The Gold Update

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

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

by

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Santé !

 …m…

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

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

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

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

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

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

The answer is in the following gift box for Gold:

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

 …m…

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

The Gold Update: No. 735 – (16 December 2023) – “Gold’s Upside Fruition; Stocks’ Suicide Mission”

by

The Gold Update by Mark Mead Baillie — 735th Edition — Monte-Carlo — 16 December 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Upside Fruition; Stocks’ Suicide Mission“

Yes, ’tis The Gold Update, but we’re compelled (as occasionally is our wont) to start with stocks’ suicide mission, given Gold in upside fruition (albeit still vastly undervalued) is doing just fine, thank you very much.

What is with this stock market, eh?  As a great friend (with a long stint at basically the very top of a household-name investment bank … but we’ll maintain anonymity in this case) here recently remarked:  “The stupidest people on Wall Street are the pension fund managers.”

Ya think? Pros and rubes alike are throwing money like Pavlov’s drooling dogs on steroids into an S&P 500 index that is so beyond overvalued, further adjectives escape us.  ‘Course as we’ve tweeted (@deMeadvillePro):  mind the website’s S&P 500 MoneyFlow page to assess if the buying actually has substance.

Still, we hear that apps with names like “Robinhood” allow for incredibly easy stock market access such that everyone’s gonna keep on buying and thus stocks shall only go even higher.  To us that sounds more like being “robbed in the hood” as when the selling starts, the compounding of such shall overwhelm anything Wall Street and the World have ever seen.  Because as you regular readers know:  “The money isn’t there.”

By the numbers:

  • A dozen years ago in 2011, the market capitalization of the S&P 500 exceeded the U.S. liquid “M2” Money Supply by +29%; as of yesterday, that excess is +100%, the market cap now $41.3T versus an M2 of but $20.7T.  (Wanna cause The Crash?  Fax that last sentence over to CNBS for all the rubes watching their boob tubes).

     

  • Per yesterday’s (Friday’s) S&P settle at 4719, ’tis precisely -100 points (or just -2.1%) below the all-time intraday high of 4819 set on 04 Janaury 2022; the current “expected daily trading range” for the S&P is now 34 points, meaning a new all-time high can be reached within 3 trading days, just in time for Christmas.

     

  • The number of consecutive trading days the S&P has been “textbook overbought” (a 44-year concoction of John Bollinger’s Bands, along with Relative Strength and Stochastics) is now 28 which is in the 93rd percentile of all such overbought conditions since the year 1980.
  • Present all-risk S&P 500 annualized dividend yield:  1.475%.  Present no-risk U.S. 3-Month annualized T-Bill yield:  5.225%.  (Why is this so hard to grasp?)  “Because, mmb, T-Bills aren’t gonna double in price…” Just like stock’s can’t get halved, eh Squire?  (‘Preciate the tee-up).
  • The “live” price/earnings ratio of the S&P settled the week at 44.9x; that is essentially double the 66-year average P/E of 22.8x (Shiller “CAPE” into deMeadville post-2012) and +77% up from when our “live” deMeadville version was instituted those 11 years ago at 25.4x:

              

  • Next, too, we’ve the S&P’s 50-year regression channel as plotted from 1973 up to COVID (the red vertical line) from which the channel’s trend is extended-to-date, suggesting the S&P “ought” today be at best sub-3000 rather than the current 4719:

             

By the numbers indeed, the most daunting being lack of price-supportive earnings — and far worse — the lack of money when it all goes wrong.

The good news is:  irrespective of the S&P’s ominous (understatement) overvaluation, the market is never wrong.  The bad news is: the market always reverts to its broadest measures of mean.  And should your use your trusty Pickett slide rule to do such reversion math, an S&P “correction” of -50% wouldn’t be untoward a wit.  We merely await the FinMedia coming up with the catalyst, of which there are a multitude from which to choose, (see our 09 July missive that cited “Stocks’ 10 Crash Catalysts”), or to quote Bill Cowper from away back in 1785:  “Variety is the spice of life”.  And our sense remains “Look Ma!  No Money!” shall be the ultimate crash driver.  The Federal Reserve can then double the money supply to cover what the investment banks cannot credit to you after having sold your stock, the price of Gold at least doubles beyond where it already “ought” be (see the opening Gold Scoreboard), and on we go.

And thus to Gold let’s Go!  In settling this past week at 2034, Gold is -118 points below its 04 December All-Time High of 2152.  Regardless, price just completed its fourth up week of the last five, such fruition from the foresight to be “in” rather than face being fried upon stocks’ suicide.  Here we’ve Gold’s weekly bars from one year ago-to-date, the current parabolic Long trend now nine weeks in duration.  But don’t worry, should you deem that as too long:  the longest such Long trend this century lasted 26 weeks back in 2005, which was preceded by a like 25-week stint in 2004 and later by a 24-week run in 2019.  In fact from the year 2001-to-date, Gold has recorded eight parabolic Long trends of 20 or more weeks.  Which is why we say: “When Gold goes, it Goes!”  To the graphic with Sly we go:

But wait, there’s more:  for can the Economic Barometer also go higher?  Hat-tip Media Research Center in canvassing ABC News to discover that we’re wrong, for President Biden’s economy “is really wonderful” … even as the StateSide Treasury Deficit for November alone rocketed +26% “on higher interest costs”.  Do we again cue BTO’s “You Ain’t Seen Nothing Yet” –[’73]?  How about the month’s core retail inflation increasing from a +0.2% clip in October to now +0.3%?  Fortunately favouring the Fed’s rate cut musings, the New York State Empire Index faceplanted from November’s +9.1 reading to -14.5 for December:  “Smunch!”  Here’s the Econ Baro representing the whole bunch:

All-in-all as to when to cut its Funds rate, the Fed now awaits the go-ahead from the FinMedia, (given the recent paradigm in which they oversee the Fed).  And yet, credit still is due November’s Retail Sales with a month-over-month whirl-round from -0.1% to +0.3% whilst Industrial Production similarly got going from October’s -0.6% sag to bag +0.2% for November.

Meanwhile countering Gold’s post-All-Time-High price drag, both precious metals have resumed showing some swag.  Below we’ve the two-panel graphic of daily bars across the past three-months-to- date for Gold on the left and for Silver on the right.  To be sure, the baby blue dots of the yellow metal’s trend consistency are still slipping, but with less acceleration, whilst those for the white metal have at least paused their fall.  And of course, the broader three-month trend across both panels is obviously up:

Then too we’ve the 10-day Market Profiles for Gold (below left) and for Silver (below right).  Despite Gold’s 164-point trading range these last two weeks, clearly the home of trading volume price consensus is right there at 2047.  And in Silver’s case, same is her 24.15-24.45 zone: 

Time we go to wrap with:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3704
Gold’s All-Time Intra-Day High:  2152 (04 December 2023)
2023’s High:  2152 (04 December)
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)
Trading Resistance:  2047 / 2087 / 2016
10-Session “volume-weighted” average price magnet:  2042
Gold Currently:  2034, (expected daily trading range [“EDTR”]: 33 points)
Trading Support:  2021 / 2012 / 1997
10-Session directional range:  down to 1988 (from 2152) = -164 points or -7.6%
The Weekly Parabolic Price to flip Short:  1917
The 300-Day Moving Average:  1909 and rising
The Gateway to 2000:  1900+
2023’s Low:  1811 (28 February)
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

And please do not fall afoul of the following … ’tis coming:

Go with your Gold!

Cheers!

 …m…

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

The Gold Update: No. 734 – (09 December 2023) – “Gold-Record’s Calamity; Stocks’ Stark Misfortune-to-Be”

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The Gold Update by Mark Mead Baillie — 734th Edition — Monte-Carlo — 09 December 2023 (published each Saturday) — www.deMeadville.com

“Gold-Record’s Calamity; Stocks’ Stark Misfortune-to-Be“

British Prime Minister (1874-1880) Benjamin Disraeli is infamously quoted in reference to the leader of Parliament’s Opposition:  “If Gladstone fell into the Thames, that would be a misfortune; and if anybody pulled him out, that, I suppose, would be a calamity.”

And whilst misfortune for the stock market is well overdue to ensue, with respect to Gold, calamity is descriptively apropos following the second consecutive daily record high of 2152 achieved this past Monday (04 December) … following which it all went a bit wobbly, price settling out the week yesterday (Friday) at 2021.

To be sure, a week ago we acknowledged Gold’s “Finally!” having recorded a fresh All-Time High of 2096 on 01 December, a milestone comprehensively missed by the FinMedia.  A watchful reader even wrote to us:  “Nothing in Barron’s or WSJ…”  But then herein penned last week “…new highs in major financial markets tend to draw in the “mo-mo” crowd…” and in turn, Gold on Monday left no doubt in shredding the Shorts all the way up to 2152.  ‘Twas a beautiful thing, albeit then came calamity as highlighted here:

However:  let’s couch calamity in context.  Oh yes, this past Monday’s reversal of -114 points from 2152-to-2038 across just 16 hours ranked as Gold’s fifth-worst same-day high-to-low points plunge century-to-date; but by percentage, such -5.3% intra-day drop ranked only 34th-worst.  Which for you WestPalmBeachers down there means the prior 33 even worse same-day percentage drops all eventually led to All-Time Highs for Gold, (i.e. the trend is your friend given Gold eventually goes all the way back up — and then some — as we just saw.)

Further, Gold’s dominant trends all remain up:  that includes the key 21-day linear regression trend, and as we below see both the year-over-year dashed regression trend along with the rightmost weekly blue-dotted parabolic Long trend, now a healthy eight weeks in duration and accelerating upward:

“But Silver took quite a hit, eh mmb?” 

‘Twas the case, Squire.  Gold’s net fall for the week of -3.4% pales in comparison to Silver’s net -9.9% weekly shellacking, her worst since that ending 14 October 2022.  This in turn blasted the Gold/Silver ratio from 80.8x just a week ago up to now 86.8x.  Fortunately, Sister Silver still has plenty of weekly parabolic Long trend cushion beneath her, present price being 23.29 vs. the flip-to-Short level now 21.07.

Speaking of taking a hit, you regular readers and website followers have witnessed that taken of late by the Economic Barometer.  So much so that the now-defunct Funkin’ Waggnalls might have defined “straight down” as “The Econ Baro”.

But the Baro did get a bit of a boost on Friday from better payrolls data for November:  net job creation beat both “expectations” as well as the October increase; the pace of Hourly Earnings doubled from +0.2% to +0.4%; the Average Workweek grew; and the Unemployment Rate fell by -0.2% from 3.9% to 3.7%.  

Now a month-over-month drop of -0.2% in Unemployment may not seem like much, but ’twas the second-best monthly improvement since the April 2022 reading.  ‘Course the ADP Employment data actually worsened for November, (but Labor’s data survey is better, depending upon “who’s in office”, right?).  Then how about that University of Michigan “Go Blue!” Sentiment Survey:  from November’s 61.3 to 69.4 for December!  And The Wolverines are ranked Number One in StateSide collegiate football!  How great a picture is this?  (Well, maybe not…).  We’ll see what the Federal Reserve’s Open Market Committee has to say next Wednesday (13 December):

Thus we’ve covered calamity following Gold’s record high — and to an ongoing extent — same for the above Econ Baro.  But what about (as entitled) misfortune-to-be for the stock market?  After all the FinMedia appears all-in for an S&P 500 record high (above 4819 vs. the current 4608 level).  To wit, Dow Jones Newswires just reported “The VIX says stocks are ‘reliably in a bull market’ heading into 2024…”  So clearly no one has done the math as to the stock market’s usual demise when the VIX is this low (12.35 at Friday’s settle).  And yet by the website’s S&P 500 menu, we’ve still yet to see any true “fear” in the MoneyFlow, even as we tweeted so (@deMeadvillePro) this past Tuesday.

Further, we’ve herein on occasion enumerated a number of factors continuing to be present for it all to go wrong for stocks, notably the ongoing lack of earnings support.  Yet as a long-time reader wrote in this past week:  “It hasn’t been about EPS for a long time. It’s all about stock price.”   And we comprehensively agree.  That is because “It’s different this time” … just as ’tis always been different prior to every one of the stock market’s true crashes; (e.g. in our lifetime:  27 August 1987, 24 March 2000, 11 October 2007, and 19 February 2020, not to mention the myriad of other double-digit “corrections” therein).  Imagine the 38 roulette slots (or 37 here in Europe) having their numbers replaced with S&P 500 constituent symbols.  “Half on NVDA and half on AMZN!”  … “Le jeux sont FAIT, Monsieur, rien ne va PLUS!”  That’s where we are today.

Not to belabour the point, but we have a question.  What are companies such as Advanced Micro Devices (AMD, p/e 1,003.3x), Ceridian HCM (CDAY, p/e 2,593.4x), Ventas (VTR, p/e 3,593.8x) et alia even doing in the S&P 500?  How about the Index’s 34 constituents not even making money?  Reprise the late, great Vince Lombardi:  “What the hell’s goin’ on out there?!?!?” (Friendly reminder:  US liquid Money Supply [“M2”] now $20.7T; S&P 500 market capitalization now $40.2T; have a nice day).

Stark misfortune-to-be, indeed.  By any historical yardstick, the is S&P is so significantly overstretched ’tis stunning that it hasn’t yet steeply succumbed.  But until it does — and ’twill — as is our wont to say, the Investing Age of Stoopid merrily rolls on its way.

Meanwhile not so merrily rolling downward this past week were the precious metals.  First 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.  Earlier we mentioned Gold’s key 21-day linear regression trend as being up, which ’tis; however, its baby blue dots of trend “consistency” are just now kinking over to the downside, suggestive of still lower prices near term.  Yet by pricing structure, we don’t see too much further damage beyond the present 2021 level down to 1975.  But by the Profile for now, the mid-2040s clearly show as trading volume resistance:

Similar is Silver’s two-panel slate.  Her “Baby Blues” (at left) already have departed below their key +80% axis; price presently as noted at 23.29, her safety support structure ranges from 23.88 down to 21.93.  ‘Course by her Profile (at right), Sister Silver hardly is the happiest camper:

We’ll close it here with another FinMedia bemusement.  The once-mighty now ratings-floundering CNN ran on Gold’s record-high Monday with:  “Gold has never been this expensive.”  With all due respect to the network’s writers and editorial staff, Gold remains extraordinarily cheap.  “Expensive” was back in 2011 when Gold’s price growth was outpacing U.S. Dollar debasement, (recall our then writing about “Gold having gotten ahead of itself”).  But for the chump news-droolers out there, the price of Gold last Monday reached its highest level ever at 2152 … yet valued today at 3705, Gold is cheap!  What’s inanely “expensive” (understatement) is the stock market.  And thus we wrap with this favourite graphic:

Stay with your Gold!

Cheers!

 …m…

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

The Gold Update: No. 733 – (02 December 2023) – “Gold: Finally!”

by

The Gold Update by Mark Mead Baillie — 733rd Edition — Monte-Carlo — 02 December 2023 (published each Saturday) — www.deMeadville.com

“Gold:  Finally!“

If you caught last Tuesday’s tweet (@deMeadvillePro, Gold then 2042) you saw where this was going:  “Santa clearly is contemplating a new all-time Gold high by Christmas. ‘Twould be 2075 spot a/o 2089 FebFuts. (On verra…)” 

And so for Gold, as the expression goes, “Santa came early this year.”  In settling the week yesterday (Friday) at 2092, February Gold (the current “front month”) en route traded to as high as 2096, +7 points above the prior “front month” 2089 All-Time High that had been in place since 07 August 2020.  Spot Gold, too, exceeded its prior All-Time High of 2074 in trading as high as 2076.  Finally!  ‘Tis a beautiful thing.

‘Course, you astute readers of The Gold Update fully realize that this year we did not forecast a specific high price, (which for you WestPalmBeachers down there is why the above Gold Scoreboard has stated “No Forecast” throughout 2023).  Nonetheless, early in the year we expressed our anticipation of Gold by year-end at least achieving a new All-Time High: “Whoomp! (There It Is)” –[Tag Team, ’93]

To wit, as herein penned back on New Year’s Day:  “…how do we forecast a high for 2023? Linearly we don’t … as for uncharted territory above Gold’s All-Time High (2089 of 07 August 2020) that’s for the Fibonacci-obsessed.”  

True, we from time-to-time dabble in “fib retracement” for establishing trading targets.  However, we avoid the Sybilistic art of future “fib extension”:  for us ’tis too Timothy Leary, to whom President Nixon in ’70 purportedly referred as “the most dangerous man in America”, (only to then to nix the Gold standard a year later).  That from the “Now Look Who’s Talkin’ Dept.” … but we digress.

