel is the same drill for the S&P 500, near-term oversold, but upon which we’ll later expound):

Still therein for the yellow metal, the good news is the smooth valuation line itself is rising such that price need not actually drop -195 points; (the pace of the smooth line’s ascent exceeded +5 points every day last week).  Regardless:  price (2407) remains sufficiently high above value (2212).  On a percentage basis that is a +8.8% gap:  the last period of such upside percentage excess was during the onset of the RUS/UKR incursion during early March 2022, following which within the ensuing 10 weeks Gold fell better than -200 points.  And to the extent Gold’s recent buoyancy is arguably due to fresh Middle East conflict, we’ve herein demonstrated over the years that geo-political price spikes for the yellow metal are short-lived.  Further, as the website’s Market Values page is a bona fide leading indicator of direction, even as Gold of late has been getting the bid, again we remain wary of price having reached a near-term lid.

Too from the technical tent, Gold by its “continuous futures contract” is approaching a flip of the daily parabolic measure from Long to Short:  currently 2407, were 2386 to trade on Monday, such Short (albeit a bad idea) would be in play; and Gold’s average price decline across the past 12 such Short signals is -353 points (just in case you’re scoring at home).  But no, we do not expect anything of such downside magnitude this next time ’round.

‘Course, all this near-term negative awareness may be moot given the International Monetary Fund having stated this past week that “Something will have to give” with respect to what is deemed as an unsustainable level of U.S. debt and thereto its global fallout ramifications.  “Got Gold?”  Again, despite price’s record highs, fundamentally ’tis still cheap and it looks great:

“And I added a lavendar-bounded support area in there, mmb…“

Nicely done, Squire, in that view of Gold’s weekly bars from a year ago-to-date.  And we concur:  your 2150-to-2000 area does look structurally-supportive for Gold, and notably enhances the notion that the sub-2000 days are gone.  Indeed should near-term price weakness come to the fore, that year-over-year graphic really encompasses Gold’s soar.  And ultimately, we’ll see more.

Now having just mentioned the IMF, ’tis a nice segue into the StateSide Economic Barometer.  For with respect to the U.S. economy, the IMF also penned on Tuesday: “The exceptional recent performance of the United States is certainly impressive and a major driver of global growth…”  We cite as well their chief economist Pierre-Olivier Gourinchas:  “The strong recent performance of the United States reflects robust productivity and employment growth, but also strong demand in an economy that remains overheated…” Is that your takeaway per the Econ Baro from a year ago-to-date?  Is the economy really that great?  Or shall it stagflate as we’ve suggested is its state of late?

Last week brought 13 metrics into the Baro:  but period-over-period, just four improved.  Moreover, ’tis Q1 Earnings Season:  thus far for S&P 500 constituents, 51 have reported with just 30 having increased their bottom lines from a year ago.  But this is the mighty “best of the best” S&P 500:  should not all entities therein be improving; (a bit tongue-in-cheek perhaps, but to be fair, in a decent Earnings Season at least 70% improvement at the S&P level ought be expected; thus far just 59% have made more money, albeit ’tis early).  

However, even as the aforeshown green Market Values graphic of the S&P shows its futures as sufficiently oversold, the truth remains that earnings are not supportive of price:  the “live” price earnings ratio of the S&P settled yesterday at 43.1x.  Reprise yet again one Jerome B. Cohen: “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”  Recall our notion in recent years of a “Look Ma, no earnings!” crash?

Or if you prefer more lately, a “Look Ma, no money!” crash?  The current market-capitalization of the “Casino 500” now at $43.3T is just 48% supported by the liquid U.S. money supply (M2 basis) of only $21.0T.  So when you sell, how’s your broker’s “I.O.U.” gonna work out for ya?  Nuff said.

And yet has enough been said by the Fed?  No.  For on the heels of former TreasSec Larry “Oh Not That Guy” Summers in the week prior having cautioned the Federal Reserve’s next rate move could possibly be up rather than down, just this past Thursday at the Semafor World Economy Summit, New York FedPrez John “It’s All Good” Williams said:  “…if the data are telling us that we would need higher interest rates to achieve our goals, then we would obviously want to do that…” Obviously indeed.  You regular readers know we’ve been musing well ahead of the curve about rate hike(s) since our first missive of this year.  And ’tis been better than 30 years since upon pushing Barbie’s button she said “Math class is tough.”  As we oft harp, these days it seems no one does math; rather, they parrot.  “Well, it was on the news, ya know…”

Yet hardly can enough be said about the precious metals having run ahead, both Gold and Silver as thoroughbreds!  In fact amongst the entire BEGOS pack, Silver now leads the year-to-date percentage tracks at +19.6%, followed by Oil +16.7% and then closely by Gold +16.2%.  (The S&P’s once-inane gain has now fizzled to just +4.1%; we’ll display the whole bunch in next week’s “month-end” edition of the Gold Update).

But specific to Gold below on the left and Silver on the right, historically one is hard-pressed to find such like uptrend performance.  Why, even the “Baby Blues” of trend consistency having fallen a month ago below their key +80% axis could not forestall further price-rise by any material degree.  Still:  that +80% level is critical to watch, for upon being breached, the rule rather than the exception is lower price levels near-term; (the “Baby Blues” you can find updated daily, ‘natch, on the website):

Turning to the 10-day Market Profiles for the precious metals, you also can clearly see the bulk of trading for both Gold (at left) and Silver (at right) as centered in their respective price stacks.  The most dominant prices therein traded are as denoted:

Next week bring 10 metrics into the Econ Baro, the two most viewed to be:

  • The first peek at Q1 Gross Domestic Product, the growth pace for which is expected to have slowed from that in Q4, and

  • March’s “Fed-favoured” Personal Consumption Expenditures Prices, such paces not expected to have eased from those in February.

Nonetheless, despite a pending dip in the price of Gold, ‘tis best you continue to grab more and hold!

Cheers!

 …m…

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

The Gold Update: No. 752 – (13 April 2024) – “Gold Achieves Our Forecast High for This Year”

by

The Gold Update by Mark Mead Baillie — 752nd Edition — Monte-Carlo — 13 April 2024 (published each Saturday) — www.deMeadville.com

“Gold Achieves Our Forecast High for This Year“

This past Tuesday 09 April at precisely 07:15 GMT, Gold tapped our 2375 forecast high for this year.  As we reminded you valued readers a week ago, such call made back on 30 December was couched as “conservative”.  And indeed this past week, Gold reached up past “conservative” to another All-Time High yesterday (Friday) at 2449 only to then plunge -98 points (-4.0%) in just five hours — its ninth-largest intraday points drop in history — toward finally settling at 2360.

“Well congrats anyway, mmb.  Now are you forecasting a higher, aggressive price for this year?“

We shan’t so do, Squire, having already staked our claim.  Still, so as to keep eyebrows raised, let’s reprise that which we herein penned upon making the 2375 call:

“…whenever Gold has had a five-day run into Christmas of better than +1.0%, its average maximum price increase (as measured from the settle of the last trading day before Christmas) through the ensuing year is +23.9%.  That average comes from seven qualifying occurrences during 2001 through 2022:  and now for 2023 we’ve an eighth occurrence.  Thus applying that +23.9% average maximum increase to Gold’s 2065 settle this past 22 December would bring 2557 during 2024 … However: because a) we fully comprehend that “average” is not “reality” and more importantly that b) cash management drives at least some degree of capital preservation … we’ve decided to lop off one standard deviation of that average, which then conservatively forecasts +15.0% above 2065 — thus 2375 — for 2024’s high.  Anything beyond that is gravy.”

And with Gold having further ascended to 2449, another portion of giblets for the gravy already is warranted.  Whilst we’re not predicting it, 2557 from here at 2360 (+8%) doesn’t seem all that untoward timewise, given we’ve not even completed the year’s first quadrimestris (a little Latin lingo there), albeit Gold remains considerably stretched technically above its BEGOS Markets valuation.