Given Gold’s fresh All-Time High is finally in hand, let’s take a realistic crack at “How high from here?” for the yellow metal.  After all, new highs in major financial markets tend to draw in the “mo-mo” crowd, albeit for Gold, its notorious triple top across the past three years ain’t drawn squat.  And let’s be honest:  Gold’s new high at present is marginal at best.

“But it’s only been one day, mmb…” 

‘Twouldn’t be a landmark missive without our beloved Squire.  Still, such marginal high can cue the Gold Shorts, which from the “Party Pooper Dept.” may swiftly remind us that following the aforementioned 2089 high came the 2079 high on 08 March 2022 and then the 2085 high this past 04 May.  Thus in the Shorts’ words, “There’s nothing to see here” in their anticipation of it again all going wrong for Gold.

Yet as we’ve oft quipped of late, “triple tops are meant to be broken”.  And marginally or otherwise, that just happened.  Moreover as herein penned one week ago regarding December’s monthly net changes:  “…the last six [have been]:  +2.6%, +4.5%, +3.4%, +6.4%, +2.9% and +3.8% from 2017 through 2022 respectively…”  That is an average net December change of +3.9%, which from November’s 2056 futures settle would bring 2136 by New Year.

But wait, there’s optimistically more.  Century-to-date Gold has recorded 5,767 trading days, 252 of which have elicited All-Time Highs.  Now obviously it doesn’t “feel” like Gold averages a new high every 23 trading days:  indeed therein the standard deviation is 155 days, the longest stint between All-Time Highs being 2,237 days from 06 September 2011 to 27 July 2020 (whew!) even as the U.S. Money Supply (“M2”) simultaneously increased +90.2% (whoa!)

Nevertheless to our point:  for those 252 All-Time High days, the average maximum increase in the price of Gold within the enusing three months is +8.9%; or if you prefer, the median maximum price increase is +7.9%.  Either way, “in that vacuum” from the present 2092 level would put Gold in the 2257-2278 range by February’s end, (just in case you’re scoring at home).  ‘Course, hardly is “average” reality, but it at least gives us some measure of reasonable upside guidance for Gold through these next three months.

Of greater import however is that Gold’s new high remains peanuts vis-à-vis its currency debasement valuation, depicted in the opening Scoreboard as now 3707, i.e. +77% above here, even accounting for the increase in the supply of Gold itself.  Which got us to question:  how long does it typically take for the price of Gold to double?  Here’s the answer from one price’s “century mark” to the next:

Thus discounting that most recent long 12.4-year stint, Gold from the year 2002 has doubled in value on average every 3.7 years, (inclusive of the above table’s overlapping periods).  So to achieve that 3707 valuation level in four years’ time is not unrealistic a wit.  Which of course begs another question:  will there even be a U.S. Dollar in four years’ time?  Our coy answer:  ’tis oft said “Gold has been money for 5,000 years”; the disintegrating Federal Reserve Note just 109 years.  Poof!

But there’s no poofing nor pooh-poohing Gold’s fresh All-Time High.  To all those fellow “analysts” just some months ago calling for Gold Shorts down toward 1500-1100, here we are instead at 2092 per the following chart of Gold’s weekly bars and parabolic trends.  So do not be that guy:

Neither let us forget Silver.  Severely lagging Gold of late, Silver’s weekly parabolic trend only just confirmed flipping from Short to Long per yesterday’s 25.90 settle, (Gold’s Long trend having been in place now through seven weeks).  And unlike Gold being at its All-Time High, Silver is -47.9% below her All-Time High of 49.82 established away back on 25 April 2011.  Again:  do not forget Sister Silver!

Looking ever more forgettable however is the StateSide Economic Barometer.  It’s one-month (21 trading days) plunge from 02 November through yesterday is the most since 27 May 2022, following which the S&P 500 fell -11.8% from 4158 to 3667 in just 13 trading days.  That being an exception, as we’ve otherwise acknowledged since COVID, the good news is the S&P no longer follows the Econ Baro, so again “There’s nothing to see here.”  See for yourself:

Indeed, of the 49 metrics that have come into the Baro across the past 21 trading days, just 16 improved period-over-period.  It thus appears the Fed is well enroute to successfully attaining its slow-growth goal … but given FedChair Powell’s commentary yesterday, they apparently don’t know it (yet).

As for the “we never go down” S&P 500, it has displaced Gold in leading the BEGOS Markets’ percentage changes year-to-date as we go to the standings with 11 months plus one trading day in the books; both the yellow and white metals round out the present podium: 

And specific to the S&P 500, we wrote this past week to a fine friend and colleague as follows:  “…S&P is ridiculously overbought and horribly overvalued … The set up [for a crash] clearly is there … but of course, ‘tis different this time (right?)…”

‘Tis ad nauseum for you regular readers, but we’ll keep pounding the table on this:

  • The “live” P/E of the S&P per Friday’s close is 42.6x (don’t argue; do the math);
  • The average “live” P/E of the top 50 cap-weighted S&P constituents is 52.6x;
  • The S&P is now “textbook overbought” through 18 consecutive trading days;
  • The S&P’s all-to-risk yield is 1.528%; that of the risk-free US three-month T-Bill is 5.215%;
  • The Q3 S&P Earnings Season ranks only 12th of the past 26 for bottom-line improvement;
  • The S&P “sans COVID” by 50-year regression would today be about 2900, not 4595.

Got stocks?  Scary, really, really scary!

The exception of course is if you’ve precious metals’ stocks, the following graphic suggesting their being well undervalued vis-à-vis Gold itself, even as it too remains debasedly undervalued.  Again it being month-end plus a day, here are the year-over-year percentage tracks of those key metals equities from worst-to-first:   Franco-Nevada (FNV) -23%, Newmont (NEM) -13%, both Pan American Silver (PAAS) and the Global X Silver Miners exchange-traded fund (SIL) -1%, Agnico Eagle Mines (AEM) +8%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +10%, and Gold itself +17%.  And in the perfect Equities/Gold leveraged world, Gold “ought be” the lowest rather than highest line on this graphic:

Got metals stocks?  Merry, really, really merry!

Further, if you’ve been long any of the BEGOS Components across at least the past month — again save for Oil — the rising tide of inflation has been lifting all boats.  Here we’ve their respective bars and diagonal trendlines for the past 21 trading days, the consistency of those trends as depicted by the baby blue dots.  Note for the Euro the “Baby Blues” suggesting lower levels ahead:

Next we’ve the 10-day Market Profiles for record-high Gold on the left and Silver on the right.  The denoted bars are those with the greatest volume-traded support from 17 November through yesterday:

Naturally it being month-end plus a December day, here is Gold’s Structure by the monthly bars for the past 12 years.  And yes, Virginia, just as there is a Santa Claus, so too as noted are triple tops meant to be broken.  Et voilà.  Thus in turn Gold is at an“All Time High” –[Rita Coolidge, ’83]:

To wrap this rather epic edition of The Gold Update, “We have breaking news…”

“Bring it on, mmb…” 

Thank you, Squire.  Direct from the “We’re Completely Gobsmacked Dept.” here ’tis:

Last evening we were all eyes on Gold when at precisely 18:28 GMT price recorded the new All-Time High of 2089.3, surpassing 2089.2 which as you well-know had been in place as the prior high since 07 August 2020. Some three-and-one-half hours later at 22:00 GMT price settled also at an All-Time Closing High of 2091.7.

Curious as to how our FinMedia friends would portray this great event, we went to Bloomy’s home page, obviously expecting it to be the lead story.  But it wasn’t there.  Worse, it was no where to be found their home page!  So we instead zoomed over to Dow Jones Newswires’ Marketwatch home page.  It must be at the top, right?  Wrong!  Rather, the lead stories were on “The Dow”, “Bitcoin” and “GameStop”.  Where is the Gold story?  We enabled a MW home page search for “Gold”:  first find was Goldman; second find was again Goldman; third find was “Gold” … buried deep down the page amongst the “click-bait” ads for chumps, with the barest of mention of the new high.

But we really and truly learned something from this:  Gold now is of no material media importance whatsoever.  Who cares, right?  The sad part is:  when they finally figure it out (upon everyone morphing from marked-to-market millionaires to marked-to-reality impoverisheds) ’twill be too late.

Still, perhaps the late Leary would have gotten it:

“But his was of the Acapulco type, mmb…” 

Likely the case there, Squire.  As for the real thing, ’tis at an All-Time High and yet it remains unspeakably undervalued.  That’s really all you need to know.

Got Gold?  Got Silver?  Got a wealth-preserved Future!

Cheers!

 …m…

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

The Gold Update: No. 732 – (25 November 2023) – “Basking Under Gold”

by

The Gold Update by Mark Mead Baillie — 732nd Edition — Cortona — 25 November 2023 (published each Saturday) — www.deMeadville.com

“Basking Under Gold“

Greetings from under the Tuscan sun.  Here in Cortona, recorded history dates all the way back to the Etruscans in the 8th century BC, (which for you WestPalmBeachers down there is some 2,900 years ago).  And in those days, Gold was employed in wire form toward implanting teeth as “dentures” from animals into those locals having lost same.  ‘Course, ‘twould not be until 1252 AD that Gold as an internationally-recognized currency would appear, namely as the fiorino (or Golden Florin), following which (dare we say) “the rest is history”.

As for the rest of this week’s edition of The Gold Update, as noted in the prior wrap ’twill be brief given our being in motion:  “… just straight to the point with a salient graphic or two along with our view…”  And what we’re viewing for Gold looks quite positive as we go to its weekly bars from one year ago-to-date:

Through Gold’s 47 trading weeks so far in 2023, yesterday’s (Friday’s) closing price of 2004 ranks as the year’s sixth-highest weekly settle.  However, the sticky area across the five better settles is the tight price range of 2016-2025.  Thus the Gold Short may smugly say:  “We’ve been here before, so there ain’t no more.”

Regardless, given Gold’s weekly trading range now being 53 points, ‘twouldn’t be untoward to find Gold reach 2057 within one week’s time.  Again, any weekly close above 2025 would be ample territory to then test the year’s 2085 high (04 May ’23), and further the All-Time 2089 High (07 August ’20):  the latter is just +4.2% above today’s 2004 level.

Moreover in looking toward next month, 26 of the past 48 Decembers have been net positive for Gold, including each of the last six:  +2.6%, +4.5%, +3.4%, +6.4%, +2.9% and +3.8% from 2017 through 2022 respectively.  Whilst Smart Alec might thus say “Down then”; our preference rather is “December’s trend is our friend.”

And toward closing, the Economic Barometer’s fallout suggests upside Gold will out should the Fed stew and pout:

So there we are ever so briefly — yet hopefully saliently — for this week.  Mind too your favourite Gold information at the website:  simple select “Gold” under the BEGOS Markets menu and all the price-leading information is there:  Gold’s Market Value, Trend, Profile, Magnet, Range, and the currently-highlighted Market Rhythm featuring the 12-hour parabolic study.  We’ll therefore see you in a week’s time with the usual graphics-rich end-of-month edition.  Until then:

Bask under your Gold!

Cheers!

 …m…

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

The Gold Update: No. 731 – (18 November 2023) – “Gold Pops as Inflation Stops and the Economy Flops”

by

The Gold Update by Mark Mead Baillie — 731st Edition — Monte-Carlo — 18 November 2023 (published each Saturday) — www.deMeadville.com

“Gold Pops as Inflation Stops and the Economy Flops“

Some 40 years ago per advertising billboards for the evening blatt known as the San Francisco Examiner:  “A lot can happen between 9 and 5”.  And relative to just this past week, ’tis perfectly analogous to the state of Gold, Inflation and the Economy:  “A lot can happen between Monday and Friday”.  To wit for the week:

  • Gold above support spritely popped;
  • Inflation (FinMedia’s take) abruptly stopped;
  • The StateSide economy frightfully flopped.

Just like that.  “Who knew?”

Perhaps our neighbour knew in walking past us mid-week with just a single word uttered our way:  “3000”.

Great to hear some Gold awareness there, even as price settled the week yesterday (Friday) at 1984.  Yet per the above Gold Scoreboard, the yellow metal’s Dollar debasement value is 3704.  At least somebody’s paying attention.

Or (oui, c’est ‘Gold’ en français):  was the utterance of “3000” instead a reference to valuing the S&P 500, itself now 4514?  The inevitable reversion of the Index’s honestly calculated price/earnings ratio (43.8x “live”) to our historical 66-year mean (22.7x incorporating Bob Shiller’s CAPE pre-2013) brings the S&P well sub-3000.  Further, we’ve on occasion herein graphically depicted that were it not for the massive monetary infusion to counter COVID, the S&P by our 50-year regression channel would today be in the high 2000s, a level otherwise gratefully accepted by the investing community had there been no pandemic monetary response.  Just a few things to make one go “hmmm…”

Regardless, let’s break down Gold’s pop, inflation’s stop, and the economy’s flop.

Gold’s pop:  per the opening bullet point, this past week saw Gold pop back and settle above the green 1980-1922 support zone, price as noted now 1984, the week’s high en route being 1996 (i.e. just 93 points below the 07 August 2020 All-Time High of 2089).  To Gold’s weekly bars from one year ago-to-date we go, the blue-dotted parabolic Long trend firmly in place with a lot of underlying safe space:

Moreover, we see by Gold’s monthly bars a Moneyflow “Buy” signal:  whilst not a formal recommendation, ’tis worth consideration.  The following chart shows a wee chap at lower right extolling said signal.  This is because the green Moneyflow track has crossed above the double-center line.  Across the past 28 calendar years, this up-cross has occurred 11 times.  The average maximum points follow-through is +264, but with this warning:  three of the past four such Long signals have garnered at most +50 points of additional gain … just in case you’re scoring at home.  For at the end of the day as we always say:  “Cash management is everything.”  But worth an awareness view here:

Inflation’s stop:  In concert with October’s retail inflation having come to a halt (the Consumer Price Index registering “unch”) whilst recording wholesale deflation (the Producer Price Index registering -0.5%), our FinMedia friends swiftly declared the Federal Reserve’s interest rate hikes as having come a conclusion, with cuts commencing next year.  And as you regular readers recall, our missive’s wrap two weeks back described the FinMedia’s essentially running the Fed.  So there we go.  Or do we?  

As ’tis our penchant to actually do the math, we came up with the following three-panel graphic of monthly “headline” inflation reports from a year ago-to-date; (note at right the Personal Consumption Expenditures report lags the PPI and CPI by one reporting month).  Our focus for each panel is the directional slope of the respective dashed regression trendlines.  Again:  “hmmm…”  For both the PPI and CPI, their slopes are rising; and their October figures are quite the deviations from the trendlines. This can imply a snap-back to the upside come the November numbers.  Too, the “core” measures (not displayed) for October are:  PPI “unch”, CPI +0.2%, and for September’s so-called “Fed-favoured” PCE +0.3%.  Let’s see with all three panels identically scaled:

Economy’s flop:  The following bit is not for the weak-of-stomach crowd; thus gird one’s loins as necessary.  Our StateSide Economic Barometer this past week got summarily skewered, as tweeted (@deMeadvillePro) Thursday evening.  Now here’s the picture from one year ago-to-date, the S&P (red line) ignoring overvaluation as the “bad news is good news” illogicity continues:

And specific to “good news”, as we’ve noted since COVID, the Econ Baro doesn’t lead the stock market as it did during the prior 22 years from 1998 into 2020.  ‘Course, the monetary injection post-Covid essentially equaled the increase in the market capitalization of the S&P 500, and we’ve thus been awash in liquidity ever since, (hat-tip “The Market Never Goes Down Dept.”)  Why, not even Moody’s — a week ago citing that U.S. credit risk “…may no longer be fully offset by the sovereign’s unique credit strengths…” — can stop the stampeding S&P. 