‘Course as last week wrote:  “Gold ‘Overbought’ is Great!”.  Below from a week ago is our now updated Market Values graphic for Gold vis-à-vis its smooth BEGOS valuation line.  The lower panel oscillator (price less value) is still hovering ’round the extremely overbought +200 level.  And yet by the opening Gold Scoreboard, price at 2360 is -1362 points below Dollar debasement valuation.  Thus near-term Gold is very over-extended; but broad-term Gold remains very undervalued.  So ’tis not too late to buy, Kate, even if near-term we see price deteriorate … for Friday’s -98 intraday points-drop is indicative of some fragility.  Here’s the graphic:

 

 

But notably lost of late in the analytical mix — contra to the “convention wisdom” crowd — is Gold’s strength in tandem with Dollar strength.  For it does on occasion occur:  recall the first six months of 2010 when Gold and the Dollar Index (DXY) by mid-year were both up respectively by +13% and +10%.  And although the percentage moves of the DXY can be diminutive compared to those for Gold, directional correlation is the key.  So year-to-date, here are their respective tracks (independently scaled), with both dashed linear regression trendlines clearly in ascent:

Indeed yes, Virginia, even as the DXY (105.820) is now at its highest closing level since 02 November, Gold nonetheless did record that fresh All-Time High yesterday at 2449, price this past week on balance well-eclipsing our 2375 forecast.  From a year ago-to-date by Gold’s weekly bars and parabolic trends, here’s how price has gone UP:

As to the Stateside economy, inflation and the Fed, the FinMedia still can’t seem to get the word “cut” out of their head.  Steadfastly — despite much math to the contrary — ’tis expected that the Federal Reverse shall cut rates this year:  except that there shan’t be three cuts, rather one, and not (so they now say) until after Summer.  Or perhaps not at all based on what former TreasSec Larry “Oh Not That Guy” Summers just said this past Thursday, (hat-tip Bloomy):  “You have to take seriously the possibility that the next rate move will be upwards rather than downwards…”  (We assume he’s actually done the math and/or regularly reads The Gold Update).

And to be sure, at the level of retail inflation, the Consumer Price Index (CPI) for March printed increases of +0.4% for both the Headline and Core readings.  Annualized, that pace is +4.8% and the 12-month summations are Headline +3.3% and Core +3.8%.  The “good news” is:  at the wholesale inflation level, growth in the Producer Price Index (PPI) slowed in March, which can in turn “lead” to lower CPI levels.  On verra, but no matter how we slice it, inflation remains running above the Fed-desired +2% annualized pace — and should it not be trending down that way — they may just have to raise.

Either way, in an otherwise light week of incoming data for the Economic Barometer, sustained inflation at the retail level along with other metrics’ deterioration still keeps us in mind of stagflation.  Notably (but not widely focused upon), February’s Wholesale Inventories tied for their worst backup since those of December 2022, indicative of product not moving so well.  Too, the University of Michigan’s “Go Blue!” Sentiment Survey for April declined from that for March.  Thus which way does the Baro itself march?  Have a look (should you dare) from a year ago-to-date, the stock market poised for a downward skate:

And just in case you’re scoring at home (courtesy of the “How Can We Fool ‘Em Today Dept.”) as regards The President’s “inflation was skyrocketing” comment:  when “they” took office on 20 January 2021, the 12-month summed data through December 2020 was as follows:  CPI Headline +1.3%, its Core +1.5%, PPI Headline +1.4% and its Core +1.3%.  (Oopsie Joey…)

Too, the “Casino 500” appears at long-last to be encountering an oopsie of its own, having recorded back-to-back down weeks for the first time since those ending last 20 and 27 October.  Our honestly-calculated capitalization-weighted “live” price/earnings ratio of the S&P is now 45.3x and the yield but 1.384%, whilst risk-free U.S. three-month dough pays an annualized 5.230%.  (A word to the wise is sufficient).

To our two-panel Gold graphic we go, featuring the 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 clearly depict Gold’s strong uptrend, albeit the Profile shows us how far the yellow metal fell from grace just yesterday (the white bar being present price):

 

And with the same drill for Sister Silver, both her Baby Blues at left and Profile at right fairly mirror those of Gold.  Silver’s high this past week of 29.905 hadn’t previously traded since 01 February 2021.  Yet, the Gold/Silver ratio remains historically high at 84.4x versus the century-to-date average of 68.2x.  By that average given Gold today at 2360, Silver “ought be” 34.67 (rather than the present 27.97).  So obviously whilst Gold fundamentally remains cheap, Silver remains super cheap!  Here she is:

To sum it all up with further Gold highs intact, let’s wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3722
Gold’s All-Time Intra-Day High:  2449 (12 April 2024)
2024’s High:  2449 (12 April 2024)
10-Session directional range:  up to 2449 (from 2249) = +200 points or +8.9%
Trading Resistance (Profile selection):  2413
Gold’s All-Time Closing High:  2391 (11 April 2024)
Gold Currently:  2360, (expected daily trading range [“EDTR”]: 44 points)
Trading Support (Profile selections):  2358 / 2346 / 2304 / 2292 / 2278
10-Session “volume-weighted” average price magnet:  2340
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2023
The 300-Day Moving Average:  1996 and rising
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

Next week brings 13 metrics into the Econ Baro, plus Q1 Earnings Season ramps up, notably featuring financial institutions.  We indeed sported a wry smile yesterday over the FinMedia’s concern of Wells Fargo (WFC) having beaten earnings “estimates”, but the stock then falling “on the news”.  Perhaps ’twas because the company actually made less money than a year earlier, (but we’re not supposed to point that out).  Best to point to that which broadly makes money and secures your world of wealth:  Gold!

Cheers!

 …m…

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

The Gold Update: No. 751 – (06 April 2024) – “Gold ‘Overbought’ is Great!”

by

The Gold Update by Mark Mead Baillie — 751st Edition — Monte-Carlo — 06 April 2024 (published each Saturday) — www.deMeadville.com

“Gold ‘Overbought’ is Great!“

We’ve penned it before, so let’s pen it again:

“Gold when technically overbought [as clearly now ’tis] might actually be considered a good thing … [as] great bull markets (or the resumption thereof) do breakout as such.”

That quintessentially describes the nature of Gold’s price over the past five weeks.  And the Gold bid is substantive:  the combined COMEX trading volume of Gold from 04 March-to-date is the largest for any five-week stint since the world balked at COVID in 2020.  Back then, the price of the yellow metal after having settled the prior year of 2019 at 1550, powered up to 2089 come 07 August 2020, a nearly +35% increase in 152 trading days:  that All-Time High then remained in place until ’twas eclipsed more than three years later this past 27 December.

Moreover, Gold’s June contract settled yesterday (Friday) at 2349 inclusive of an intraday 2350 All-Time High, just 25 points shy of our predicted 2375 high for the entirety of this year.  Further, Gold’s “expected daily trading range” (EDTR) is now 35 points:  so priced today at 2349, Gold is within a day’s range of reaching our 2375 target.  (Yes there are some +20 points of eroding premium in Gold’s futures price, but again given the EDTR is 35 points, such excess is at best noise).

“And it’s not too late to buy, right mmb?“

Actually, Squire, in the broader picture — especially as “under-owned” as remains Gold — hardly is it late:  rather, ‘tis still early!  We only mention this to dispel any investor concerns of having “missed the move” as Gold has still so far up to go.  Oh to be sure, ‘twould be untoward technically for Gold not to pullback near-term; but fundamentally Gold remains extraordinarily inexpensive relative to U.S. Dollar debasement, such valuation by our opening Scoreboard now 3720.