“But still, mmb, that’s a really big drop in the Baro…” 

‘Tis a most material drop indeed, Squire.  Since the Econ Baro’s inception back in ’98, there have been just nine other drops of this magnitude across a 12-trading day span.  All have led to fairly imminent — however not always overwhelming — price declines in the S&P.  That stated, the most recent such Baro decline occurred just over a year ago as of 22 May 2022;  then come 17 June (just 14 trading days hence), the S&P had fallen -521 points (-12.5%).  Whether that repeats — with FinMedia missives now suggesting a record S&P high is nigh (i.e. above the 4819 level achieved on 04 January 2022) — depends upon the investing whims of news followers vs. math doers.  Neither overlook that the U.S. “riskless” Three-Month T-Bill still yields an annualized 5.233% per Friday’s settle.  On verra…

Either way, at this writing the S&P 500 is “extremely textbook overbought” (based on our concoction of John Bollinger’s Bands, along with standardized Relative Strength and Stochastics) and the S&P 500 futures settled yesterday +229 points above their smooth valuation line (per the website’s Market Values page).  Too is the S&P’s aforementioned “live” P/E of 43.8x.  Recall the P/E as the S&P topped pre-DotComBomb back in March 2000?  43.2x.  Today ’tis one perpetually scary/expensive stock market.  And with Q3 Earnings Season having just ended, in collecting bottom lines for 1,860 companies, only 51% improved year-over-year.  Specific therein to 446 S&P constituents, 64% improved … but given “It’s the S&P”, should not 100% have improved?  What shall the next spin of the wheel reveal?  “Les jeux sont faits; rien ne va plus…”

Meanwhile, the next special graphic of the precious metals is our two-panel view featuring Gold’s daily bars from the last three months ago-to-date on the left and likewise for Silver on the right.  Of note are Gold’s “Baby Blues” of trend consistency having actually gone negative whilst price has risen.  This is because the 21-day red trendline has rotated to negative; we oft quip “follow the blues”, however in this case given the positive pricing track for Gold, we’re not really looking for much downside.  Indeed for Silver, her red trendline has rotated from negative to flat, hence her rightmost baby blue dot sitting on the 0% axis.  Also as penned in the Prescient Commentary this past Thursday:  “…Silver’s daily Parabolics flipped to Long effective today’s open (23.510): the average maximum follow-though of the past 10 such studies (either Long or Short) is 1.695 points…”  Therefore with respect to Gold and Silver, leave any silly Shorting ideas to Smart Alec:

As to the 10-day Market Profiles which denote prices at the most robust levels of volume, both panels below look healthy for Gold at left and Silver at right.  In fact for the white metal, her +6.6% gain for this past week (vs. +2.1% for the yellow metal) served to reduce the Gold/Silver ratio from 87.1x to 83.4x.  Still, the century-to-date ratio is 67.9x, leaving Sister Silver plenty of room to outperform Gold on the upside:

In sum, Gold again has a chance to go for an All-Time High.  The S&P by any and all rights is due for a dive (understatement).  And certainly both “ought be” similarly priced right ’round “3000” … at least if you do the math.  (What a rare concept, eh?) 

We’ll close it here with this logistical note:

Next week’s 732nd consecutive Saturday edition of The Gold Update is planned to be quite brief as we shall be “in motion”:  just straight to the point with a salient graphic or two along with our view.  In any event, don’t be a turkey, given what can ensue…

…rather, keep your eyes (and wealth) on the Golden prize clearly due!

Cheers!

 …m…

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

The Gold Update: No. 730 – (11 November 2023) – “Gold’s Bang-On-Time Dive”

by

The Gold Update by Mark Mead Baillie — 730th Edition — Monte-Carlo — 11 November 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Bang-On-Time Dive“

Let’s open with this from the “We Hate It When We’re Right Dept.” reinforced by the age-old axiomatic quip:  “Be careful of that for which you wish as you just might get it.”  And you regular readers definitely get it.  For bang-on-time this past week came Gold’s dive.

Far more broadly in positively waving the Gold flag across the past 14 years — from the first edition of the Gold Update on 14 November 2009 with Gold then 1120 to now our 730th consecutive Saturday edition and price at 1943 — in anticipation of interim price declines we’ve on occasion had to deviate from Gold’s otherwise net ascent of 73%, (during which stint the U.S. Dollar’s M2 supply has increased a net 143%).  And last week’s anticipative missive (“Gold’s Post-Geopolitical Pullback“) is a case in point, price in turn recording its second-worst weekly loss year-to-date on both a percentage (-2.9%) and points (-57) basis.  Which for those of you scoring at home begs the question:  “Which has been the worst?”, the answer being the weekly loss ending 29 September of -4.1% or -80 points.  ‘Course after that, Gold low-to-high gained +10.7% or +196 points through the heart of October.

Oh to be sure, over the years we’ve pounded the table that “shorting Gold is a bad idea” even in anticipation of price falling.  But this time ’round the dastardly Shorts got their fill (if you will) were they Short per last week’s drill.  We thus humbly utter the one word by the chap whose car cassette player was sufficiently loud such as to send the Tacoma Narrows Bridge into its destructive suspension swing:  “Sorry…” –[Pioneer, ’94].

To add context to present price, graphically for Gold we’ve placed on our year ago-to-date weekly bars the 1980-1922 green-bounded support structure cited in the prior missive.  And quite thoroughly hoovered it was this past week per the rightmost bar, although the parabolic trend remains Long:

Further should that support structure bust, it can be expanded to 1990-1914 or even 2001-1901 before Gold’s overall price positioning becomes materially affected … be it lower … or higher than ever before.

‘Course if you’ve been highly hyped up by the FinMedia these days, you may be seeking a dose of meclizine given the descriptive extremes of markets’ motions.  “Oh yields are plummeting!” they say.  “Oh the Dollar is tanking!” they say.  “Oh the stock market’s soaring!” they say.  “Oh Gold’s become so passé!” they say.  And from the “What Are They Smoking? Dept.” comes this gem: “Oh the Fed’s done raising!” they say.  To which we say clearly any effort to do math has gone away.  More on that along the way.

But for all the dizzying cries over markets’ careening this way and that, let’s look at the comparative tracks of the five primary BEGOS Markets from one month ago-to-date per the following two-panel display.  First on the left — save for Oil — the Bond, Euro, Gold and S&P 500 are all pretty much where they were on this date a month ago.  Yes, really:

Second on the right we’ve merely isolated the same tracks solely for Gold and the S&P such as to emphasize their once again dancing un pas de deux as we’ve on occasion depicted these many years.  And whilst broadly it shan’t last, at least at this writing the best paired correlation amongst those five primary BEGOS Markets is negative between Gold and the S&P, (which for you WestPalmBeachers down there means when one is going up, the other is going down); thus the mirror-like tracking in the above graphic.

“But what about Oil, mmb?” 

Ours is not to wonder why, Squire, other than to speculate when you’ve a lot of something for which demand is intermittently waning, the requisite price to move supply falls, (hat-tip Macroeconomics 101).  Moreover:  whist many folks are openly befuddled by Oil’s down direction given Mid-East tension, we humbly suggest that one merely mind the website’s Oil and/or Market Trends page such as to follow the “Baby Blues” of trend consistency. Five such Oil signals have therein been produced from one year ago-to-date, the average maximum $/cac follow-through within 21 trading days being $6,386, (ranging from $1,660 to $13,490).  That sure beats your trying to outguess the market; or as we oft quip:  “Follow the Blues instead of the news, else lose yer shoes.”

Also becoming a bit shoeless of late is our Economic Barometer.  Already having been on skids during November, this past week’s muted set of just five incoming metrics was nonetheless net negative for the Baro, notable month-over-month weakenings including September’s Trade Deficit and the backing up of Wholesale Inventories, plus a lurch down in November’s University of Michigan’s “Go Blue!” Sentiment Survey.  Too, as household liquidity lessons, the credit card is coming to the rescue.

But:  at least we’re told the Federal Reverse shan’t further raise rates, right?  Wrong.  Here’s the Baro from one year ago-to-date, featuring the earnings-unsupported S&P 500 in red and a table of the Fed’s 2% inflation target vs. the reported data.  Stagflation?  Stay tuned…

“But mmb, those PPI annualized percents are in line with the Fed’s target…” 

Duly noted, Squire.  If that Producer Price Index is truly leading, then we ought see the other inflation percents stall, if not fall, although the Fed does have a lean toward those Core Personal Consumption Expenditures.  As well, Minneapolis FedPrez Neel “Cash n’ Carry” Kashkari per Dow Jones Newswires “…is not convinced rate hikes are over…”  Or to reprise the great Bonnie Raitt from back in ’88: “It’s just too soon to tell…”

In the midst of all this, we read the Fed’s interest-rate increases of the past two years being deemed as “historic”.  Again, the Fed’s Effective Funds Rate is presently 5.33% (i.e. the targeted 5.25% + 5.50% ÷ 2).  Hardly is that “historic”.  Anyone remember the Prime Rate at 22% back in 1980?  We do. (What would be today’s FinMedia adjective for that?  “Steroidic”?)

Specific to the precious metals this past week, a more apt adjective would be “atrophic” as next we’ve the two-panel display of Gold’s daily bars for the past three months-to-date at left and same for Silver at right.  As aforementioned for Oil, here we’ve the “Baby Blues” signaling “Sell” in both metals’ current cases upon the dots having slipped below their respective +80% axes.  Again we commend “The trend is your friend” even if it must descend:

Indeed with respect to Gold, we tweeted (@deMeadvillePro) this graphic last Monday, reflective of the “Baby Blues” heading south:

And so in turn we go to the 10-day Market Profiles for Gold (below left) and Silver (below right).  Simply stated from high-to-low, the word “hoovered” is apropos, with all labeled lines now overhead trading resistance.  As for their two-week percentage changes, Gold’s from top-to-bottom is -4.0% whilst that for Silver is -6.3%.  Is it any wonder the Gold/Silver ratio — now 87.1% — is at its second-highest level since last March?  No ’tisn’t.  Reprise:  Do not forget Sister Silver!

Toward the wrap, here’s the stack.

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3706
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
The 2000’s Triple-Top: 2089 (07 Aug ’20); 2079 (08 Mar ’22); 2085 (04 May ’23)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
10-Session “volume-weighted” average price magnet: 1985
Trading Resistance: 1951 / 1964 / 1970 / 1994 / 2007
Gold Currently: 1943, (expected daily trading range [“EDTR”]: 24 points)
Trading Support: none by the Profile
10-Session directional range: down to 1922 (from 1980) = -81 points or -4.0%
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1883 and rising
The Weekly Parabolic Price to flip Short: 1846
2023’s Low: 1811 (28 February)
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

In sum, Gold is definitely getting the anticipated post-geopolitical pullback.  Does it continue?  Per the website’s Gold and/or Market Values page, recall that price a mere week ago was +120 points above its smooth valuation line; that deviation has since been reduced to now +39 points.  Yet even as Gold’s “Baby Blues” are accelerating lower, again note the cited structural support bases:  1922, 1914 and 1901, the notion thus being that Gold is “safe” above the 1800s.

‘Course, given Gold’s valuation by Dollar debasement is now 3706, ’tis clearly requisite toward maintaining one’s bridge to wealth security.

Thus:  don’t be that guy…

…rather consider that Gold today is THE bang-on attractive Buy!

Cheers!

 …m…

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

The Gold Update: No. 729 – (04 November 2023) – “Gold’s Post-Geopolitical Pullback”

by

The Gold Update by Mark Mead Baillie — 729th Edition — Monte-Carlo — 04 November 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Post-Geopolitical Pullback“

From our purview, Gold appears on the perch of a downside lurch:  a classic post-geopolitical pullback.

“Unless like you’ve said that maybe ‘it is different this time’, right mmb?” 

Indeed, Squire, ‘twould be wonderful if Gold of late has been on the march as the world awakens to its real wealth trait versus that of worthless currencies.  But obviously Gold’s +10.7% climb from 06 October (low 1824) to 27 October (high 2020) was overwhelmingly induced by the Mid-East mayhem.

‘Tis terrible such tragedy has brought focus to Gold.  Yet within that conversation we hope arises a wider awareness of just how inexpensive Gold remains vis-à-vis currency debasement.  We need only glance at the above Gold Scoreboard reflecting price having settled the week yesterday (Friday) at 2000 … however by Dollar debasement (even in accounting for Gold’s own supply increase) the yellow metal’s value today is +85% higher at 3707.

That said, as we’ve previously articulated in detail, Gold has a penchant to reverse course downward following geopolitical price spikes, the most recently notable before the Mid-East mayhem being the early stages of the RUS/UKR war in 2022:  from that year’s 23 February settle price of 1911, Gold spiked +9% to as high as 2079 on 08 March only to then reverse course by -9% to 1895 come 16 March, i.e. below where ’twas at war’s outbreak; hence the heartless Gold Short then cynically saying “Nothing to see here…” 

And whilst now we’re starting to sense some Mid-East geopolitical price reversal is nigh, Gold being so close to its 2089 All-Time High, perhaps renewed wealth awareness then drives the yellow metal more properly into the sky.  For as Squire reminds us, maybe ’tis different his time.

By no means does this suggest making light of the Mid-East mayhem.  But acceptance of it as an ongoing event has begun affecting its stance in the news cycle.  Whilst still unquestionably a dire situation, we penned as follows in this past Wednesday’s Prescient Commentary:  “…As Mid-East headlines fall a bit from above the fold, so too falling are the precious metals’ prices…”  Moreover come Thursday in perusing Le Figaro, mention of the Mid-East didn’t appear until the seventh story in their “front page” news stack.

To be sure, fundamentally Gold is far too low; geopolitically ’tis somewhat stretched; and technically at least by BEGOS valuation ’tis presently too high.  (That courtesy of the “Nothing Moves in a Straight Line Dept.”)  To wit, let’s go to our year-over-year graphic of Gold vis-à-vis its smooth valuation line borne of Gold’s movement relative to those of the primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P).

The lower panel’s oscillator (Gold less valuation) tells the “too high” story, price at present better than +100 points above the smooth line.  Historically (century-to-date):  upon price initially exceeding +100 points above valuation, Gold’s average decline within the ensuing 21 trading days (one month) is -5.5%.  Gold most recently exceeded valuation by +100 points in settling at 1993 on 20 October:  solely within that “vacuum” of a -5.5% decline would bring 1890 by 20 November.  Shall it so do?  We think not as Gold shows structural support from 1980 down to 1922; (for you mid-support structure watchers out there, that level is 1951).  Moreover as we’ll later see by Gold’s 10-day Market Profile, trading support at present ranges from 1995-1988.  But here’s the one-year BEGOS valuation chart featuring Mr. Too High extolling the present extreme:

 

Still, by Gold’s weekly bars and parabolic trends from a year ago-to-date, Gold appears quite safe as there is plenty of room below present price to the rightmost blue dots protecting the fresh Long trend, even given a post-geopolitical downward reversal of course:

Even broadly by Gold’s daily closing price across the past dozen years, this next view exemplifies the push to break up through the otherwise still existing triple-top spanning the past four years.  We thus think any near-term post-geopolitical price decline becomes a springboard to the next All-Time High:

“And don’t overlook that the weakening economic data helped Gold yesterday, mmb…” 

True enough there, Squire. The recently burgeoning Economic Barometer took a bit of a whack this past week, markedly so in the October data provided by the StateSide Bureau of Labor Statistics.  And generally, any hint that the Federal Reserve (its Open Market Committee as anticipated unanimously standing pat on Wednesday) may be done raising rates feeds positively into Gold.

Indeed, October’s Payroll creation was -49% slower than in September, and the Unemployment Rate ticked up whilst both the Average Work Week and Hourly Earnings ticked lower.  “Oh no, say it ain’t slow…”  Still, to be fair, ADP’s Employment pace was +27% over September’s:  so again, ’tis who’s counting whom.  Regardless, other slowings from September into October included the Conference Board’s gauge of Consumer Confidence, the Chicago Purchasing Managers Index, and the Institute for Supply Managment’s Indices for both Manufactuing and Services.  Too, the pace of Construction Spending slowed from August into September.  Yes, all that negativity came to be, even as on Wednesday the Wall $treet Journal headlined with “The Economy Is Great…” (albeit Europe and China seemingly are on the skids).  Either way, StateSide put all its math into the Econ Baro, et voilà:

Now beyond the world of reality, the S&P 500 is going giddy!  Or at least those following it are.  On Monday:  “The S&P gained +1.2%!”  Then Tuesday:  “The S&P added another +0.6%!”  Wednesday:  “The S&P is soaring, +1.1%!”  Thursday “The S&P is straight up +1.9%!”  Friday:  “The S&P is all bullish, up yet again +0.9%!”

And thus for the week the S&P garnered growth of +5.9%.  Cue the late, great Howard Cosell:  “Looook at it GO!”

Here’s to where we saw it go:  merely back to now 4358 as ’twas three weeks ago.  Thus predictably, you know the next sentence.  “Change is an illusion whereas price is the truth.”  In other words, (’tis our turn to say):  “Nothing to see here.”

In the midst of it all, ‘natch, is Q3 Earnings Season.  And for the S&P 500, of the 381 constituents having so far reported, 65% have made more dough than in Q3 a year ago.

But shouldn’t they all be making more?  After all, this is the S&P 500, the top-tier, best-of-the-best.  And when it does not all go right, valuation is the plight.  Thus our honestly-calculated “live” price/earnings ratio for the S&P went from 34.0x on Monday to 40.5x come Friday’s settle.  For you WestPalmBeachers down there, that means if you buy the S&P right now, you’re willing to pay $40.50 for something than earns $1.  Further, the cap-weighted dividend yield for the S&P is but 1.625%.  Do not reprise “Bargain”–[The Who, ’71].  Worth reprising:  the U.S. three-month T-Bill annualized yield is now 5.253%.

Then there’s Gold, which as aforementioned can rise +85% just to reach its current Dollar debasement value.  (Remember:  given historically such eventually happens, this is not a difficult decision).  And although price may languish near-term in post-geopolitical recoil, we don’t expect it to come well off the boil, (on which is has been for nearly a month).

So to Gold’s two-panel graphic we go with the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  Especially note the baby blue dots of trend consistency.  Barring price imminently/rapidly rising, those “Baby Blues” shall cross beneath the key +80% axis:  such has occurred twice within the past year resulting in subsequent point drops (within 21 days) of -67 and -20 respectively; and that reasonably aligns with the underlying 1980-1922 support structure noted earlier.  Specific to trading support, by the Profile the 1995-1988 zone may be the first to go toward further below:

Turning to Silver, that which seems inevitable for the yellow metal has already happened for the white metal, her “Baby Blues” (at left) having penetrated below the +80% level, as graphically tweeted (@deMeadvillePro) Wednesday evening, (albeit price has yet to let go in being saved by yesterday’s slowing economic inputs).  Still, as stated in Thursday’s Prescient Commentary, we can see Silver sliding down toward the 22.18 level.  But first by her by her Market Profile (at right), Sister Silver’s last trading bastion of support is 22.95:

So with our expectations for Gold getting a post-geopolitical pullback — but still more broadly maintain an uptrend — we’ll wrap it up here with this from the “Is the FinMedia Really Running the Fed? Dept.”  To wit:

As you all know, the FOMC per this past Wednesday’s Policy Statement unanimously voted to maintain the Bank’s FedFunds target range as 5.25%-5.50%.  But did they really need to have their traditional two-day meeting?  After all, we were informed the previous Friday (27 October) by Dow Jones Newswires that:

“Inflation Trends Keep Fed Rate Hikes on Pause–Underlying inflation picked up in September, government data showed, keeping the Federal Reserve on track to hold short-term interest rates steady at its next meeting.”

Therefore:  why meet at all?  Even as the recent inflation data we herein recounted a week ago clearly justified the Fed raising rates, the FinMedia already had decided “No no, Jerome” and that was that.  (One wonders if they have to sign non-disclosure agreements.  Just a passing thought…)

Regardless of who’s running the Fed show, pullback or not, don’t pass on Gold!

Cheers!

 

…m…

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

The Gold Update: No. 728 – (28 October 2023) – “S&P Squirms; Gold Firms”

by

The Gold Update by Mark Mead Baillie — 728th Edition — Monte-Carlo — 28 October 2023 (published each Saturday) — www.deMeadville.com

“S&P Squirms; Gold Firms“

Welcome to this week’s missive featuring your favourite end-of-month graphics as we put the wraps on October, (albeit with two trading days in the balance followed by Wednesday’s EuroSide holiday).  And sadly as the Mid-East mayhem continues, the safe-haven bid has further fed into the price of Gold toward settling yesterday (Friday) at 2016, the highest weekly close since 05 May.

However, per this piece’s title, as is our occasional wont we start with stocks, specifically as regards the S&P 500’s state of squirm.  To wit from the “‘Tis Not About Us Dept.” you may recall that herein penned back on 22 July:

►“As we tweeted (@deMeadvillePro) last Thursday [20 July]:  S&P only -0.7% today (Thu) but the MoneyFlow drain was the most for any one day since 13 Sep ’22.  Suggests near-term top is in place.”

‘Course you regular website readers know the MoneyFlow is a directionally-leading characteristic of the S&P 500 which had settled this past 20 July at 4535.  From whence, ’tis all gone rather wrong as depicted by the following daily graphic of the S&P’s closings year-to-date:

Indeed since that tweet, the S&P 500 has declined -9.2% (from 4535 to now 4117).  However for the moment, the S&P has become “textbook oversold” such that it perhaps gets a bounce before the next trounce. That’s technically.

But fundamentally our “live” price/earnings ratio of the S&P 500 remains high in the sky at 34.6x.  And to be sure, Q3 earnings season isn’t helping the situation, regardless of the FinMedia’s fawning.  For example:  last evening, once-revered Barron’s ran with “Why a Solid Earnings Season Isn’t Good Enough for the Stock Market”.  But because we actually do the math, of 596 companies (including 226 S&P constituents) having thus far reported for Q3, just 51% have bettered Q3 of a year ago.  That’s considered “Solid”?

“But 67% beat estimates, mmb…” 

You know Squire had that comment ready to go.  But were we ever to risk dipping a toe into the equities market, we’d desire our shareholdings to be in companies that grow the bottom line rather than shrink it.  Yet such has been the illogical lean to the latter that exists in today’s Investing Age of Stoopid.  Nuff said.  To Gold we go.

And what better segue than to bring up the BEGOS Markets standings year-to-date, Gold having moved from fourth position just at September’s end to now first, +10.2% to this point in 2023.  (Note therein the Dollar Index being +3.0% which by conventional wisdom doesn’t happen when Gold rises … except for the fact that “Gold plays no currency favourites” as you regular readers well know).  ‘Course the Bond has been creamed, price -12.1% in 2023 whilst yield has risen from 3.975% at year-end 2022 to now 5.023%.  As for Sister Silver lacking pace, she’s not getting the geo-political gain garnered by Gold, especially with Cousin Copper on the skids.  Here’s the whole gang:

As for Gold’s weekly bars from a year ago-to-date, we’ve locked in the rightmost second blue dot of the new parabolic Long trend, the prior Long trend having failed miserably only to have then been saved by an equally poor trend (the three red dots) for the Shorts.  Although we’re rah-rahing away there, should there hopefully be some resolution to the Mid-East mayhem, Gold typically would then drop like a stone.  For as we opined a week ago, Gold shan’t become moon-bound until the current All-Time High (2089) is eclipsed; thus it remains for now range-bound, all as herein detailed a week ago.  Either way, from Gold’s recent low just on 06 October at 1824, price has since risen to as high (yesterday) as 2020, or +10.7% in 16 trading days.  Here are the weeklies:

Now let’s stay in the year ago-to-date mode in turning to Gold and its percentage track along with those of top-tier precious metals companies, wherein not all have positively fared.  From the bottom up we’ve Newmont (NEM) -11%, Pan American Silver (PAAS) -9%, the Global X Silver Miners exchange-traded fund (SIL) -4%, Agnico Eagle Mines (AEM) +9%, Franco-Nevada (FNV) +10%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +16%, and Gold itself +21% from this day a year ago.  What stands stark in this construct is all these equities lagging Gold!  Simply look mid-chart ’round May when Gold was as high as ’tis now, but every equity itself was materially higher than now!  The expression may go:  “Dere’s Gold in dem dere hills!”, but dere’s real value in dem dere equities!  Wow!

Meanwhile, is the StateSide economy Golden?  Ehhhh, not really.

“But the Econ Baro had a good week, ehhhh mmb?” 

Indeed it did Squire.  In fact, of the ten incoming metrics for our Economic Barometer, eight of them improved period-over-period.  However, let’s focus on two of those “improvers”.  First is the first peek at Q3 Gross Domestic Product:  an annualized +4.7% real growth.  Impressive.  However, again as we do the math:  42% of the otherwise unreported nominal +8.4% growth pace was due strictly to inflation.  Unimpressive.  And the so-called “Fed-favoured” Core Personal Consumption Expenditures Price Index — after increasing just +0.1% in August — leapt by +0.3% for September:  annualized that’s +3.6% and the 12-month summation is +3.5%.  Yes, the latter is a two-year low … but is it near the Federal Reserve’s target of +2.0%?  No.  Still, our best guess for Wednesday’s Open Market Committee Policy Statement is that they’ll unanimously again lie low.  Heaven forbid the Fed actually be ahead of the curve.  Here’s the Baro:

Let’s next go ’round the horn for all eight components that comprise the BEGOS Markets.  Here we’ve their daily bars across the past 21 trading days (one month).  Each market has its grey linear regression trendline, four at present rising (Euro, Swiss Franc, Gold and Silver) and four thus falling (Bond, Copper, Oil and S&P 500).  ‘Course, the consistency of each trend is denoted by the “Baby Blues” which specifically for the Swiss Franc have just dipped below their +80% axis, suggestive of a cheaper Franc near-term.  Is that merely coincident that the FOMC may just raise rates, in turn increasing Dollar strength?  ‘Tis one of those things that makes us go “Hmmmm…”:

We’ve already alluded to the white metal not getting the geo-political bid that’s been boosting the yellow metal, the Gold/Silver ratio now 86.8x vs. its millenium-to-date average of 67.8x.  Priced to that average, Silver today at 23.24 would instead be +22% higher at 29.73, (just in case yer scorin’ at home).  Reflective below of Sister Silver not keeping pace is price being mid-10-Day Profile on the right whereas Gold essentially tops its stack on the left:

So with but two trading days remaining in October, here now is our stratified Gold Structure by the month across these past dozen years.  As oft previously shown, now courtesy of the “Here We Go Again Dept.” we’ve Gold’s triple top which “is meant to be broken” as highlighted by the three Golden arrows.  Moreover, we’ve anticipated on occasion throughout this year’s missives that Gold shall record a fresh All-Time High in 2023:  obviously the momentum is there, barring a post-geo-political price retrenchment (as is the rule rather than the exception).  Nonetheless, let’s cue Elvis from back in ’60 with “It’s now or never…”:

Through these 10 months we’ve emphasized the importance of doing the math to get to the truth of such critical metrics as economic inputs, p/e calculations, and so forth.  And whilst nothing light can be made of the horrific Mid-East mayhem, as this past week unfolded a mathematical “challenge” shall we say “came to light” over at the United States Department of State.  Hat-tip ExecutiveGov which reported:  “The Department of State has issued an advisory cautioning United States citizens against travel to more than 200 countries amid rising geopolitical tensions and conflict.”   ‘Course, you can see where this is going, given (hat-tip Quora) stating:  “Today, there are 197 countries in the world…“  The bottom line here being:  if you’re in the States, you’re sorta stuck from going anywhere, nor beyond!  Best therefore not to squirm; rather stay firm and stuck in Gold!

Cheers!

 

…m…

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

The Gold Update: No. 727 – (21 October 2023) – “Gold: Range-Bound? Or Moon-Bound?”

by

The Gold Update by Mark Mead Baillie — 727th Edition — Monte-Carlo — 21 October 2023 (published each Saturday) — www.deMeadville.com

“Gold:  Range-Bound?  Or Moon-Bound?“

Across the past 23 trading days (from 20 September) Gold traded per that date’s high of 1969 down -145 points (-7.4%) to 1824 (on 06 October) from which price then ascended +185 points (+10.1%) through yesterday (Friday) to as high as 2009 in settling out the week at 1993.

Further from the aptly-named “Short Memories Dept.” ’twas funny how the FinMedia and friends just two weeks ago were pronouncing the end of Gold as a viable source of wealth:  now ‘twould seem they can’t get enough of it.

Moreover as suggested in last week’s missive, for Gold’s weekly parabolic Short trend ’twas “Three strikes and yer out!”, as provisionally penned in Thursday’s Prescient Commentary.  And with the week having ended, that trend is now confirmed as Long per the fresh encircled blue dot:

So:  is Gold remaining range-bound?  Or is it finally moon-bound?  Let’s start with the former.

For the bazillionth time we postulate that “change is an illusion whereas price is the truth”.  Whilst the low-information, short-attention span, instant gratification crowd have recently been yanked to and fro through Gold’s plunge before its “Going to a Go-Go”–[Miracles, ’65], let’s focus on price, the truth to know. To wit: 

Today’s 1993 price also traded during 34 of the prior 168 weeks going all the way back to that ending 31 July 2020.  And as anyone who is paying attention knows, Gold’s infamous triple top (2089/2079/2085) has yet to be broken, (which they are meant to so do).  Thus until the next All-Time High is achieved, price remains range-bound, for 1993 today ain’t anything over which to bray “Olé!”  Here is price (i.e. “truth”) via the monthly candles from 2020-to-date, denoting the triple-top:

But what has not yet happened — and may not happen — is the usual Gold post-geo-political price spike decline.  As herein penned a week ago:  “…(to risk a terribly overused phrase) perhaps ‘it’s different this time’…”  With reference to the above-labeled “Mid-East Mayhem”, two brutal weeks have passed since the Hamas/Israël incursion, Gold having initially spiked as anticipated.  But given the typical historical time pattern of prior geo-political price spikes, now two full weeks hence, Gold has been void of retrenchment.  The most recent prior example was early on in the RUS/UKR war, Gold twice spiking in 2022 on both 24 February and 08 March … only to trade beneath the initial spike as swiftly as 16 March, even as the war worsened.  Not this time however as quite a number of bad actors fight for center stage in the “Who’s backing whom?” phase.

Recall too our citing Gold vis-à-vis its smooth valuation line per both the website’s Market Values and Gold pages.  Just prior to the Mid-East mayhem, price already was better than -115 points below valuation:  now ’tis +107 points above same per our next graphic.  (Note:  the valuation line compares Gold’s movement relative to those of the other primary Markets that comprise BEGOS, i.e. the Bond / Euro / Gold / Oil / S&P).  Yet should Gold not materially retract — and instead its All-Time High of 2089 be eclipsed — then ’twill be fair to say Gold is moon-bound:

 

“So how high then is the moon, mmb?“

Squire rhetorically knows the answer to his softball question, (thanks mate!).  Clearly moon-bound for Gold is to match its true Dollar debasement level, presently per the opening Gold Scoreboard at 3724.  To be sure, such journeys can seemingly take forever:  on 09 March 2012 that debasement level reached 2089; but such All-Time High for Gold was not achieved until better than eight years later on 07 August 2020.  As valued charter reader THR oft quips “Gold will make you old”, but ‘twould be folly not to anticipate 3724 … and beyond!  Or in the words of the Great Gleason:  “To the moon, Alice!”

As to the destination of the economy, net-net ’twasn’t a nice week of incoming metrics for the Econ Baro.  Some were improved, notably September’s Housing Starts and Industrial Production/Capacity Utilization.  Conversely, October’s National Association of Home Builders Index weakened as did the NY State Empire Index; the pace of September’s Retail Sales slowed as did that for both Building Permits and Existing Home Sales; the Conference Board’s (lagging) set of Leading Indicators turned even more negative; and Business Inventories for August backed up.  Nothing is easy.  Here’s the Baro:

Neither is it easy for the S&P, given both the geo-political climate and the Index’s ongoing overvaluation, our “live” price/earnings ratio settling the week at 36.2x.  And speaking of earnings, (or lack thereof), have you been following their Q3 season?  Specific to the S&P 500, 68 constituents have thus far reported:  just 34 (50%) of those bettered their bottom lines from a year ago.  More broadly?  ‘Tis worse:  with 134 companies’ (of some 1800 to eventually report) results in hand, just 44% have bettered.  Too as tweeted (@deMeadvillePro) this past Thursday, “Flow leads dough…” per our S&P MoneyFlow page depicting a more negative stance.

And again from the “They’re Just Figuring This Out Now? Dept.”, iconic ol’ Morgan Stanley finds U.S. Treasuries attractive at 5%.  (‘Course you readers of The Gold Update have known for months that the T-Bill’s been yielding at least 5% since 18 April.)  Oooh and this quick update:  the market capitalization of the S&P 500 per Friday’s settle is now down to $36.9T; but the liquid money supply (“M2”) of the U.S. is only $20.8T.  It doesn’t add up very well, does it?  No it doesn’t.