The key point here is:  Gold finally and rightly is getting repriced to a somewhat more reasonable level, albeit still well below said Scoreboard valuation.  Again, that is broad-term.  As for near-term, our 2375 looks ripe for the taking; indeed you may remember our couching that level as “conservative” when we first made the call; (see via the website The Gold Update from last 30 December, entitled “Gold – We Conservatively Forecast 2375 for 2024’s High”).  And now year-to-date, Gold is +13.4%.  As for year-over-year, ’tis +15.3% in turning to price’s weekly bars from 05 April a year ago, the rightmost blue-dotted parabolic Long trend now increasing its upside acceleration:

‘Course the thrust of this missive is that ’tis great when Gold becomes “overbought” as price climbs high into the sky.  Still, from the infamous “Nothing Moves in a Straight Line Dept.” Gold right now is truly, technically over-extended.  We thus update the following telling graphic from the website wherein we chart the daily closing prices from this time a year ago-to-date astride the smooth valuation line, (a near-term analytic unrelated to the broad-term Scoreboard valuation).  Those of you familiar with this proprietary measure know the drill:  when price breaks above or below the smooth line, ’tis the direction in which to trade, (albeit Shorting Gold is a bad idea).  Recall the smooth line is derived from relative price changes amongst the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500) as the flows between these critically important entities is significantly substantive; hence the inception of BEGOS some two decades ago.  Here’s our two-panel valuation view:  

Per the graphic’s lower panel (price less valuation), specific to Gold, a 100-point (on either side) deviation is considered “extreme”, and we’re essentially now +200 points above valuation.  Such extreme distance in concert with Gold almost at our year’s forecast high of 2375 can present a near-term reversal of fortune, (and if anything, an opportunity to add to one’s pile).  Whilst the extent of a reversal is unknown, the +200 level has basically been reached only three other times:  first on 22 August 2011 after which price within a year dropped by -19.8%, then again briefly on COVID-crazy 15 April 2020, the third time being on 06 August 2020, which then saw price similarly drop within a year by -19.4%.

So is another -19%ish drop within Gold’s cards?  We don’t see that a wit.  For positively, note on the above graphic the remark pointing to recent structural support just below 2200.  As we penned back in our 09 March piece:  “…gone are the days of the 1900s…”  Should this new “repricing” of Gold remain true to inevitable form, indeed those “days” ought well be histoire.  Thus the bottom line is:  Gold’s pending price plight shall morph into dip-buyers delight.

Yet for the StateSide economy, our Economic Barometer seems biased a bit more toward plight rather than delight.  Job creation in March was fairly firm, notably per the ADP Employment data having bettered consensus, as well as having improved over that for February, that month in turn having been revised higher.  But in looking at the past week’s Initial Jobless Claims as well as February’s Trade Deficit and Consumer Credit, all three worsened from the prior period, of which was revised lower in all three cases, and all three were worse than consensus.  Indeed, have we of late mentioned the word stagflation?  You know we have, especially given the graphic depictions in recent editions of inflation rising and/or still trending above the Federal Reserve’s 2% target.  More on inflation specific to the BEGOS Markets following this view of the Baro (with the inane “Casino 500” in red) from one year ago-to-date, “Oops…”:

Indeed one wonders if the earnings-lacking, nearly-yieldless S&P is at long last putting in a top.  (Yes, ’tis wishful thinking, right?)  We nonetheless stick to history at some point repeating itself yet again — and that mathematically — a third “correction” of worse than -50% across the past 25 years is justifiably in the cards.  ‘Course, preventing that is math no longer being employed in portfolio management.  But just when ’tis said: “It’s different this time”, it turns out not to be.  Perhaps “AI” shall save it all from going wrong … else hasten such.  Would you board a plane piloted by Assembled Inaccuracy?  “Have a nice fright…”  There’s still a lot of “learning” to do out there.

As to inflation, per our musings since the start of this year, we reprise:  “…might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens … surprise!”  Or as Bloomy printed this past Tuesday:  “Bond Selloff Builds as Fed Seen Delaying Rate Cuts” … Oh say it ain’t so!

And yet, the old adage certainly seems in play:  “The rising tide of inflation lifts all boats.”  Or clearly so for the following BEGOS Markets.  This next four-panel display shows the past 21 trading days (one month) for our Metals Triumvirate, plus Oil, all including their baby blue dots of trend consistency.  Across the board ’tis up, up and away!  And those of you seasoned investors and traders know that markets have a hankering to lead that which fundamentally is coming, (which in this case for you WestPalmBeachers down there means more inflation).  Thus just maybe there’ll be a “Fed rate hike?”  We know, “Don’t go there!”  Here’s the graphic:

And specific to the precious metals, next is our two-panel display of the 10-day Market Profiles for Gold on the left and for Silver on the right.  Per the wee white bars, there’s nothing like sitting atop the respective stacks, eh?

To wrap, in that we’ve mentioned inflation, again ’tis on full display next week as the March data arrives at both the retail (Consumer Price Index) and Wholesale (Producer Price Index) levels.  In both cases, consensus expects cooling.  (We’ll believe it when we see it; on this side of the Pond it sure doesn’t feel like it).  Still toward staying first rate:  ensure your nuggets of financial wisdom include both Gold and Silver, as being “overbought” is great!

 Cheers!

 …m…

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

The Gold Update: No. 750 – (30 March 2024) – “Gold Reaps More Record Ground”

by

The Gold Update by Mark Mead Baillie — 750th Edition — Monte-Carlo — 30 March 2024 (published each Saturday) — www.deMeadville.com

“Gold Reaps More Record Ground”

Welcome one and all to the 750th consecutive Saturday edition of The Gold Update.  Having missed nary a Saturday since our first missive (20 November 2009) with Gold then 1151, price since has nearly doubled (+94%), toward settling this past shortened trading week on Thursday at the latest All-Time High of 2234.  Thus we’ve a milestone price for Gold in synch with this milestone missive.

To be sure across the same stint, Gold supply’s tonnage has increased +23% for which we rightly account in the above Scoreboard valuation of 3719; but the U.S. liquid money supply (“M2”) has far more overwhelmingly increased +147% (that’s 2.5x for those of you scoring at home).  ‘Tis reason right there to make sure you own Gold!

So as we turn to Gold’s weekly bars and parabolic trends from one year ago-to-date, let’s again cue Rita Coolidge from back in ’83 with “All Time High”:

Gold’s +3.1% (+68 points) gain this past week ranks fourth-best on both a percentage and points basis in better than a year (since the week ending 17 March 2023).  Moreover, the current 2234 level is -141 points shy of our forecast high for this year of 2375, (a further +6.3% gain from here), to which ’tis reasonable to say — with three quarters remaining in the young year — would seem well within range.  Indeed were 2375 to be reached by year-end, ‘twould be a +14.6% gain (from 2023’s close of 2072).  Possible?  Absolutely!  Across the past 49 trading years (from 1975 through 2023), Gold has recorded intra-year gains exceeding +14.6% in 26 of those years.  

As to the three notable near-term Gold negatives we herein cited a week ago, price has only been positive.  Still, recall then that price (per our Market Values page) was +71 points above our “smooth valuation line”:  that deviation is now +116 points which historically is both excessive and generally leads to some natural ebb within Gold’s overall up-flow.  Too, Gold’s daily (not weekly) parabolics a week back had flipped to Short, albeit they’ve now returned to Long.  But Gold’s “Baby Blues” (per our Market Trends page and as we’ll later below see) were — and still are — in decline.

Now including key precious metal equities and the month of March being in the books, we next go year-over-year with the following percentage tracks wherein we find Agnico Eagle Mines (AEM) +14%, Gold itself +13%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -2%, the Global X Silver Miners exchange-traded fund (SIL) -9%, both Franco-Nevada (FNV) and Pan American Silver (PAAS) -18%, and cellar-dweller Newmont (NEM) -26%.  But as lagging as the equities appear, there is a rather robust appearance in their most recent rises.  Notably thereto across the past 32 trading days (since 13 February), whilst Gold is +11%, AEM is +33%.