But ’tis adding up quite nicely for Gold as we next go to its two-panel display of daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  The baby blue dots of trend consistency have only just crossed above their 0% axis, suggesting the uptrend has more “Room to Move”–[Mayall, ’69] in spite of near-term technicals being somewhat stretched.  Thus given some natural price retraction, we can see the key underlying support levels as labeled in the Profile:

With the like drill for Silver, her “Baby Blues” (below left) are just on the threshold of turning positive whilst she exhibits a belly of Profile support (below right) in the upper 22s.  (More broadly, Silver’s weekly parabolic trend still is Short, whereas aforeshown Gold’s is now Long).  Nonetheless, Sister Silver is gaining that precious metal bid:

To sum up, ’twas a great week for Gold and a poor one both for equities and the StateSide Economic Barometer, the latter in the new week looking to the first peek of Q3 Gross Domestic Product and that “Fed-favoured” Core Personal Consumption Expenditures metric for September.

And with geo-politics continuing to dominate the airwaves whilst the lousy Q3 Earnings Season unfolds, one ought expect more of the same at least near-term, albeit liquid markets don’t move in a straight line.  But the “Baby Blues” at the website’s Market Trends page tend to keep one on the correct side of it all.

Indeed all-in-all — at least until Gold posts a new All-Time High above 2089 — we still see price as more range-bound than moon-bound.  But again, as Jackie points out to Alice:

 

Or as we time-to-time say:  “Tick tick tick goes the clock clock clock…”  Got your precious metals?

Cheers!

…m…

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

The Gold Update: No. 726 – (14 October 2023) – “Awakening to Gold”

by

The Gold Update by Mark Mead Baillie — 726th Edition — Monte-Carlo — 14 October 2023 (published each Saturday) — www.deMeadville.com

“Awakening to Gold“

Now before we all get too excited out there about Gold having yesterday (Friday) posted its largest one-day net gain since 17 March by both percentage +3.4% and points +64, let us acknowledge that price is right where ’twas a mere 14 trading days ago on 26 September.  So in settling out the week at 1946, for you “three-week” price charters, Gold for said stint is essentially “unch”.  Or as we oft quip:  change is an illusion whereas price is the truth.  And at 1946:  truth = cheap.

Still, yesterday’s robust move was gratefully appreciated.  Save also for 17 March, Gold hadn’t had such a single session up move since a smattering of days when the 2020 COVID scare got underway (from 23 March – 09 April that year), prior to which was a +4.7% day’s net gain on 24 June 2016.  Too, in measuring the Gold futures by MoneyFlow (change x volume), yesterday’s inflow ranked third-best year-to-date.  (And further for those of you curiously scoring at home, yesterday’s +3.4% net Gold gain ranks 27th-best century-to-date, the most being +9.0% away back on 17 September 2008 upon ol’ Black Swanee’s song about everything else going wrong).

Impressively however, as we’ve pointed out over these many years, Gold — unlike other major markets –has a tendency to rise faster than it falls.  To wit:  most recently from high-to-low, price dropped -112 points in nine trading days (26 September – 06 October).  Yet from just Friday a week ago – i.e. six trading days — +123 points was price’s gain:  don’t miss the Gold Train!

‘Course by the benefits of debasement, foresight, and a new geo-political catalyst, Gold this past week “got off the schneid” in fast fashion.  To quickly encapsulate these three Gold positives:

► By debasement Gold remains ridiculously undervalued vis-à-vis the above Scoreboard; priced now at “the market is never wrong” level of 1946, ’tis nonetheless -48% below the Dollar debasement value of 3725, which given historical price-to-value reversion shall eventually be reached.

► By foresight as herein starkly charted a week ago, Gold vis-à-vis its smooth valuation line (per the website’s Market Values page) was “nearly -100 points ‘low’, historically an extreme that begs for reversion up to the mean”.  Moreover for four consecutive sessions (02-05 October) Gold settled at least -100 points below said line.  Now ’tis +39 points above it … reversion swiftly wins again.

► By geo-politics came the incursion into Israël whilst we were putting pen to paper at this time a week ago.  Obviously then followed — as anticipated by a material amount — Gold gapping higher at Sunday night’s open whilst the S&P futures gapped lower.

“But in the past, mmb, you’ve gone on about how geo-political price spikes then come all the way back down…“

We’ve detailed in prior missives examples of that typically being Gold’s case, Squire.  But (to risk a terribly overused phrase) perhaps “it’s different this time”, especially per the just cited realities of debasement and foresight, the wake-up catalyst now being geo-political.

The point is:  Gold has been priced way too low for way too long, pure and simple.  And as the Investing Age of Stoopid seemingly unravels, those paying attention may finally be awakening to Gold.

“And you read what Grantham said, eh mmb?“

Our good man Squire really is on a roll today.  Yes, we swerved past a Bloomy piece which teased “Jeremy Grantham Says No One Should Invest in the US“ (as culled from a FinMedia television interview).  And admittedly, we chuckled over the interviewee’s referring to the small-cap Russell 2000 as being replete with horribly high-debt “zombie” stocks.

But neither let us rule out the ongoing overvaluation of the large-cap S&P 500.  That “mightiest of the mighty” index still maintains many sky-high silly valuations, the “live” cap-weighted price/earnings ratio settling the week at 38.2x; (recall 10 years ago it being -33% lower at a still expensive 25.4x … scary).  

And do you remember how overvalued shares fared notably in ’87, ’02, and ’09?  To quote Jonathan Winters in the role of Lennie Pike:  “I hope you turn away … that you just look the other way” –[It’s a Mad, Mad, Mad, Mad World; United Artists, ’63].  For per yesterday’s settles, 101 of the 503 S&P constituents now have P/Es of 40.0x or more.  Repeat:  scary.  As for “fear”?  Yesterday the S&P netted a loss of -0.5% … but the MoneyFlow regressed into S&P points dropped -1.0%.  And as you website followers know, Flow leads dough.  Repeat:  “fear”.

‘Course as is Gold’s wont, it can benefit from the “fear” trade.  Oh to be sure, Gold’s weekly parabolic trend remains Short (as does that for Silver).  But in turning to Gold’s weekly bars from one year ago-to-date, such Short trend had a big chomp taken out of it per the rightmost bar.  As for the flip-to-Long level for the enusing week being 1968, ’tis well within Gold’s current “expected weekly trading range”, now 48 points.  Three strikes and out for the red-dotted Short trend?  Here’s the graphic:

Too, especially for those of you who’ve been with us across better than a decade, there’s the ol’ 300-day moving average for Gold.  Historically it typically marked significant support or resistance for Gold, although much of that “reliance” has since waned.  Still, if only by coincidence, in this next graphic of Gold’s daily closes for some dozen years, that average (in blue) shows as support per the rightmost price bounce.  And as usual, the “triple top” remains there for the taking should the investing world ever awaken to reality:

As to the reality of the StateSide economy, its “yo-yo-ing” has built in a somewhat positive slant from about mid-point (this past April)-to-date in our year-over-year view of the Economic Barometer:

Tell-tale signs of ongoing “Dollar strength” influenced the Baro’s incoming metrics as the week unfolded.  September’s Import Prices shrank whilst those for Export increased.  And inflation at both the wholesale and retail levels came in bit hotter than consensus expectation.  As for the consumer, The University of Michigan “Go Blue!” Sentiment Survey took quite a hit in declining from September’s 68.1 reading to only 63.0 for October, the third-largest monthly decline in the past 16 months.  Indeed, oh that “Dollar strength”, the “Dixie” recording its 11th up week of the past 13.  Yet if you query:  “How then can Gold have also gone up?”  Re-read last week’s piece.

Reading below into Gold’s two-panel graphic we see the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  Note that Gold’s “Baby Blues” of trend consistency are on the up move:  because they still are below the 0% axis, the trend mathematically remains down, however ’tis rotating toward turning positive.  And because Gold settled on its high price for the past two weeks, the present “white bar” is barely discernable at the top of the stack.  (Are those the Gold Shorts we hear yelling “Hobson close!  Hobson close!”?  Always a pleasure to have them take the other side of the trade):  

Next we’ve the like display for Silver, her daily bars at left and Profile at right.  Clearly her recent rally whilst robust visually appears a bit dwarfed vis-à-vis that for Gold.  Mais au contraire as Gold’s recent low-to-high gain is +6.7% whereas that for Silver is +10.3%.  Thus be thee not discouraged, Sister Silver!

We now close on a memorializing note for James E. Sinclair.

We were honoured to meet “Mr. Gold” in San Francisco some nine years ago on 15 November 2014.  Long-time readers of The Gold Update know ’tis infrequent that we read the fine writings of other Gold analysts (so as not to bias our own thinking and interpretation of data).  Jim was an exception with whom we occasionally corresponded, and he’d always reply.  And his thorough understanding of The Gold Story was rarely paralleled.  Thanks for the awakening, Jim.

In his memory, let’s indeed add a word to this moving ’73 Pink Floyd piece, his now resting at “The Great GOLD Gig in the Sky”:

 

Cheers to Jim!

…m…

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

The Gold Update: No. 725 – (07 October 2023) – “Gold Further Tanks; to the Dollar No Thanks”

by

The Gold Update by Mark Mead Baillie — 725th Edition — Monte-Carlo — 07 October 2023 (published each Saturday) — www.deMeadville.com

“Gold Further Tanks; to the Dollar No Thanks“

“Well ya know, Gold is down because of Dollar strength…”

Oh good grief are we sick of hearing that.  Honest to Pete, knee-jerk “conventional wisdom” is hardly our investing indicator of choice, especially when it comes to owning Gold, which at this writing — in having settled out the week yesterday (Friday) at 1847 — is as cheap as can be.  More on that as we move forward.

But let’s begin by (again) debunking the notion of “Dollar strength”.  ‘Tis axiomatic that which is worth zero (“0”) — regardless of it being acceptably transacted in exchange for other currencies, goods and services — is at any price still worth “0”.  Further to our point — given we oft quip Gold plays no currency favourites — let’s point (►) to past periods (sampled from three-to-four months in duration) of positive correlative strength for both the Dollar and … oh say it ain’t so … Gold!  To wit:

► Just after the turn of the century (which for those of you who can do math began with 2001), the Dollar Index (“Dixie”) from 19 Feb ’01 to 21 May ’01 recorded a net gain of +6%:  Gold’s net gain for the identical stint was also +6%.

► How about in 2005:  from 29 Aug through 28 Nov, Dixie’s net was +7% and Gold’s was +12%.

► Then there were the FinCrisis throes of 2008:  from 08 Sep through 08 Dec both Dixie and Gold netted gains of +7%.  Are we having fun yet?

► Check out 2010:  from 01 Feb through 14 June whilst Dixie gained +7%, Gold nearly tripled same with +20%.  They say:  “No Way!” …  Way.

► Ah, then came infamous 2011:  from 27 Jun through 26 Sep Dixie’s net change was +6% … Gold’s was +9%.

► Three years hence from 27 Oct ’14 through 02 Feb ’15 Dixie netted +9% and Gold a still respectable +5%. 

► And similarly just last year in 2022 from 10 Jan through 25 Apr, Dixie gain a net +8% and Gold again a net +5%.

Thus to paraphrase the Johnny Paycheck tune from back in ’77, you can “Take this Dollar strength and shove it.”

Regardless, as we’ve emphasized, of late ’tis hardly just Gold being pinned down by the Dollar.  The primary BEGOS Markets (Bond / Euro / Gold / Oil / Spoo) have all — save somewhat for Oil until just these last few days — been on the skids.  The following picture depicts their percentage tracks from some three-months ago-to-date along with the green-dashed Dixie:

And amongst the selling, Gold was shoved lower for the third straight week, the 1824 low being revisited for the first time since 09 March.  So per the price tracks in the opening Gold Scoreboard, Gold today (1847) is lower than ’twas on this day three years ago (1936), even as the U.S money supply (“M2” basis) is +33% higher now than then ($15.6T –> $20.8T).  But the market never being wrong, Gold completed its second week of the fresh parabolic Short trend, here per our view of the weekly bars from one year ago-to-date:

Also as anticipated, Silver’s weekly parabolic trend is now Short.

“But are you resolved to ‘how low is low’ for Gold, mmb?“

A side-stepped question that duly warrants a studied answer, Squire.  That red line in the above graphic is precisely at the 1800 level, (one ought think another “planned” loading up point for the sovereigns).  As for an analysis in the vacuum of averaging:  Gold’s average points drop for the past 10 weekly parabolic Short trends from each confirmation is -101 points.  Therefore from the “confirmation price” of 1865 two weeks ago, a -101 downside would bring 1764.  Indeed the mid-to-upper 1700s were extremely price congestive throughout much of 2021.  Yet just this past March (left end of the red line) found Gold buyers coming to the fore.  Should that repeat — especially upon recognition that “Dollar strength” can be beat — this new Short trend can well end as short-lived.

“But even if the Fed raises again, mmb?“

Squire, ’tis starting to look like another Federal Open Market Committee vote to boost the cost of FedFunds come 01 November.  But again in expunging “conventional wisdom”, you along with many of our long-time valued readers already know Gold can get on the go even in times of rising interest rates, (see 2004-2006).  And as we regularly say, with the Gold Scoreboard valuation of 3725 today, price at 1847 is ever so cheap.

More to the point per the website’s Gold page, here next is the graphic of Gold’s daily closes from one year ago-to-date astride the smooth valuation line (born of price changes relative to those of the primary BEGOS Markets:  Bond / Euro / Gold / Oil / Spoo).  The lower panel is the difference between price and valuation, which per yesterday’s settle is nearly -100 points “low”, historically an extreme that begs for reversion up to the mean.  And now we learn of an incursion in Israël which can have geo-political price ramifications for Gold.  Either way, have we mentioned that Gold is cheap?  Indeed:

Not appearing so cheap of late is the thrust of the StateSide Economic Barometer.  In spite of the hand-wringing over a returning recession, the Econ Baro has been marching right up the road, albeit such apparent “growth” includes “inflated” data.  Recall on 28 September the final read of Q2 Gross Domestic Product incorporated a chain deflator implying 44.7% of growth was inflated vs. real.  Still, some fairly bold metrics boosted the Baro this past week, notably Labor’s Payrolls numbers for September (+48% over August), although ADP’s Employment data was 180° out-of-phase (-51%).  Too, August’s Factory Orders whirled ’round from shrinkage to expansion.  But on a scary note:  Consumer Credit — a key economic driver — actually shrank in August for the first time since the summer of 2020 when all were cowering under COVID.  (Prior to that, Consumer Credit hadn’t shrunk on a monthly basis since its July reading in 2012).  Are FedChair Powell and his trusty FOMC able to sleep?  Raise ’em and weep?  Here’s the Baro:

Specific to the markets, let’s now go ’round the horn for all eight BEGOS components.  Typically we reserve this view solely for our month-end editions of The Gold Update.  But with “Oh that Dollar strength!” ruling the roost, here we’ve the exceptional picture of each market’s grey diagonal trendline heading down across the past 21 trading days (one month) along with their respective baby blue dots of day-to-day trend consistency.  Indeed as we tweeted (@deMeadvillePro) this past Thursday with respect to Oil having already issued a Sell signal in the prior week, “Follow the blues, (you know the drill…)”:

And to specifically drill down into the precious metals, follows are their respective 10-day Market Profiles for Gold on the left and for Silver on the right.  Despite the recent selling, both metals at present exhibit trading support below current price (white bar), notably for Gold as labeled at 1834 and for Sister Silver in her 21.70-21.25 zone:

With Q3 Earnings Season underway and 10 metrics due for the Econ Baro in the new week, let’s wrap here with two notes from deMeadville’s vast array of departments.

First from the “Core No More? Dept.” we perused an interesting essay (hat-tip FI’s Todd Bliman) emphasing that the Federal Reserve evaluates inflation and the economy well beyond the oft-mentioned Core Personal Consumption Expenditures Price Index.  We (indeed one would assume all of us) agree, albeit the Core PCE month-in and month-out seems very closely aligned with the Fed’s 2% inflation goal.  Nevertheless, as hard-wired ad nauseum throughout the FOMC’s Policy Statements, they “…will continue to monitor the implications of incoming information for the economic outlook…” and oh baby as payrolls grow but consumers lie low, which way shall the Fed go?  The next Core PCE reading is three trading days prior to the next FOMC vote.

Second from the “They’re Just Figuring This Out Now? Dept.” (the popularity of which is growing by leaps and bounds), Dow Jones Newswires discovered this past week that “Rising Interest Rates Mean Deficits Finally Matter“.  Otherwise, who knew, right?  Moreover, does this (finally) threaten the ongoing Investing Age of Stoopid?  Stay tuned…

As to ongoing so-called “Dollar strength” ultimately getting shoved, we reprise Daryl Cagle’s oldie-but-goodie graphic given that ultimately 0 = 0:  So do stay with Gold and Silver!