“Which is the way it’s supposed to be, right mmb?“

Right, dear Squire:  live by the equities’ leverage, albeit suffer by it at times within Gold’s overall rich pageant.  Here are the tracks: 

 

However:  returning to Gold’s firm year-to-date performance (thoroughly so through March), and it being not only month-end but quarter-end as well, here are the BEGOS Markets’ percentage-change standings thus far in 2024.  Gold is on the podium with a +7.8% gain, third only to the “Casino 500” (+10.2%) and ever-burgeoning Oil (+16.5%).  Note, too, that the Dollar is +3.2%, contra to the conventional wisdom that it is negative-correlated to Gold, (which as you know plays no currency favourites).  Still, ’tis proof once again that the Buck gets a bid when interest rates are up.  Thus “francly” for the Swiss, ’tis become a complete miss following the Schweizerische Nationalbank’s rate cut as we disclosed a week ago:

Nearer-term in comparing Gold’s trend to those of all the BEGOS Markets, let’s go ’round their horn for the past 21 trading days (one month).  Therein we see the components’ “Baby Blues” depicting the day-to-day consistency of each grey linear regression trendline.  And as aforementioned, Gold’s blue dots are dropping, as is the case for every market, except Oil.  Oh to be sure, Gold’s trend clearly is up; however as those leftmost several days drop off the chart, the slope of the grey trendline shall become less steep.  And as you long-time readers and website followers well know:  “Follow the blues instead of the news, else lose your shoes”, (which for you WestPalmBeachers down there means some Gold selling near-term wouldn’t be untoward).  Here’s the graphic, (the “Spoo” essentially being the “never go down” S&P 500):

As to the StateSide economy, ’twas another week of rather “split” results for the Economic Barometer:  of the 12 incoming metrics, six improved period-over-period, which means six did not so do.  We were a bit alarmed to see February’s Personal Spending leap +0.8% (from +0.2%) even as Personal Income slowed to +0.3% (from +1.0%).  Paying more these days for the same stuff?

Moreover, yesterday (Friday) brought the “Fed-favoured” Personal Consumption Expenditures data, (which given the holiday shan’t face markets’ reactions until Monday).  February’s headline PCE increased +0.3%, the most since September, whilst the Core reading also increased +0.3%, the second-most since September.  Thus the trend of inflation across the past five reported months (Oct-Fed) is rising.

Thus in turn, ’tis no wonder that the FinMedia “call” for three FedFunds rate cuts this year is being subtly scaled back to one … or none … (or are rate hikes not done?)  Too, the Baro recorded further “contraction” in March’s Chicago Purchasing Managers’ Index as well as a pullback in the Conference Board’s measure of Consumer Confidence.  Are you confident?  Or is the notion of stagflation becoming an agitation?  Here’s our year-over-year Econ Baro view, the “Casino 500” yet to encounter its Waterloo:

Through it all as the economy potentially stagflates sans imminent relief for interest rates — with the three-month annualized yield of the U.S. Treasury Bill (5.2035%) nearly four times higher than that of the “Casino 500” (1.384%) — the Investing Age of Stoopid nonetheless rolls upward in comprehensive ignorance to an S&P 500 lacking both earnings support (the live price/earnings ratio now 46.9x) and monetary coverage (the market capitalization/money supply ratio now 2.2x).  Scary continues!

Comforting, however, are the yellow metal’s underlying layers of trading support as we turn to the 10-day Market Profiles for Gold on the left and for Silver on the right.  Note:  the labeled Gold supports are basis the June contract — inclusive of its +21 points of fresh premium (June Gold having settled at 2255) — as April is now put to rest:

And proudly pointing to Gold’s new All-Time High is the happy guy in our 15-year view by the month of the layered price structure.  This year’s Gold goal remains as shown at 2375:

To close — given that the yellow metal is at an All-Time High — nothing could be more appropriate to wrap than with The Gold Stack, with the June contract but one row below debasement valuation:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3719
JUNE Gold Currently:  2255, (expected daily trading range [“EDTR”]: 30 points)
Trading Support (basis June):  2241 / 2232 / 2228 / 2211 / 2199 / 2186 / 2183
Gold’s All-Time Intra-Day High:  2234 (28 March 2024)
2024’s High:  2234 (28 March)
10-Session directional range:  up to 2234 (from 2149) = +85 points or +4.0%
Gold’s All-Time Closing High:  2234 (28 March 2024)
Trading Resistance:  (none)
10-Session “volume-weighted” average price magnet (basis June):  2202
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2023
2024’s Low:  1996 (14 February)
The 300-Day Moving Average:  1983 and rising
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

So there we’ve missive No. 750 as magnificently aligned with a Gold All-Time High.  Will it get any better?  ‘Course ’twill!  Just make sure you make your move with Gold!

Cheers!

 …m…

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

The Gold Update: No. 749 – (23 March 2024) – “Gold’s Fresh Highs; Fed’s Cred Demise?”

by

The Gold Update by Mark Mead Baillie — 749th Edition — Monte-Carlo — 23 March 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Fresh Highs; Fed’s Cred Demise?”

Gold recorded another series of fresh All-Time Highs this past week in eclipsing the 2203 level (from 08 March) in a swift run up to 2225 on Thursday before coming off (as we’ve written “expectedly”) in settling yesterday (Friday) at 2167.  Still, given Gold’s momentum with but a week to go in Q1 of 2024, our forecasted year’s high at 2375 remains rightly reasonable.

But let us again head with the Fed, indeed query if ’tis losing its cred.  Clearly that which we herein penned a week ago “…Obviously the FOMC shall unanimously vote to do nothing with its Bank’s Funds Rate…” is exactly what occurred per the Open Market Committee’s Policy Statement issued on Wednesday.  Our takeaway these many years — rather than watch all the FinMedia bilge — comes from simply reading the Statement, in which for 20 March are these three key sentences:

  • “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.”

     

  • “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

     

  • “The Committee is strongly committed to returning inflation to its 2 percent objective.”

Yet even as inflation is ticking higher — above and beyond 2% — three FedFunds rate cuts remain on the table for the balance of 2024?  What?  “Curiouser and curiouser!” cried Alice…

To be sure, you’ve already seen the inflation tables we’ve presented in recent missives.  So this time, let’s get graphic(!)  Thus from 12 months ago-to-date (March ’23 through February ’24), below are the headline and core charts for the Consumer Price Index (CPI-retail inflation), Producer Price Index (PPI-wholesale inflation), and Personal Consumption Expenditures (PCE-Fed-favoured inflation).  Note:  the PCE February data points are the consensus estimates as the report is not due until next Friday, 29 March (the markets actually being closed that day).  Therein:  each data point is annualized per that month’s reading; each inflation track is accompanied by its dashed trendline; each panel is identically scaled; and the Federal Reserve’s 2% target level is in red.  And again we say:  “We’re going the wrong way”.  Still, Bloomy ran this past week with “The Great Inflation Scare is Fading.”  Clearly they don’t have these charts:

Demonstrably, the rightmost datapoint (February ’24) in every case is above the Fed’s 2% target.  Moreover:  most of the dashed trendlines are rising up and away from that target, the notable exception ironically being the “Fed-favoured” inflation measure of “PCE – Core”, the trend for which is admittedly nearing said 2% target.  But really:  three rate cuts?  How about a rate hike?  (Perhaps we ought apply to be on the FOMC, but the pay cut would be too dear…)

Hardly dear is dear old Gold.  Its present 2167 price is -42% beneath our opening Gold Scoreboard’s Dollar-debasement valuation of 3719.  So to Gold’s weekly bars we go, the rightmost blue-dotted parabolic Long trend now a young three weeks in duration in this year-over-year view:

However, let us temper the rejoicing of Gold Going Great with some present technical negatives, courtesy of the “Party Pooper Dept.”, albeit with this caveat as penned a week ago:  “…they’re clearly stretched to the upside, however great bull markets (or the resumption thereof) do breakout as such…”  That for you WestPalmBeachers down there means Gold when technically overbought might actually be considered a good thing.

Either way, we’ve the following two-panel graphic.  On the left again is Gold vis-à-vis its smooth valuation line from three months ago-to-date.  Price at present is +71 points above the smooth line, the red down arrows suggestive of the eventual meeting of price with value, (that line itself on the rise; the points difference between price and value is at the foot of the panel).  On the right are Gold’s daily candles across the past 21 trading days (one month) along with the Parabolics study that currently is our leading Market Rhythm for Gold:  note the rightmost red-encircled dot which heralds the start of a Short trend.  (Too, we’ll later see Gold’s “Baby Blues” of trend consistency suggesting lower price levels ahead).  Here’s the graphic:

“So, mmb, the question becomes ‘How low is low’, eh?“

So ’tis, Squire, (barring the technicals instead catching up to price, which again in a bullish breakout is mathematically natural).  Regardless, in looking above at the right-hand panel of Gold since a month ago, “The Big Move” in round numbers was +100 points from 2050 to 2150.  Thus by structural support, that latter number ideally would be as low as Gold goes near-term.  But with three technical negatives all simultaneously in play (price above value, Short daily parabolic trend, and as noted we’ll see, a breakdown in Gold’s “Baby Blues”), we sense 2150 shall bust, (this past week’s low having already touched 2149, but ’twas prior to Thursday’s 2225 All-Time High).

Nonetheless, does all that mean a full retracement back down to 2050 is warranted?  ‘Tis dependent on buyside enthusiasm:  through the 57 trading days year-to-date, Gold’s average daily COMEX contract volume is 208,633; yet for these past five days, the average is +15% higher at 240,638.  We can therefore say that “Gold is in play”:  however, Friday’s down day (high-to-low from 2188-to-2158) sported Gold’s largest one-day contract volume this year at 391,750, such “mo-mo suggesting more low” should dip buyers wait out more downside show.  ‘Course, broadly on balance, Gold continues to look good to go with eventually higher levels to bestow.

Meanwhile, bestowed upon a needy, stagflative Economic Barometer this past week was improved data for housing.  The National Association of Home Builders Index gained ground in March as did February’s readings for Housing Starts, Building Permits, and Existing Home Sales.  In an otherwise light week for incoming data, the only “negative” metric was a slowing in March’s Philly Fed Index:  but its result (3.2) was positive for just the fourth time in the past 22 months: “Fly, Eagles Fly”[Borrelli/Courtland, ’55].  Here’s the Baro:

Yet does stagflation still lurk for the economy?  Next week for the Econ Baro we’ve 14 metrics, just seven of which are expected to show period-over-period improvement.  And again, the aforementioned February PCE, along with that month’s Personal Income/Spending, are to be released on next Friday’s holiday, meaning they can’t be traded upon until Monday, April Fools Day … oh baby.

As for the Casino 500, ’tis “nuthin’ but new highs” as the stock market continues to “price in” the same news over-and-over-and-over again.  Week-after-week we read of the market rising day-after-day because of “Breaking News:  The Fed Will Cuts Rates Three Times This Year!”  The S&P is now “textbook overbought” to the tune of 45 consecutive trading days:  going all the way back to the year 1980, that streak ranks in the 98th percentile of such overbought condition.  Indeed yesterday, Janus’ Bill Gross characterized today’s investing climate as “excessive exuberance”.  ‘Course, Smart Alec shan’t sell his shares until he (along with everyone else) is scared, the broker then crediting his account with IOUs when the money isn’t there*.  (“Pssst:  Got Gold?”)

* As of 22 March ’24:  S&P 500 market cap:  $45.7T; U.S. liquid money supply (M2):  $21.0T.

Next we’ve got more of Gold, and Silver too.  Beginning with the yellow metal is our two-panel display of Gold’s daily bars from three months ago-to-date at left and 10-day Market Profile at right.  Note the “Baby Blues” which depict trend consistency:  we’ve actually coloured the rightmost one in red given its having dropped below the key +80 axis level.  That generally leads to lower Gold levels near-term.  For example:  from one year ago-to-date, such “Baby Blues” slip phenomena has occurred on three occasions, the downside price movement within 21 trading days (one month) ranging from -10 points to -49 points, (i.e. were that to pan out in this case from today’s 2167 level, Gold would head down into a range between 2157 to 2118, just in case you’re scoring at home).  As for the Profile, Gold is now sitting just above the trading support labeled as 2164:

For the white metal, Sister Silver’s resent sweet ascent is now being met with some dissent.  With the like drill as shown for Gold, her “Baby Blues” (below left) have just kinked down, and Profile support (below right) shows at 24.65.  Should Silver sustain a bit of a hit, the high 23s would likely seem fit:

To close, we’ve these few quick quips.

This past Tuesday we awoke to read that Kazuo Ueda and his mates at Nippon Ginkō — for the first time in 17 years — put positive the bank’s overnight lending rate in raising it from -0.1% to a sought range of 0.0% to 0.1%.  Still, it all seems rather wee, but as goes the saying:  “Saké to me, Saké to me, Saké to me…”

This past Thursday with Swiss precision at 09:00 CET, Tommy Jordan and his lads at Schweizerische Nationalbank cut — without scheduled notice — both their key lending and deposit rates to 1.50%.  This in turn elicited the Swiss Franc’s largest single session high-to-low drop (-1.69%) versus the Dollar in better than a year.  Or how would Emmental Robin put:  “Holy cheese, Batman!”

And from the “You Can’t Make This BS Up Dept.”, hardly complete would be the week without having learned from “ABC News!” that according to The World Happiness Report, the Good Old USA no longer ranks amongst the Top 20 Happiest Countries.  Aw shucks.  But when your nation averages some 45 murders per day (per the Kaman Law Firm), ’tis hard to be happy.  Indeed, that’s America, babe:  “Death and Taxes!”

Rather, seek that which is more life-and-monetary sustaining: 

And Gold in any denomination is still Gold!

Cheers!

 …m…

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

The Gold Update: No. 748 – (16 March 2024) – “Gold’s Expected Detinue; Fed HIKE Must Ensue?”

by

The Gold Update by Mark Mead Baillie — 748th Edition — Monte-Carlo — 16 March 2024 (published each Saturday) — www.deMeadville.com

“Gold’s Expected Detinue; Fed HIKE Must Ensue?“

We start with the Federal Reserve, the Open Market Committee scheduled to deliver its next Policy Statement this coming Wednesday, 20 March (at 18:00 GMT).

Obviously the FOMC shall unanimously vote to do nothing with its Bank’s Funds Rate, the devil then being in the Statement’s details, followed by those then exorcised by the FinMedia from Chair Powell during his presser.

Now as you regular readers know, we’ve herein mused (albeit not predicted) since the beginning of this year that the Fed — rather than cut rates as everyone expects — instead have to further raise rates if for no other reason than the math suggests inflation is running well above the Fed’s infamous, annualized 2% “target”.

Recall two weeks ago our inflation summary for January.  ‘Tis below on the left.  Since then, the Bureau of Labor Statistics has chimed in for February with both retail inflation (Consumer Price Index) and wholesale inflation (Producer Price Index).  Thus we’ve updated that graphic as now shown below on the right, (February’s Personal Consumption Expenditures not due from the Bureau of Economic Analysis until 29 March).  Regardless:  look at the “Averages” row at the foot of both panels:  we’re continuing to go the wrong way, (i.e. inflation is increasing).  And yet conventional wisdom is staying the rate reduction course?  “C’mon, man!”  Again, if in red, the metric is ostensibly “too high” for the Fed:

 

But nary a day goes by wherein we don’t read about the “timing” of the Fed’s cutting rates.

So query:  what about the “timing” of the Fed instead rightly raising rates?  Just sayin’ … for after all, math is a marvelous science for detecting the truth.  (‘Course, “Math Class” has been long-removed from many a public school curriculum and replaced with “How to Grow a Tree Class”).  Still, the insistance for the Fed to cut rates remains a core issue for the FinMedia.  Following all this past week’s increasing inflation metrics for February, here are some choice headlines per the parroters:

  • Bloomy:  “Fed gets more reasons to delay interest cuts” (why not raise?);
  • DJNw:  “‘Perpetually optimistic’ investors worry Fed won’t cut rates three times this year” (dumb);
  • CNBS:  “This week provided a reminder that inflation isn’t going away anytime soon” (duh);
  • Bloomy:  “Fed Seen Sticking With Three 2024 Cuts Despite Higher Inflation” (denial).

At least Dallas FedPrez Lorie “Logical” Logan gets it, her saying in January:  “…we shouldn’t take the possibility of another rate increase off the table just yet…”  Too bad she is not (as yet) an FOMC Member.