 

Cheers!

…m…

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

The Gold Update: No. 724 – (30 September 2023) – “Gold Guillotiné !”

by

The Gold Update by Mark Mead Baillie — 724th Edition — Monte-Carlo — 30 September 2023 (published each Saturday) — www.deMeadville.com

“Gold Guillotiné !“

We start by paraphrasing this oft-misquoted line from American TV icon Desi Arnaz:  “mmb, you’ve got some ‘splaining to do!”, even as our two previous missives entitled Gold as being “Technically Torturous” and “The Torture Continues”.  Following which — at precisely 13:40 GMT this past Wednesday — Gold succumbed to the guillotine in penetrating the week’s parabolic protection at 1905.2, provisionally flipping such trend from Long to Short, in turn confirming so with price settling yesterday (Friday) at 1865.  In fact, you may recall that such guillotining was presciently previewed in our prior missive’s graphic of Gold’s weekly bars.  And so it came to pass that 28 weeks of net gain for Gold are now gone, (albeit such trend for Silver is still barely Long, but likely shan’t be come Monday’s open).  Here’s the updated dual panel graphic:

“That’s a gruesome graphic there, mmb…”

Sadly so, Squire, wherein we see at left Gold’s red-encircled parabolic dot confirming such trend having swung from Long to Short, whilst at right Silver’s Long trend is but 8¢ from the end, the guillotine in top gear as the Dollar Revolution continues.

In reaching this past week to as high as 106.540, ’twas the best level for the Dollar Index since 30 November of a year ago, (Gold settling that day at 1783 … but let’s not go there).  Today at 105.870, the plucky buck is but -18% below its historical high of 129.050 upon its futures’ inception away back on 20 November 1985.  And were that gap to close, U.S. interest rates shall be far higher still, the FedFunds rate back then being 8.05% versus today’s 5.50%.

Yet that noted, just yesterday the Bureau of Economic Analysis reported the Federal Reserve’s favourite inflation gauge for August, the pace of the Core PCE Price Index coming in at a rather benign +0.1%, which annualized is well below the Fed’s +2.0% target.  Shall the Fed’s Open Market Committee therefore vote to again “pause” come their 01 November Policy Statement?

Regardless, as depicted above, Gold’s weekly parabolic Long trend never got off the pause button, was executed, and is now Short.  And recall when said Long trend began a month ago, we were looking toward a fresh All-Time High show.  Instead from Gold, out went the dough.  Here’s our updated table of Gold’s ten prior weekly parabolic Long trends, plus the latest’s zero result across the bottom.  As Sheriff J.W. Pepper said to the elephant in “The Man with the Golden Gun” –[Eon/UA, ’74]:  “Boy, you is ugly”:

Understandably, you now may well ask “So how low is low?”  There we shan’t go, save for some structural support from this 1865 level down to 1813 built in early March.  And whilst conventional wisdom points to “Dollar strength” as the yellow metal’s culprit, we again hearken back to a Gold truism:  that it plays no currency favourites.  Simply recall the 2010 six-month stint wherein from January through June the Dollar Index gained +10% and Gold +13%.  Boom!  It does happen.

Still since mid-year, Gold and its equities brethren have been pressured.  It being month-end, here’s our year-over-year view of those elements’ percentage tracks depicting the VanEck Vectors Gold Miners exchange-traded fund (GDX) +14%, Franco-Nevada (FNV) +13%, Gold itself along with Agnico Eagle Mines (AEM) +12%, the Global X Silver Miners exchange-traded fund (SIL) +3%, Pan American Silver (PAAS) -7%, and Newmont -12% (as we know encompassing acquisition costs).  But again from mid-way, this hardly is the happiest chart in the house:

Month-end also means bringing up our year-to-date standings of the BEGOS Markets.  And atop the stack for the first time in deplacing the S&P 500 to second spot is Oil.  Rounding out the podium is the Doggy Dollar, (although because ’tisn’t a BEGOS component, we can still say Gold is in third position).  Properly the cellar dweller is the Bond as the Year of the Yield continues:

Specific to the second-place S&P 500, clearly it struggled through the oft seasonally-challenged month of September.  But more importantly, are both Wall Street and the FinMedia finally waking up to valuation reality?  More on that in our closing paragraph(!)  As for economic reality, here’s the StateSide Econ Baro from one year ago-to-date, replete with its mega yo-yo swerves and curves:

“Yo, Joe!  Which way does it go?”  For this past week’s set of 12 incoming metrics, eight were worse period-over-period and one was “unch”, thus leaving just three that improved, including August growth in both Personal Income and Durable Orders.  But the month’s real stinker was Home Sales, both New and those listed as Pending.  And pity the poor Chicago Purchasing Managers Index:  its September reading of a paltry 44.1 marks the 13th consecutive month of regional economic contraction.  “Go Bears…”

Speaking of “Go” — save for Oil — going down through September was the continued direction for the balance of the BEGOS Markets, (as ’twas the case back on 12 August when we penned “Ain’t Just Gold Been Headin’ Down…”).  Nearly everything gets sapped during “Dollar strength”, but again its yield is decent, the three-month U.S. T-Bill paying an annualized 5.300% per yesterday’s settle.  And that’s risk-free dough, (even if DC is closed).  Either way, let’s go ’round the horn for all eight BEGOS components by their daily bars from one month ago-to-date, Oil being the sole market sporting a rising trendline, albeit its baby blue dots of trend consistency are weakening as we tweeted (@deMeadvillePro) earlier in the week:

As for the precious metals’ 10-day Market Profiles, obviously we find their respective present prices (the white bars for Gold below left and for Silver below right) down in le panier de la guillotine, the yellow metal alone having lopped off some -100 points in just eight days.  Within the overall Profiles, Gold’s high-to-low is -5.4% whilst that for Sister Silver is -7.3%.  

Again as ’tis month– indeed quarter –end, here we’ve the stratified view of Gold’s Structure per the past dozen years-to-date, its triple-top axiomatically waiting to break:

To close, per our aforementioned tease, here we go courtesy of the “Where Have You Been These Last Four Years? Dept.”

Regular readers know — and notably so since 2019 — we’ve been constantly concerned as to the overvalued state of equites, especially the S&P 500 Index as a whole.  Oft we’ve quipped that we’re in “The Investing Age of Stoopid” purely by doing the honest math to compute the S&P’s price/earnings ratio, presently 37.7x as opposed to the parroted, dumbed-down 24.5x believed by your broker, (who frankly today appears incapable of doing the math).  But that’s where we are now.  And as we herein have written ad nauseum through these recent years:  “…earnings are not supportive of price…”

Well here it comes… READY?

This past Wednesday the lightbulb finally illuminated in the children’s writing pool over at Barron’s, headlining their webpage “above the fold in bold” with:

“The Stock Market Has a Big Problem.  It’s Called Earnings.”

They’re just figuring this out now???

And yet when we view our MoneyFlow page for the S&P 500 — even during its current decline — true “fear” has yet to appear.
But what appears most appealing to us is Gold being priced today (1865) at just half its Dollar debasement value (3726) per our opening Gold Scoreboard.
Thus — precious metal guillotines and Dollar Revolution aside — in strolling along life’s path, what ought you have glowing in your vault?  Gold!

 

Cheers!

…m…

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

The Gold Update: No. 723 – (23 September 2023) – “Gold – The Torture Continues”

by

The Gold Update by Mark Mead Baillie — 723rd Edition — Monte-Carlo — 23 September 2023 (published each Saturday) — www.deMeadville.com

“Gold – The Torture Continues“

On the heels of last week’s piece “Gold – Fundamentally Fabulous, Technically Torturous“, we’ve given consideration to some infamous tortures foisted upon mankind across the centuries.  And how well-documented they are!  The exasperating drips of the Chinese Water Torture… the exhausting torture of Sleep Deprivation… and (“Don’t say it!”) yet we must –> the excruciating endlessness of the Tickle Torture, (just to name a few).

But wait, there’s more!  Today ’tis the ever-exponential agony of the GPTT:  Gold Price Tease Torture!  “Oh please mother make it stop!” –[Linda Blair, ‘The Exorcist’, Warner Bros., ’73]

“Well, mmb, there’s also your ‘live’ p/e of the S&P still unsupportably high in the sky as everybody waits — in your own words — ‘for it to all go wrong’; that’s kinda torture too…”

So ’tis, Squire.  That price/earnings ratio now at 37.7x keeps clear-cut the case for a comprehensive S&P “correction”.  However, there’s a significant difference between the S&P 500 and Gold:  whereas the former is fully-engaged, the latter lingers unengaged.  Folks follow stocks; few follow Gold.  Going by Gallup as of this year, 61% of adult Americans own equities; going by “Gold IRA Guide” as of 2020, just 11% of adult Americans owned Gold.  And globally, Gold’s ownership has been cited as less than 1%.

Still for those of us is the Gold know, our so-called GPTT continues blow-by-blow.  For nary over a week ago, we were waving Gold’s flag to and fro. And as this past week did unfold, it appeared that Gold finally was on the go.  Gold having then settled at 1946, we wrote our song and dance — including in last Tuesday’s Prescient Commentary the anticipation of price reaching the mid-1970s — and come Tuesday the yellow metal had streaked up to 1969 … only to then give it all back and then some by reaching down to as low as 1933 come Thursday.

“Blame it on the Fed!“, they say.  “The Dollar’s soaring up!”, they say.  “Rates’ll never go down!”, they say.  Either way, Gold settled the week yesterday (Friday) at 1945 in netting a -1 point loss for the week after tracing therein a high-to-low range of -36 points.  “It’s torrr-orrr-turrre…”  –[The Cure, ’87].  And yet for both the yellow and white metals, the respective weekly parabolic trends remain Long per their rightmost four blue dots, with Silver actually bettering Gold for the week:

‘Course specific to the Federal Reserve — its Open Market Committee unanimously having voted to maintain the Bank’s Funds Rate in the 5.25%-5.50% target range — one’s take on it in large part is dependent upon one’s FinMedia source.  Post-Policy Statement and Powell Presser this past Wednesday, if sourcing from Dow Jones Newswires, one read that “Fed predicts ‘soft landing’ for the economy — low inflation and no recession.”  If instead sourcing from Bloomy, one read that “Stocks Fall as Yields Rise on Fed’s ‘Hawkish Skip’.”  So which is it?  Any wonder the precious metals are directionally confused?  Fortunately for them, the math will out.  To wit:

Per the opening Gold Scoreboard, albeit with price at a lowly 1945, valuation today is 3704, (i.e. +90% higher).  Moreover, if you love Sister Silver, here’s the fun part:  whilst settling the week at 23.82, given the century-to-date average Gold/Silver ratio being 67.7x, when applied to Gold’s valuation of 3704, that values Silver at 54.71!  130% higher!  “What’s in your vault?”  Nothing confusing there.

As to the StateSide economy, our Economic Barometer turned in a confusing week.  Just eight metrics arrived, the best being August’s increase in Building Permits, and the worst ironically being August’s Housing Starts.  Go figure, the Baro basically drawing a blank for the week:

As for the S&P (4320) -6.2% from its year-to-date high (4607 on 27 July) — or if you prefer -10.4% from its all-time high (4819 on 04 January 2022) — everyone wants to know “Why?“ The obviously answer (as we simply practice the otherwise archaic science of math) is that price vis-à-vis earnings is historically excessive.  The average p/e of the Top Ten cap-weighted S&P 500 constituents (AAPL, MSFT, AMZN, NVDA, TSLA, GOOGL, GOOG, META, LLY and UNH) right now is 51.5x.  Remember (ad nauseum) ol’ Jerome B. Cohen?  “…in bull markets the average level would be about 15 to 18 times earnings.”

Other answers as to “Why?“ may include it seasonally being September, considered the year’s notoriously worse stint.

Or that the S&P’s all-risk yield of 1.582% is absurd to abide given the risk-less U.S. three-month annualized T-Bill yield of 5.305%.

Or that ’tis better to get one’s money out of stocks given the market capitalization of the S&P 500 is now $37.7T versus a U.S. liquid “M2” money supply of just $20.7T.  Remember ol’ Egbert?  “Hey Mabel!  I sold some stock but the broker says they don’t actually have the money to pay us!”  That shan’t be good.

Or there’s the market overall pricing excess thanks to COVID and the Fed:  recall the S&P’s regression growth channel had said “pandemic” not occurred?  And further how the increase in the market capitalization of the S&P 500 equaled the monetary creation by the Fed to counter COVID?  Here’s that updated graphic:

‘Course, just as the S&P rocket-shot was fostered by the Fed’s monetary injection, the market has since been somewhat succumbing via the Fed’s monetary withdrawal (which commenced in the week ending 2 April a year ago).  Or in the words of Inspecteur Clouseau:  “Out with zee bad air [equities] and in with zee geuuud [yield]…”  And that’s quite a drop from today to the channel were the Fed to so drain…

However through it all, the precious metals remain torturously tepid.  Indeed were Charles Dickens around today to pen a book on Gold and Silver, ‘twould well be titled “Great Expectations, Part Deux”.  Or more realistically given our two-panel graphic with Gold’s daily bars from three months ago-to-date on the left and 10-day Market Profile on the right, “What Expectations?”:

Silver as aforementioned is performing a tad better than Gold per the white metal’s like bars (below left) and Profile (below right).  At least she is adorned in her precious metal pinstripes rather than in her industrial metal jacket.  From her intraday low of 22.56 on 14 September she is now +5.6% higher, whereas Cousin Copper from his high a day later of 3.85 on 15 September is now -4.2% lower at 3.69.  Stay your pinstripes pursuit, Sister Silver!

Torturous as may be this read, this let’s close with a notable FinMedia musing from late in the week:  ’tis the notion that the Fed’s so-called “neutral rate” (i.e. inflation-adjusted lending rate) may have to naturally rise going forward.  We wonder if this is to cover for the Fed having creamed the Dollar — increasing its “M2” supply by +42% or some +$6.6T from March 2020 into April 2022.

And yet specific to the Dollar Index, it has nonetheless risen from March 2020 (then 98.05) to 105.29 today.  Either “the more there are, the more they’re worth” — else the offsetting currencies, substantively the €uro and ¥en — have been strained and puréed:  which of course is the case.  The €uro (that surprisingly has lasted more than four years) has gone from costing $1.104 in March 2020 to as low as $0.959 a year ago; (’tis today $1.068 as it now pays an interest rate).  But pity the poor ¥en!  From 107/$ in March 2020 to a vacation-worthy 146/$ today!

Cue Deep Purple from back in ’73 with  “My Woman from Tokyo” 

 

 Regardless of where your sun rises, when it comes to currency chaos, torturous as ’tis, where else would you rather be?  Gold and Silver obviously!

 

Cheers!

…m…

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

The Gold Update: No. 722 – (16 September 2023) – “Gold – Fundamentally Fabulous, Technically Torturous”

by

The Gold Update by Mark Mead Baillie — 722nd Edition — Monte-Carlo — 16 September 2023 (published each Saturday) — www.deMeadville.com

“Gold – Fundamentally Fabulous, Technically Torturous“

Firstly:  Gold is fundamentally fabulous given its ultimate valuation is a function of currency debasement.  Hardly is that news to our veteran readership, nor to anyone who fully comprehends The Gold Story.  So let’s just briefly break down the ultimate effect of valuation on Gold with three bullets:

  • Gold settled this past week yesterday (Friday) at 1946; per the opening Gold Scoreboard, valuation is 3706; Gold is thus presently priced at but 53% of its valuation;
  • Gold’s highest level of valuation-to-date is 4031 (per the week ending 15 April ’22), with price concurrently at 1977; obviously since then, the Federal Reserve has been “rebasing” the money supply (“M2” from $22.1T to now $20.7T, or -6.3%);
  • Gold’s price — whilst typically lagging valuation — eventually ascends to past high valuation levels; Price’s All-Time High of 2089 (on 07 August 2020) matched the valuation high of 2089 achieved eight years earlier (as of 24 July 2012).

Thus ’tis fundamentally fabulous to know there is so much higher for Gold — dare we say “automatically” — to go.  Precisely put, Gold’s price today so relatively inexpensive, ’tis akin to Roger Moore opting for “player’s privilege” in rolling Louis Jourdan’s lucky backgammon dice:  “It’s all in the wrist … double sixes … fancy that.”  –[Octopussy, Eon-MGM/UA, ’83]

“Yet if I can play devil’s advocate, mmb, Gold is just not popular anymore…“

Your “Yet“ is the operative word there, Squire:  merely move it to the end of your sentence in replacing the word “anymore“.  Moreover as recently penned, Gold’s popularity amongst the so-call “sovereigns” remains substantive.  When including Gold as a currency (albeit this data is six years in arrears per the World Gold Council), it reportedly makes up better than 50% of foreign reserves belonging to Austria, France, Germany, Greece, Italy, The Netherlands, Portugal, The United States, and (again per six years ago) Venezuela.