Also — were the Fed to raise rates — are the fallout issues both for equities and political support.  As you know ad nauseum, the S&P 500 is ridiculously over-extended, (see the historical case in last week’s missive for a material “correction” of some 16%-to-18% within these next three months).  The last thing the Fed wishes to foster is a rate-hike-elicited stock market collapse, especially in a Presidential election year.  As the U.S. Senate in May 2022 extended FedChair Powell’s term through May 2026, ’tis favourable for him not to see a power shift therein should higher rates cream equities.  On verra…

The bottom line is:  if the Fed truly desires annualized inflation not exceed 2%, they need tighten rates, and in turn, tighten belts of America.

As entitled for “Gold’s Expected Detinue” (which for you WestPalmBeachers down there means “a person or thing detained”), certainly so was Gold’s recent advance.  For the week just past, Gold’s net change was -1.2% (-27 points) in settling yesterday (Friday) at 2159.  Why “expected?”  Recall from last week’s piece this now updated graphic of Gold vis-à-vis its smooth valuation line as derived from the relative movement of the five primary BEGOS Markets (Bond / Euro / Gold /Oil / S&P).  Oh to be sure, per the Gold Scoreboard, price (2159) is vastly undervalued given its currency debasement level (3717); but more momentarily per the website’s Market Value graphic, price at present is nearly 100 points “too high” given what near-term typically ensues per the red encircled bits as displayed from one year ago-to-date:

‘Course, across the same time frame by Gold’s weekly bars and parabolic trends, hardly does it get any better than this.  And yet with respect to that just displayed for Gold being some 100 points above its BEGOS Market Value, our weekly graphic’s dashed linear regression trend line is similarly about 100 points below price, (that courtesy of the “Means Reversion Dept.”)  Here ’tis:

Nonetheless more broadly — indeed by the day since 22 August 2011 (when Gold achieved an All-Time Closing High at 1900) — the upward tilt of price looks nice.  This next display retains several of Gold’s more notorious levels of the past, along with this year’s 2375 forecast (green line) as rather ripe for the taking:

But taken for a ride of late — indeed one quite steeply down — is the Economic Barometer.  That combined with increasing inflation maintains the reality of stagflation as detailed in our prior two missives.  In fact, the StateSide economy did get a net bump for this past week, albeit the increasing CPI and PPI headline levels aided and abetted the Baro given “the rising tide of inflation lifts all boats” … until of course stagflation digs in deeply:  “It now costs how much for that?”  Not pretty:

As for the Casino 500, (red line in the Econ Baro chart), its “live” price/earnings ratio is now 45.3x (basically double its inceptive reading a dozen years ago) and the “textbook” measure (a concoction of John Bollinger’s Bands along with the classic measures of Relative Strength and Stochastics) is currently “overbought” through the past 40 consecutive trading days, (historically never sustainable).

Fortunately, both Gold and Silver — especially the latter — remain cheap relative to currency debasement.  For Gold to match today’s debasement valuation, price need rise from 2159 to 3717 (i.e. +72%).  And with the century-to-date average of the Gold/Silver ratio at 68.1x, priced to that per Gold’s 3717 valuation puts Silver from today’s 25.41 to 54.58 (i.e. +115%) … just in case you’re scoring at home.

Drilling down to the near-term view, here next we’ve the daily bars and baby blue dots of trend consistency from three months ago-to-date for Gold at left and for Silver at right:

“Both do look over-extended, mmb…“

Squire, they’re clearly stretched to the upside, however great bull markets (or the resumption thereof) do breakout as such.  ‘Course, market participation with a buy-side bias is foundational for the bull to run, and credit due both Gold and Silver, their contact trading volume for the past two weeks having been above average.

Indeed to further focus on the past two weeks, here we’ve the precious metals’ 10-day Market Profiles for Gold (below left) and for Silver (below right), their respective trading support and resistance levels as labeled.  Of note, whilst Gold’s volume is toward the higher prices, that for Silver is around mid-Profile.  But the aforementioned Gold/Silver ratio is now 85.0x, down from 89.1x a week ago.  So Silver is getting a well-overdue bid, price having just closed above 25.00 for three consecutive days, an event not having occurred since last 29 November through 01 December:

Towards the wrap, here’s The Gold Stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3717
Gold’s All-Time Intra-Day High:  2203 (08 March 2024)
2024’s High:  2203 (08 March)
10-Session directional range:  up to 2203 (from 2088) = +115 points or +5.5%
Gold’s All-Time Closing High:  2189 (11 March 2024)
Trading Resistance:  2185 / 2164
Gold Currently:  2159, (expected daily trading range [“EDTR”]: 26 points)
10-Session “volume-weighted” average price magnet:  2157
Trading Support:  2155 / 2135 / 2126 / 2107 / 2092
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar ’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2001
2024’s Low:  1996 (14 February)
The 300-Day Moving Average:  1974 and rising
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

‘Tis a fairly quiet week ahead for incoming Econ Baro metrics:  just seven are scheduled, four of which relate to Housing.  Still as cited, The Main Event is Wednesday’s FOMC “maintain the target range” decision.  But in and amongst the Statement, Powell Presser and FedSpeak, might the phrase “rate increase” slip out … just as a little future possibility?  Quel drame, mes amis…

Either way, with Gold paused per its detinue, consider adding more to your metals’ milieu!

Cheers!

 …m…

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

The Gold Update: No. 747 – (09 March 2024) – “Gold Flies to Fresh All-Time Highs”

by

The Gold Update by Mark Mead Baillie — 747th Edition — Monte-Carlo — 09 March 2024 (published each Saturday) — www.deMeadville.com

“Gold Flies to Fresh All-Time Highs“

With The Gold Update now in its 16th calendar year and price having just made a series of marginal fresh All-Time Highs these past three trading days (2161 Wednesday, 2172 Thursday, 2203 Friday), on the surface we deem this as a somewhat exciting event, Gold having then settled out the past week yesterday at 2186.

However:  from a more studied purview, ’tis admittedly adequate to couch it all as rather “ho-hum” given how vastly undervalued Gold remains vis-à-vis the above Scoreboard.  Therein, the current market level of 2186 is -41% below the Dollar debasement valuation of 3716.  Or for you WestPalmBeachers down there, Gold still has a very long way to go up — and moreover — that ’twill so do given price historically always catches up to prior high levels of valuation.  This is starkly shown in the above right-hand panel, wherein clearly Gold whilst now nicely getting some up-curl remains well behind the money supply green line’s continuing to unfurl.  And to be sure:  this time ’round such catch-up process is seemingly taking forever.

Still, we take heart in Gold’s having thus far traveled this year some 38% of the route from last year’s settle (2072) toward this year’s forecast high (2375).  And from the “Wishful Thinking Dept.”, extrapolating the current year-to-date pace would place Gold at our 2375 forecast high come 21 June, followed by 2764 for year-end.  ‘Course, hardly are we holding our breath for it to all go that exquisitely perfect, but ’tis nonetheless a tasty technical tidbit.

Further from the “Keeping One’s Feet on the Ground Dept.” whilst such an extensive BEGOS Market (Bond / Euro / Gold /Oil / S&P) movement (be it up or down) naturally pulls price away from our proprietary “smooth valuation line”, as this next graphic shows, reversion to said smooth line eventually recurs over time.  And per the lower panel oscillator (price less valuation), at present, Gold (2186) is +128 points above that line (2058):  obviously the prior two such extremes (red vertical lines) from a year ago-to-date in turn both lead to at least some material near-term price retrenchment. That cited, Gold’s recent peaks across the past three months in the 2090-2070 area appear supportive, (or more optimistically:  gone are the days of the 1900s).  Here’s the graphic:

Next let’s turn to Gold’s weekly bars and parabolic trends from one year ago-to-date.  This past week’s price upthrust comprehensively hoovered away the remnants of the ever so short-lived red-dotted parabolic Short trend, flipping it to Long in fine style per the new rightmost blue dot.  Therein, we can’t help but notice the past two parabolic Short trends could not manage more than three weeks of red-dotted duration.  Gold’s +5.5% low-to-high intra-week gain was the best in nearly a year, since that ending 17 March 2023, and the +4.5% net weekly gain the best since that ending this past 13 October. Think the buyers are in charge?  “YES!!!” indeed:

Meanwhile in charging along with the stagflation theme nauseatingly herein detailed a week ago, the Economic Barometer’s set of 13 incoming metrics produced — as surmised — just five period-over-period improvements, notably with respect to job creation, albeit the rate of February’s Unemployment (despite the increase in Payrolls) jumped two pips from 3.7% to 3.9%.  Still, there were some sore stinkers in the past week’s bunch:  January’s Factory Orders sank at a -3.6% pace, the month’s Trade Deficit was the worst since that of last April, and credit cards rocketed into orbit as January’s Consumer Credit level leapt from $0.9B in December to $19.5B.  “When ya don’t gots da dough, get out da plastic!”  Afterall, there was almost no growth in February’s Hourly Earnings.  And as for the Econ Baro itself, straight down continued as … well … straight down, even as Federal Reserve Chairman Jerome Powell in his Humphrey-Hawkins Testimony remained non-committal toward any near-term change in his Bank’s Funds Rate, (for which as you regular readers know the case can be made to actually increase it).  “Oh, say it ain’t so!”  Here’s the Baro:

“But the S&P 500 keeps sailing right along, eh mmb?“

So ‘twould appear, Squire, albeit the mighty Index did just (barely) record a down week (-0.3%), only its third such demise of not just the past the ten weeks year-to-date, but indeed since that ending 23 October … which for those of you scoring at home means the Casino 500 has spun 16 up weeks of the last 19.  How rare are such streaks? On a mutually-exclusive basis, before this run, it had only occurred on two other occasions across the past 25 calendar years (during 2018 and 2011, prior to which was  during 1989).  And following the 2018 stint, the S&P then “corrected” as much as -18.3% within three months, whilst after the 2011 stint, the Index similarly dumped -16.9%.  Also, this Casino 500 is now characterized as 35 consecutive trading days “textbook overbought”.  So “Get Ready”–[The Temptations, ’66].

Tempting, too, is the track of Gold, certainly so since mid-February from the rightmost dominant low (1996) in the following left-hand panel of price’s daily bars from three months ago-to-date.  In the right-hand panel we’ve Gold’s 10-day Market Profile with its bevy of volume-dominant support levels as labeled:

Silver’s setup is quite similar with her daily bars (below left) and Profile (below right).  Again to expound upon that which we regulary harp, Silver — given the Gold/Silver ratio now at 89.1x — remains CHEAP!  The ratio’s century-to-average is 68.1x:  plug that into your HP 12C to see where Silver “ought” be(!)

To finish, with 15 metrics due next week for the Econ Baro including the Bureau of Labor Statistics’ reads on the pace of February inflation at both the retail and wholesale levels, we can’t resist going with this closing graphic as — after all — ’tis The Gold Update No. 747:

What fuels your financial jet?  We trust ’tis Gold!

Cheers!

 …m…

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

The Gold Update: No. 746 – (02 March 2024) – “Gold Grabs Center-Stage as Stagflation Starts to Rage”

by

The Gold Update by Mark Mead Baillie — 746th Edition — Monte-Carlo — 02 March 2024 (published each Saturday) — www.deMeadville.com

“Gold Grabs Center-Stage as Stagflation Starts to Rage“

A bold title to head this recital, Gold on Friday posting its best low-to-high intraday gain (+2.4% or +50 points) since 13 December toward settling the week at 2092, essentially tying its highest-ever weekly closing price (with that recorded this past 01 December).  To maintain perspective, Gold’s All-Time High remains 2152 (per last 04 December).

Credit Gold’s Friday flight with our Economic Barometer consumed by blight.  Straightaway as the incoming metrics low-lighted economic decay, no sooner had we posted the Econ Baro just after the 16:00 (CET) barrage of negative data that Gold got the bid, the FinMedia in full throat for the Federal Reserve to cut rates.  But as to inflation:  ’tis going the wrong way!

So as succinctly set out in his 2008 tome “When Markets Collide”, one Mohamed El-Erian writes of stagflation as “a situation characterized by disappointingly low economic growth and high inflation.”  Is such situation suddenly starting?  From our bold title, let’s get straight to two bold graphics: first the economy and second inflation.

1)  The Economic Barometer:  just as ’twas all going great for the StateSide economy, the FinMedia consistently reminding us of the successes in having embraced Bidenomics, what just happened?  In turning below to the Econ Baro from one year-ago-to-date, that rightmost vertical drop is its second-worst six trading-day plunge since this time a year ago.  Should such reversal of fortune continue to work its way into the data for computing Gross Domestic Product, that’ll be El-Erian’s “disappointingly low economic growth” … “Whoomp! There it is!”” 

 

 

2) Inflation:  the rampant FinMedia speculation as to the timing of the Federal Reserve cutting rates into rising inflation is one of the most oxymoronic concepts across the financial spectrum in our memory since dear old Dad taught us how to read the newspaper’s stock tables back in the 1960s.  (The other two more glaring incongruities being the S&P 500 trading at double its historical earnings support and Gold trading at half its currency debasement valuation).

Increasing inflation, indeed.  The retching selection of puke-green for the following table summarizing January’s key inflation measures is ever so appropriate.  Therein are the six key StateSide inflation gauges as reported for January, their respective 12-month summations, and January’s pace annualized.  Remember:  the Fed’s annualized inflation target is 2.0%:  every reading in this table above 2.0% is highlighted in red, the average readings now running from 3.4% to 4.4%.  And there’s El-Erian’s “high inflation”:

 

To be a FedHead right now is fraught with trying to avoid making a “policy mistake”.  Ostensibly-speaking,  the Federal Open Market Committee is comprised of smart, intelligent folks, (yeah they’ve got the always-lovable Goofball Goolsbee in there); but the FOMC candidly know in their souls that inflation is going the wrong way.  To cut rates is to further stimulate inflation even as economic data deteriorates.  The FinMedia comprehensively expect the Fed to cut; and the Fed has to now deal with the confidence (or lack thereof) of “How can we fool ’em today?”

Therefore: this one-two bold combination of the Econ Baro’s sudden distress and inflation frustration is not a pretty picture.

As to Gold finally getting a bid, ’tis delightfully satisfying to see price bucking its weekly parabolic Short trend.  Even given our expectations for Gold to succumb to said trend which was confirmed three weeks ago, price essentially has gone nowhere but up, and we thus revel in the joy of being wrong, at least to this point.  For as you can next see in our year-over-year graphic of Gold’s weekly bars, price at present has moved well up and away from the underlying 2020-1936 green-bounded structural support zone:

‘Course what really continues to stand out for us is the lagging performance of the precious metals’ equities.  It being month-end (plus one trading day in March), here also year-over-year are the percentage tracks of Gold and those of its key equities brethren.  From worst-to-first they rank as follows:  Newmont (NEM) -28%, Franco-Nevada (FNV) -20%, Pan American Silver (PAAS) -16%, the Global X Silver Miners exchange-traded fund (SIL) -13%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -3%, Agnico Eagle Mines (AEM) +6%, and Gold itself +13%.  So out of favour remain the equities!  (Nudge-nudge, wink-wink, elbow-elbow…):

As for 2024’s brief stint year-to-date, despite Gold’s Friday upstate, price so far hasn’t done that great.  For in turning to the BEGOS Markets Standings to this point of the year, Gold is up but a wee +1.0%, (even as the Dollar Index is +2.8%, but as you know, Gold plays no currency favourites).  Topping the podium at present is Oil, +11.9% followed by the “Casino 500” +7.7%.  Indeed specific to the S&P, through the first 42 trading days of this year, that +7.7% gain ranks second only to 2019’s stint (+11.4%) across the same number of days.  But there’s a glaring difference between  “Now and Then”” –[The BeaTles, ’23].  Then the “live” price earnings ratio of the S&P 500 was 30.6x (yield 2.054%).  Now ’tis 46.5x (yield 1.400%.).  Three-month risk-free dough then?  2.375%.  And now?  5.215%.  Yet you’re still in the stock market?  Sheer guts.  Regardless, as the fuse burns off, let’s get to the Standings before the whole thing blows up:

Too, how about Q4 Earnings Season for 2023 which just finished yesterday (Friday).  Within that calendar window, 457 of the S&P 500’s 503 constituents reported their results:  only 273 (60%) improved over Q4 of 2022.  Out of the past 27 quarters, this most recent one ranks ninth-worst as four in ten of the best and brightest from the equities world couldn’t increase their earnings.  And yet the S&P now sits at an all-time high (5137)?  What is going on?  Indeed, we’ve now the Index as 30 consecutive trading days “textbook overbought”.