But as the Investing Age of Stoopid rolls along, “The Herd” don’t want yield-less Gold.  Rather, their preference is to be all-in with equities, even if earnings-less.  “No, we gotta own Nvidia ya know [p/e 105x]… “No, we gotta own Amazon ya know [p/e 110x]… “No, we gotta own Salesforce ya know [p/e 133x]…”  That’s just a few of the 25 S&P 500 constituents with price/earnings ratios currently in excess of 100x.  As for the total market capitalization of the S&P now priced at 4450?  $38.9T.  The aforementioned liquid money supply (“M2”) of the US?  $20.7T.  Sleeping well?  Got Gold?  Admittedly that said…

Secondly:  Gold is Technically Torturous given its performance since the weekly parabolic trend flipped from Short to Long two weeks ago.  “Long” means “Up”, not “Down”.  But the latter has been Gold’s state from settling at 1966 since starting September, from which price has been as low as 1922 (-2.2%).  Worse for Silver after settling 01 September at 24.55, she has since succumbed to as low as 22.56 (-8.1%).  Torturous indeed!  That stated, both precious metals are still clinging (precariously) to their respective weekly parabolic Long trends as we see here from one year ago-to-date:

At least by each rightmost respective bar, Gold and Silver got bids into week’s end to close well off those noted lows.  And to stick with this technical treatise — torturous as ’tis — we’ve a near-term Gold study that bodes well for higher prices.  In reviewing the week’s ending data runs, from the website’s Market Rhythms page up popped a pending positive crossover for Gold’s 12-hour MACD (“moving average convergence divergence” … which for you WestPalmBeachers down there is a very popular market-following study).  Here’s the graphic of Gold from mid-year-to-date in 12-hour units with the MACD’s blue line poised to cross above its red line, visibly-viewed by the trading community as indicative of higher price levels in the offing:

‘Course, has this signal been performing well?  In order to qualify for our Market Rhythms page, various criteria must be met.  And specific to Gold’s 12-hour MACD:  across the past ten signals (since 03 May — Gold then 2082 — in perpetually swinging from Long-to-Short-to-Long-etc.) has been complied a pure-swing bi-directional gain of 159 points with an “average maximum” gain per swing of 48 points.  Just in case you’re scoring at home.  The point is:  should this next up swing confirm, we’d expect it to help Gold get back on its broader parabolic up track.

Speaking of “up track”, have you been following that of the StateSide Economic Barometer?  Nothing recessionary there:

Highlighting the past week’s streak of 15 incoming Econ Baro metrics was August’s Capacity Utilization, the 79.7% reading ranking as second highest across the past 10 months, whilst Retail Sales increased their growth to +0.6% from July’s +0.5% pace.  Too, September’s New York State Empire Index — which was largely negative throughout 2022 into 2023 — posted its fourth positive reading of the past six months.

Therein, the bogeyman of the bunch was ramped-up inflation which falsely feeds into economic “growth”.  At both the retail and wholesale levels, August headline inflation (which acknowledges that you eat and drive) more than doubled their July paces.  But is Mr. Bogey frightening Wall Street’s children?  Going by our Moneyflow page, we’ve yet to see “fear” in the S&P 500, (note again that adverb’s emphasis).  But with our “live” p/e of the S&P at an honestly-calculated 39.6x, “tick, tick, tick goes the clock, clock, clock…”

And to be sure, the rising price of Oil is nurturing numbers higher as it inflates its way through the economic system.  Here we’ve the percentage tracks of the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P) across the past 21 trading days (one month).  “Somebody stop that Oil!”:

As for the precious metals from three months ago-to-date, here next we’ve their daily bars along with those “Baby Blues” that depict the consistency of the evolving 21-day linear regression trend.  For both Gold on the left and Silver on the right, the baby blue dots are falling, which does not lend well to price’s firming and turning higher.  Still, the rightmost bar in each case is indicative of buying interest, which beneath the umbrella of the weekly parabolic Long trend — plus the aforeshown pending MACD positive cross — can combine to  “Turn the beat around…”  –[Vicki Sue Robinson, ’76]:

To the 10-day Market Profiles we go for Gold (below left) and for Silver (below right).  Their both having departed basement residency from the past two weeks enhances the (hopefully) supportive aspects for the yellow metal’s 1932-1952 zone and the white metal’s denoted 23.40 level:

Time to wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3706
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
Trading Resistance: 1952 / 1964
Gold Currently: 1946, (expected daily trading range [“EDTR”]: 16 points)
10-Session “volume-weighted” average price magnet: here at 1946
Trading Support: here at 1946, then 1942 / 1932
10-Session directional range: down to 1922 (from 1980) = -58 points or -2.9%
The Weekly Parabolic Price to flip Short: 1904
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1859 and rising
2023’s Low: 1811 (28 February)
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

If all this weren’t exciting enough, wait:  there’s more!  Wednesday (20 September) brings the next Policy Statement from the Federal Open Market Committee.  Sense across the spectrum has been the Fed shall “pause” as it recently did two Statements ago (14 June) before again raising last time ’round (26 July), as just did the European Central Bank.  So with August inflation having notably picked up the pace, this time appears more of a “Crapshoot” –[Moriarty, ’16], albeit we think the Fed shall make the raise.  Alors, on verra mes chers amis!  In the meantime, survive the torture toward achieving the fabulous:  stay with Gold and Silver if you please!


Cheers!

…m…

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

The Gold Update: No. 721 – (09 September 2023) – “Gold’s All-Time High Drive Departs With a Dive”

by

The Gold Update by Mark Mead Baillie — 721st Edition — Monte-Carlo — 09 September 2023 (published each Saturday) — www.deMeadville.com

“Gold’s All-Time High Drive Departs With a Dive“

Quite the inauspicious start for Gold’s fresh parabolic Long trend as otherwise herein detailed a week ago.  Indeed then we were all megaphones and pom-poms about Gold now being en route to a new All-Time High … and we’re still in that camp even though the drive to such high has commenced with a dive.

For having settled a week ago at 1966 in confirming the new up trend — and historically backed by the strength to surpass the present All-Time High (2089 on 07 August 2020) as we ascend — Gold instead this week fell to as low as 1940 toward settling yesterday (Friday) at 1943.  Fortunately, ’tis not the end.  

Further, this Gold uptrend remains intact, as does same for Silver.  So let’s straightaway go to the two-panel chart of the precious metals’ weekly bars from one year ago-to-date with their respective parabolic trends in stride:

The optimistic news is that both the yellow and silver metals exhibit their rightmost two blue dots of fresh Long trend.  The pessimistic news is that the margin for error — i.e. trend reversal — admittedly appears tight.  Gold’s present distance from here (1943) to the flip-to-Short price (1902) is -41 points, which given Gold’s expected weekly trading range of 44 points is within a vulnerable distance.  Similar is the case for Silver (currently 23.20) with her flip price just -1.00 point lower at 22.20; her EWTR?  1.32 points.  Hang in there Sister Silver!

“But obviously you’re still bullish for higher Gold from here, eh, mmb?“

Would we otherwise be writing, dear Squire?  Or to quote one JP from our Investors Roundtable:  “The trend is your friend until it reaches the bend.”  Moreover as cited a week ago in asking “How high is high?”, recall that Gold’s “maximum average” price follow-through per the prior 10 weekly parabolic Long trends is +11.1%.   Thus again strictly in that vacuum, we’d see Gold 2184 on this run, eclipsing the still standing 2089 All-Time High by nearly +100 points.  Here’s such historical table of positive percentage MaxGain follow-throughs:

“But if I may interject again, mmb, four of those last six ‘MaxGains’ have been less than +5%…“

Duly noted, Squire.  Yet if we instead employ the weighted-average method, the “perfect world” MaxGain comes to +9.1%, which from that starting 1966 level still sets Gold for a new All-Time High at 2145.  Either way, next week is important for the precious metals’ ascent to resume.  Else these fresh uptrends face parabolic busts.

Too, we’ve another oft-overlooked analytical note:  have you been following our Markets Ranges page?  As we tweeted (@deMeadvillePro) this past Thursday night:  “…Market Ranges becoming unusually narrow (save for that of the Spoo); may portend Big Moves ahead for the BEGOS Markets; have a look…”  

Indeed for the month of September — wherein by conventional wisdom “it all goes wrong” — scant little has yet to happen, especially with respect to the precious metals in terms of day-to-day ranginess.  Below on the left we’ve Gold’s “expected daily trading range” from one year ago-to-date; (for you WestPalmBeachers down there, this is not the price of Gold; rather ’tis how many points we expect Gold shall trade between its next day high and low).  And the number “16” in the Gold box is as narrow an expected points range as we’ve seen in better than a year.  Similarly on the right is the case for Sister Silver now with her 0.50 points expectation.  ‘Tis said “Traders love volatility”, a condition rather absent of late.  This is why understanding potential price movement from day-to-day is critical to cash management.  Here’s the graphic:

‘Course, cash management has become a crap-shoot if investing via the StateSide trendless economy.  “It’s up … no wait … it’s down … no wait … it’s ad nauseum…”  Or as crooned by The Moody Blues: “School taught one and one is two.  But by now, that answer just ain’t true…“ –[‘Ride My See-Saw’, ’68].  

Too, there’s the standard verbage in the Policy Statements from the Federal Open Market Committee that it “will continue to monitor the implications of incoming information for the economic outlook”.  Is it any wonder ongoing FedSpeak is so vague?  Can you make heads or tails of it all?  “In Search of the Lost Chord” indeed as we turn to the Economic Barometer:

And therein, we cite a notable number from this past week:  Consumer Credit as calculated by the Fed for July was just $10.4B, the third-lowest reading since the core of COVID 30 months prior.  Hitting the wall of the credit card limit?  That rising variable interest rate is a credit killer.

Regardless, President Biden’s economy is said to be just fine, thank you.  To wit these two headline doozies from Dow Jones Newswires as the past week unfolded:  “Resilient U.S. Economy Defies Expectations” and “Why Higher Unemployment Is Good News Now“  (Clearly the FinMedia summer interns are closing out their stints at high writing levels as they return to University).  Yet on this side of the pond, the EU’s leading economy — Germany — continues to falter.  Further ’round the globe, China’s exports continue to plummet … does that mean Walmart (WMT) shan’t have anything to sell?  Good grief…

Returning to Gold, ’twas a week of grief as told, made graphically bold in the graphic below:  to the left we’ve Gold’s daily bars from three months ago-to-date, this past week not looking so great.  Still, the baby blue dots of trend consistency continue to climb.  And to the right, despite Gold’s plight, the most dominantly-traded price of the past two weeks — indeed the 1943 settle — has essentially held as support per the Market Profile’s fortnight:

As for poor ol’ Sister Silver, the like graphic is weaker, her “Baby Blues” at left having just turned tail, whilst her Market Profile at right finds price having taken quite the “THUD!”  Hopefully it shan’t leave a bruise…

Notwithstanding the precious metals needing a boost into the new week, we wrap this missive with “Breaking News”:

The long-sought reversion of our “live” price-earnings ratio to its mean has finally occurred.  And both elements of the fraction thereto contributed.  The “P” of the S&P 500 at 4457 is -7% below its all-time high (4819 on 04 January 2022).  And the Index’s “E” — which for Q2 grew year-over-year by +6% — was recently enhanced by post-earnings season power profits, notably from the large market capitalization likes of Nvidia (NVDA) and Berkshire Hathaway (BRK.B).  Indeed, those two companies by cap-weighting comprise 4.1% of the S&P 500’s total of 503 constituents.  Here’s our enhanced graphic, the green line having once again reverted to the red line:

So is that as low as the S&P shall go?  Per what we know:  no.  With our “live” P/E today at 39.9x, ’tis still a very strained distance above Bob Shiller’s CAPE, which in turn has yet to re-meet with the oft-parroted S&P/DJI version of “twenty-something”.  And should the economy recess and earnings not grow, a return to the “live” P/E’s low (25.4x in January 2013) means an S&P “correction” from here of -36%; (that’d be to 2852, just in case you’re scoring at home … and recall our musing earlier this year of an S&P sub-3000).  As well, the imputed S&P yield per the P/E ( 1 ÷ 39.9 ) is 2.507%; but the actual cap-weighted yield is only 1.537% … and yet the three-month annualized T-Bill yield is more than triple that at 5.293%, and ’tis risk-free!  Thus you can see where your money ought be.

But for security above and beyond risk-free we’ve the world’s best currency:  Gold!  Today’s 1943 level prices it at just 52% of its Dollar debasement valuation, which per the opening Gold Scoreboard’s calculation of 3709 even accounts for the increase in the supply of Gold itself.  And save for smart sovereigns, just because “nobody” owns Gold yet, do not be without!  Got Yours?


Never in a million years, Sweet Sister Silver!

Cheers!

…m…

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

The Gold Update: No. 720 – (02 September 2023) – “Gold and Silver Finally Flip!  How High Might Be This Next Up Trip?”

by

The Gold Update by Mark Mead Baillie — 720th Edition — Monte-Carlo — 02 September 2023 (published each Saturday) — www.deMeadville.com

“Gold and Silver Finally Flip!  How High Might Be This Next Up Trip?“

Thank goodness, THAT’S over.

“ ‘THAT’ being what, mmb? “

THAT, Squire, being the Short parabolic trend for both Gold and Silver having finally reached the end!  For as last week herein penned:

“As to the ‘when’ for these two precious metals’ Short trends to end … it is plausible one if not both precious metals’ weekly trends can be Long in a week’s time.  ‘Stay tuned to this channel for further developments…’“

Which as foretold by the Sibyl — here in the guise of the lovely Lady Fortuna — is exactly what came to pass as the week unfolded, Gold settling yesterday (Friday) at 1966 and Silver at 24.55.  ‘Tis a beautiful thing, their new weekly parabolic Long trends each heralded by its rightmost encircled fresh dot in blue:

‘Course the key question from here is:  “How high is high?”  Notwithstanding last Spring’s structural resistance (for Gold in the 2000-2100 range and for Silver in her 25-27 range), let’s recall “average maximum” price follow-throughs.  For Gold’s last 10 parabolic Long trends (dating back to September 2018), the average max upside upon Long trend confirmation is +11.1%:  thus in that vacuum from today’s 1966 level, to reach such “perfect world” average would bring an All-Time Record High of 2184.  Likewise for Sister Silver’s last 10 parabolic Long trends, (in her case dating back to  December 2018), the average max upside (as anticipatively noted a week ago) is +19.6%.  Such increase from today’s 24.55 price, would bring 29.36, a level not traded for Silver since 01 February 2021.

And for Silver, that’s still a far cry from her All-Time Record High of 49.82 on 25 April 2011, the Gold/Silver ratio on that day a mere 32.1x versus today’s 80.1x.  The century-to-date average of that ratio is now 67.7x.  Pricing Silver to that puts her at 29.04 … which is not far from the just-cited 29.39 potential upside follow-through per the new parabolic Long trend.  ‘Tis one of those things that happily makes you go “Hmmm…”

“Hmmm…” (not necessarily happily) also applies to the state of the Economic Barometer.  Hardly is it humming along, but neither is it sputtering to a stop.  From this past week’s load of 16 incoming metrics, 8 showed period-over-period improvement, 7 were worse, and arguably the most important of all the data points — Core Personal Consumption Expenditures — again came in at +0.2% (an annualized rate of +2.4%) for the month of July.  Such rate of this Federal Reserve-favoured inflation gauge means the Open Market Committee  — some say — shan’t further raise their Banks’ Funds Rate for the balance of the year.  On verra…

To look at the Econ Baro year-over-year, its net neutral state may argue that the Fed simply go to bed, i.e. “Everything’s great!”  Dow Jones Newswires just went on record with August’s StateSide jobs report as “near perfect”.  And as for equities, Bloomy concluded the week with “Stock Traders Get Back to Believing Everything is Just Perfect”.  Perfection abounds.  And why not?  Oh to be sure, risk-free three-month U.S. “no debt ceiling dough” settled the week at an annualized rate of 5.268%, whereas the “all-to-risk” S&P 500’s yield is a paltry 1.507%.  BUT:  it doesn’t matter for neither do earnings, our “live” price/earnings ratio for the S&P finishing the week at 40.6x, not quite double the S&P’s 66-year lifetime median ’round 23x.  (Best not to wreck everyone’s fun).