 “And, mmb, it seems like the S&P keeps going up on the same news again and again…“

‘Tis quite diabolical that, Squire.  These days, the S&P 500 goes up on anything, even if ’tis already priced-in a billion times over.

‘Course the precious metals relative to currency debasement remain stubbornly cheap.  Vis-à-vis our opening Gold Scoreboard, priced today at 2092, Gold is -42% below its U.S. “M2” money supply debasement value of 3715, even in accounting for the creeping increase in the supply of physical Gold, (today 213,056 tonnes).  And with the Gold/Silver ratio now 89.6x, to “right it” to the century-to-date average of 68.1x puts Silver (currently 23.35) up an additional +24% to 30.72.  Further, were Gold priced today at that Dollar debasement value of 3715, applying that average ratio puts Silver at 54.56 … just in case you’re scoring at home.  Again, do not forget the Silver.

And as we go ’round the horn for all eight BEGOS Markets by their daily bars from 21 trading days ago-to-date (one month), both Gold and Silver per Friday sport impressive price spikes.  Still by the baby blue dots, the precious metals continue to lack trend consistency:

Next for both Gold on the left and for Silver on the right we’ve their respective 10-day Market Profiles.  Silver’s stack looks a bit more protective by its underlying bars, whereas Gold which moved swiftly over less recently-priced territory appears more porous:

Finally it being month-end plus a day, here we’ve the broad view of Gold’s strata-defined structure across the past 15 years, our 2024 forecast high sitting up there at 2375.  That rightmost candle is 01 March alone:

To sum it all up for this week, we’ve emphasized the Fed having to face what appears as the early machinations of a stagflating economy, a “damned if they do, damned if they don’t” scenario.  Despite all the FinMedia blather about inflation being tamed — given we instead do the math — ’tisn’t.  Our puke-green table with the red 2.0% overages ought be on every news desk in the nation and ’round the world.  (But as is sadly typical, the truth wrecks the narrative).  And as for the suddenly slipping economy, 13 metrics hit the Econ Baro next week, of which just five “by consensus” are supposed to show period-over-period improvement.

Thus as the cost to survive goes on the rise whilst that upon which you rely slips by, ’tis probably a good idea to have a little Gold!  Or a lot of Gold!

Cheers!

 …m…

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

The Gold Update: No. 745 – (24 February 2024) – “Gold – Short n’ Sweet”

by

The Gold Update by Mark Mead Baillie — 745th Edition — Monte-Carlo — 24 February 2024 (published each Saturday) — www.deMeadville.com

“Gold – Short n’ Sweet“

Valued readers ’round the world:  today is our fifth day as beset with a nasty flu.  So this edition (no. 745) is one of our most minimal missives extending as far back as 21 November 2009 (no. 1).  But having never missed a single solitary Saturday, we’ll be damned if some viral bug is going to pull our streak’s plug.  (Or as someone quipped years ago:  “Ya don’t mess with the mmb.”)

So here we go with “Gold – Short n’ Sweet“.  We’ve just a few of our core foundational graphics, albeit without the usual annotating.  “Short” in this case is a double entendre for the missive’s brevity, but moreover a reminder that Gold’s weekly parabolic trend a week ago flipped from Long to Short.  “Sweet” in this case is that Gold hasn’t succumbed a wit to such new Short trend, price having settled yesterday (Friday) at 2046, the +1.0% net weekly gain being second-best through the young year’s eight weeks-to-date.  Still, we continue to look for Gold to work lower, protected more broadly by the 2020-1936 structural support zone.  You can refer back to last week’s piece (no. 744) as to how low may be low.  Meanwhile, here are the weekly bars from one year ago-to-date:

Next we’ve Gold’s two-panel graphic featuring the daily bars from three months ago-to-date on the left, and 10-day Market Profile on the right.  Clearly Gold’s baby blue dots of trend consistency are directionally neutral, whereas the Profile suggests trading support in the 2030s, (but we’re not holding our breath):

And of course for Silver we’ve same, her “Baby Blues” (below left) having gone completely stagnant.  Sister Silver settled the week at 22.98, the Profile’s (below right) white bar being 23.00 and representing the most commonly-traded price of the past two weeks.

As for the Economic Barometer, ’twas a very quiet week:  just three incoming metrics were recorded.  Not to worry:  next week has 14 metrics scheduled including the “Fed-favoured” inflation gauge of Core Personal Consumption Expenditures Prices.  And the consensus estimate for January’s pace (+0.4%) is double that recorded for December (+0.2%).  Here’s the Baro:

To close, these three notes.

■ You regular readers will recall that in this year’s first Gold Update (some seven weeks ago) we “contrarily” put forth the notion (not a prediction) that the Fed perhaps shall have to continue raising rates.  No, we were not maligned, made fun of, nor impugned; but at that time, all the talk was as to when the Fed would begin cutting rates because ’twas so obvious they’d have to so do.  Really?  Do the math, just as we graphically herein detailed a week ago.  Well guess what suddenly came to the fore this past Tuesday.  Ready?  Bloomy:  “Markets Start to Speculate if the Next Fed Move is Up, not Down.”  Dow Jones Newswires:  “Traders are flirting with the idea of a Fed Rate Hike as January Meeting Minutes Loom.”  You see, if we just sweep around them, they eventually catch up.

■ Next week is the grande finale to Q4 Earnings Season.  And given the relentless rise in the S&P 500, it must be one of the best Earnings Seasons ever, right?  Wrong.  For the S&P 500, the average number of constituents improving year-over-year is typically 66%.  This Earnings Season?  Just 60%.  ‘Tis why the “live” P/E of the S&P is stuck up in the stoopidsphere at 46.3x

■ Brief as we are today, don’t overlook the website’s other market-leading pages, notably for both Gold and Silver!

Cheers!

 …m…

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

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

by

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

“More Gold Slippin’ as Inflation Renews Rippin’“

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

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

At that 06 January writing:

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

Cheers!  (And don’t forget the Gold!)

 …m…

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

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

by

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Smart boy…”

Cheers!

 …m…

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

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

by

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

“Gold Gains Ground on Premium Sound“

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

 …m…

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

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

by

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

“Gold Looks to Languish Lower“

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

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

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

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

     

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

 …m…

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

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

by

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

“Gold from Time Biding to Price Sliding“

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

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

 

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

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

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

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

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

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

This really is becoming scary.  One can be securely safe in U.S. Treasuries at triple the yield of S&P 500.  But maybe that’s not considered fun.  Surely it shan’t be fun should the stock market shut because the money doesn’t exist to fund folks’ stock sales.  Today, obviously teaching Personal Finance at the undergraduate level is a waste of time.  Remember our herein quoting Jerome B. Cohen:  “In a bear market many stocks will sell at 5 to 7 times earnings, while in bull markets the average level would be about 15 to 18 times earnings.”  As penned on the above Econ Baro, the “live” price/earnings ratio right now for the Casino 500 is 49.7x.  If you don’t believe it, do something your broker can’t do … the math:

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

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

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

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

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

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

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

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

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

Avoid stoopid.  Acquire Gold!

Cheers!

 …m…

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

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

by

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

“Gold Biding Time; Bitcoin Prime Time“

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

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

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

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

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

“C’mon, mmb, that never happens…”

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

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

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

 

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

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

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

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

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

“Now, now, mmb…”

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

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

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

GOT GOLD???

Cheers!

 …m…

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

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

by

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“So how low would be low, mmb?“

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

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

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

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

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

Cheers!

 …m…

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