Regardless, here’s the Baro with the S&P 500 today at 4516, only -5.9% below its all-time closing high of 4797 from back on 03 January 2022:

So just as “The Sky’s the Limit!” for the S&P — clearly as ’twas in November 1980, August 1987, March 2000, October 2007, February 2020 and January 2022 (from which “corrections” then ranged from -25% to -58%) — ’tis no surprise that the mighty Index again tops our year-to-date standings of the BEGOS Markets with both Gold and Oil rounding out the podium, (albeit a distant second and third).  Note Silver’s seriously lagging percentage performance; hence the aforementioned G/S ratio still historically high at 80.1x:

Too, it being month-end plus a day, ’tis time to go ’round the horn for all eight BEGOS Market components across these past 21 trading days (one month) incorporating their diagonal grey regression trendlines and the baby blue dot depictions of such trends’ day-to-day consistency.  Notably therein is a most material move by Oil.  Indeed as we twice tweeted (@deMeadvillePro) during the week, Oil initially en route to the 75-72 zone then defied its “Baby Blues” with a great gusher into the highest weekly close (86.05) since that ending last 07 November (then 88.96).  As for Copper’s up gap, we can thank the price premium in rolling from the September to December cac:

As to Gold and several of the key precious metals’ equity offerings, let’s next look year-over-year at their respective percentage performance tracks.  From the bottom up, note that only Newmont (NEM) by this time frame is in the red, -5% as its weathers costs associated with acquiring Oz-based Newcrest Mining.  Then to the good we’ve Pan American Silver (PAAS) +9%, the Global X Silver Miners exchange-traded fund (SIL) +12%, Gold itself +14%, Agnico Eagle Mines (AEM) +17%, Franco-Nevada (FNV) +19%, and the VanEck Vectors Gold Miners exchange-traded fund (GDX) topping the stack at +22%, (although well off its May highs, as is the entirety of the bunch).  But all ought benefit in anticipating higher metals’ prices near-to-medium term as the new weekly parabolic Long trends kick into gear:

Meanwhile per the past fortnight, Gold’s Market Profile below left depicts trading support in the 1945-1942 zone, whilst Sister Silver below right has slipped a pip below her most dominantly-traded price of 24.60.  These of course shall wither away as higher levels come into play:

Toward closing, here’s our chart of the sedimentary Gold Structure by the month from a dozen years ago-to-date.  Gold’s present All-Time High of 2089 was established on 07 August 2020 as the response to COVID shut down the world.  Yet now that Gold has flipped to a brand-new weekly parabolic Long trend, as noted the typical average follow-through can well break the Triple Top into uncharted territory toward 2184.  And when viewed by the rightmost monthly bars, it makes the nattering nabobs of Gold negativism appear nonsensical:

Heaven forbid your being a precious metals naybob…

…for that’s where you ought put your bob:  into Gold and Silver!

Cheers!

…m…

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

The Gold Update: No. 719 – (26 August 2023) – “Gold Grips a Bit, but Silver Rips!”

by

The Gold Update by Mark Mead Baillie — 719th Edition — Monte-Carlo — 26 August 2023 (published each Saturday) — www.deMeadville.com

“Gold Grips a Bit, but Silver Rips!“

This past week wherein Gold finally garnered a wee bit of grip, ’twas Sweet Sister Silver who showed how to rip!  Whereas Gold settled yesterday (Friday) at 1943 for a +1.3% weekly gain, Silver settled at  24.285 for a reigning +6.8% weekly gain.  Let us thus duly start with the white metal in revisiting a few phrases from recent of these missives as below dated:

  • 15 July –> “How many times have we herein written ‘Don’t forget the Silver!‘”

     

  • 12 August –> “…from the ‘Means Reversion Dept.’ to price Silver via the century-to-date mean [Gold/Silver] ratio of 67.7x puts it at 28.76, (i.e. +21% above today’s 22.75).  Again:  ‘Got Silver?’”

     

  • 19 August –> “Silver’s ‘Baby Blues’ … are just starting to curl upward, whilst price sits just above major trading support (22.75) in the Profile … Can Sweet Sister Silver actually lead Gold?  Absolutely!“

And so justifiably it came to pass this past week that Silver indeed did rip, and moreover, she did so before Gold itself at least sought some grip.  In fact:  all-in from Silver’s low of 22.265 on 15 August, it took but six trading days for price to touch 24.430, a low-to-high gain of +9.7%.  Had you been impossibly lucky enough to have bought that low and sold that high for a gain of +2.165 points, your single contract gain (at $5k/pt) equated to $10,825 … or as a deep-pocketer had you instead bought 100 contracts, your six-day gain equated to $1,082,500 … (just in case you’re scoring at home).  Visually, here are the respective cumulative percentage tracks (per net daily closes) for Silver and Gold from two weeks ago-to-date, wherein the latter still looking rather flat is saying “Gimmie more lift, baby!”

Significantly intrigued by Silver’s finally coming ’round, we warrant her being paired with Gold in displaying the weekly bars and parabolic trends for both precious metals from one year ago-to-date.  In each case, such trend remains Short (per the declining red dots), but with prices knocking on their respective doors to flip Long:

Indeed with Silver less than one point away from flipping her trend from Short to Long, the question is begged:  “How much farther does Silver then climb?”  Answer:  across Silver’s past 10 weekly parabolic Long trends (extending back into December 2018), the “median maximum” price gain from each Long confirmation at week’s-end until again flipping back to a Short trend is +13.2%, and such average max gain is +19.6%.  Strictly in that vacuum, were Silver’s trend to flip Long in the ensuing week at 24.870, a match to that median max gain would bring 27.480 — and further to the average max gain — 29.040.  As for duration, the average Long trend across those 10 prior cases has lasted for 11 weeks.  A lot of statistics there, but the prudent trader/investor looks to both time as well as range in cash management.

“Which means that 90% are not very prudent, right mmb?“

So say various studies, Squire.  Or as a dear futures mentor of ours from many years ago might say:  “They all knew better than the market which is why they’re not around anymore.”  In other words, investing as Smart Alec on a wing and a prayer won’t get you anywhere, (e.g. how’s that “live” 41.5x price/earnings ratio of the S&P 500 gonna work out for ya?).  Scary remains the story there.

As to the “when” for these two precious metals’ Short trends to end:  Gold is 32 points away from flipping to Long with the “Expected Weekly Trading Range” now 47 points; and Silver is 0.585 points away from same with an “EWTR” of 1.315 points.  Thus it is plausible one if not both precious metals’ weekly trends can be Long in a week’s time.  “Stay tuned to this channel for further developments…”

Meanwhile in briefly reviewing our “non-events” take from a week ago, ‘twould seem that (after all the FedMedia hype as was anticipated) both the Fed’s Holiday Camp and the BRICS’ Revamp had almost no sway on our primary BEGOS Markets:  week-over-week, the Bond was +0.6%, the Euro -0.7%, Gold (as noted) +1.3%, Oil -1.7%, and the S&P 500 +0.8%.  Add to that the quiet Economic Barometer producing just a mild thud, and the week on balance (save for that of Silver) was a dud.  Here’s the Baro as Federal Reserve Chairman Powell keeps a tight grip on the money whilst BRICS’ arguably succumbed to its namesake in adding six bricks to its mix:

But let not too much summertime complacency enter your veins as next week’s incoming Econ Baro metrics shall bring both losses and gains.  Wherein this past week was weathered just five economic data points for the Baro, the ensuing week brings 16 metrics, the key highlight being Thursday’s (31 August) release of July’s Fed-favoured Core Personal Consumption Expenditures Index, the consensus for which is an annualized pace of +2.4%, (i.e. +0.2% for the month).  Yet, if you really want to get into the weeds, recall the recently reported/leading July Core Producer Price Index having registered +0.3%; moreover the Core PCE’s 12-month regression level also “suggests” +0.3%.  Too much information perhaps, but should +0.3% be the number, we shan’t be too surprised whilst all around are “expecting” +0.2%.

Either way, one must deem Silver as the anticipated “surprise” of the past week.  Per our tweet (@deMeadvillePro) on Thursday, Silver’s “Baby Blues” of trend consistency were well on the northerly move after pointing to their commencing a fresh up-curl in last week’s missive.  Such is recalled below in the following two-panel graphic of the precious metals’ daily bars from three months ago-to-date with Gold at left and Silver at right.  And specific to the latter, we’ve coloured in red Silver’s bar and dot from Friday a week ago, from which point she truly did go.  Way to rip, Sister Silver!

In so “ripping”, the Gold/Silver ratio in a mere week fell from 84.1x to now 80.0x:  such like week-over-week drop has happened but one other time this year, indeed just recently so from the first-to-second week of July.  Thus our interpretation?   Sister Silver is getting a long overdue bid!

Long overdue, too, to rise from their respective Market Profile basements were both Gold next on the left and Silver on the right.  The volume-dominant supporters and resistors are as labeled:

So with Sister Silver having put in a semaine superbe, let’s wrap it here with something hardly superb.  As you regular readers of The Gold Update know, we’ve become more and more skeptical these recent years of the FinMedia’s foundational grounding and market understanding, (i.e. in referring on more than one occasion to the once-mighty and revered Barron’s as having become a children’s writing pool).  And to wit, we balked again at a headline yesterday from ever-lovin’ Bloomy.  Ready?  “Stock Rally Has a Ways to Go Before Americans Feel Rich Again”.  Instantly, we had a John Patrick McEnroe moment: “You canNOT be SERious!”  What rally is being cited?  ‘Course having virtually vanished from essentially the entirety of bullish market musings is the “E” word (Earnings) — which themselves haven’t actually vanished — but are, on balance, unsupportive of the S&P 500’s present level (4406 and its ghastly-high aforementioned P/E of 41.5x).

In fact, let’s go all the way back to The Gold Update penned on 28 January with respect to the S&P:  “The S&P is today priced at [then] 4071. Morgan Stanley already is well on the record of it reaching down this year to 3000. We anticipate sub-3000. The P/E reverting to its historical mean (22.4x) suggests — were there no growth in earnings — 2313.”  Yet to be fair for Q2 Earnings Season, as you know S&P cap-weighted profits grew at a +6% pace; but the overall level (as just stated) remains Index unsupportive.

Regardless, from here with just over four months remaining in 2023, ‘twould be a terrific tumble:  from today’s S&P 4406 level to 3000 = -32% with 87 trading days to go.  Has the S&P ever fallen by -32% within 87 trading days?  Of course it has:  during 1987, 2002, 2008, and most recently in 2020.  Shall it so do in the remainder of 2023?  Until we see fear at the website’s MoneyFlow page, the answer is “No” and our sub-3000 notion we’d have to forego.

Still, let us also reprise that:  “Marked-to-market, everybody’s a millionaire; market-to-reality, nobody’s worth squat.”  Or translated for you WestPalmBeachers down there: shall you be out of stocks before it all goes wrong?

And better yet: be in Gold and Silver!

Cheers!

…m…

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

The Gold Update: No. 718 – (19 August 2023) – “Gold’s Bottom-Seeking Descent; BRICS Seeming a Non-Event”

by

The Gold Update by Mark Mead Baillie — 718th Edition — Monte-Carlo — 19 August 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Bottom-Seeking Descent; BRICS Seeming a Non-Event“

Gold just completed its 10th down week of the last 15, “spot” settling yesterday (Friday) at 1890 and the far more actively-traded December contract at 1918.  Regardless, where is the bottom?

Such bottom-seeking descent hasn’t actually been that dire:  basis December from its 01 May settle of 2081 to today’s 1918 is a price decline -7.8% across those 76 trading days.  Within that period, the yield on three-month money has increased from 5.000% to now 5.278% whilst the liquid StateSide money supply (“M2”) has shrunk from reaching $20.89T (per 02 June) to now $20.70T.  Thus in turn, the Dollar Index has increased from 101.885 on 01 May to now 103.350, as “less is more”.

‘Course you long-time readers of The Gold Update well know that such conventional wisdom “resistors” are futile. For when Gold goes, it goes.  Recall the six-month run from January 2010 through June 2010 wherein even as the Dollar Index rose some +10%, Gold in stride rose nearly +7%?  Or with respect to interest rates when from 2004 through 2006 the Federal Reserve’s Funds Rate rose from 1.00% to 5.00%, Gold therein rising +59% (from 402 to 639)?  So again now, with respect to Gold today:  where is the bottom?

Let’s assess Gold’s weekly bars and parabolic trends from one year ago-to-date:

 

Our best sense is that Gold is near — if not at — its bottom for this red-dotted parabolic Short trend, (now 13 weeks in duration).  Note the two green support lines for the 1901-1893 zone:   1901 is the trend’s overall low from the week ending 30 June; and 1893 is the oft-reliable mid-point of the 1975-1811 support structure established during those weeks ending 03 February through 03 March.  Were that zone to go — to which we say “No!” — 1811 would then become ripe for consideration.

To be sure, the market — today 1918 — is never wrong; yet neither is Gold’s value — today 3719 — mathematically to Dollar debasement.  And since Gold is overwhelmingly priced in Dollars over any other currency, let’s briefly consider some FinMedia bantered-upon tricks by the BRICS.

Thus with a tip-of-the-cap to our “Who Knows What to Believe Dept.” as Brazil, Russia, India, China and South Africa gather in the latter for the ensuing week’s meeting, speculation is significantly rife over a variety of outcomes.  “Yet another new currency regime”, they say, (indeed a curious combining of the “5Rs”:  Real, Rouble, Rupee, Renminbi, Rand).  “The world’s new reserve currency”, they say. “And it’ll be pegged to Gold”, they say.  “But it won’t be convertible to Gold”, they say.  And the “they says” continue ad nauseum.  For what ’tis all worth, (which perhaps is nothing), we deem the outcome of it all as a non-event, and further that ’tis (whatever ’tis is) already priced into the primary BEGOS Markets (Bond, Euro, Gold, Oil, S&P 500)

Still, we’re a bit bemused again by the speculation of pegging a new currency to Gold yet without convertibility thereto.  Given Gold primarily is transacted in Dollars, then is the new currency not in that sense pegged to the Dollar?  And given the Dollar itself is (as are all the fiats) based on nothing, a BRICS currency is but another money mix.  It thus might well be based on cereal box of Trix.  You can see where the logic in pricing falls apart.

Moreover, what would you pony up to buy a “5R”?  If the BRICSters desire creating a new currency, great:  go for it.  We’ve had ’em all though history, some notables being various Dinars, Kwanza , Pengo, various Pesos, notorious Reichsmarks, et alia.  Remember too 97’s Asian Contagion and 98’s Russian Debt Crisis?  So what’s another pile of bad actors’ BRICS anyway, eh?  “Got Gold?”  To reprise the late, great Richard Russell:  “Gold’ll be the last man standing.”

In fact, let’s see how Gold has been standing across the past dozen years.  As vastly undervalued as the yellow metal remains, the bent of price’s daily settles from what was then (on 22 August 2011) Gold’s All-Time Closing High of 1900 to today has at least regained resiliency even as StateSide “M2” has since more than doubled!

“But mmb, you did write back in 2011 that Gold was too high…“

Absolutely correct, Squire.  But run the regression vis-à-vis Dollar debasement across the last four decades and — even accounting for Gold’s own supply increase — valuation today is the aforementioned 3719.  Just in case you’re scoring at home.  “Tick, tick, tick goes the clock, clock, clock…”  Do not miss out:

Turning to the Economic Barometer, its week produced quite an up-streak.  Of the 14 incoming metrics, 10 improved period-over-period, albeit the National Association of Home Builders portends August’s Housing Starts and Building Permits shall show slowing (when next reported on 19 September).  But quite curious amongst the data was the NY State Empire Index tanking from July’s +1.1 reading to -19.0 for August, whilst the Philly Fed Index was rising from -13.5 to +12.0(!)  Is that indicative of a mass exodus from New York City to so-called “Little New York”?  Stay tuned…

Meanwhile as to this current Econ Baro spike, to borrow from an old Memorex advert of 40-50 years ago:  “Is it real? Or is it inflated?”  This past 27 July we had the first peek at Q2 Gross Domestic Product annualized growth, which at +4.6% — less the 2.2% “chain deflator” — netted a real GDP pace of +2.4%.  In other words for you WestPalmBeachers down there, essentially half of the economic growth seems solely due to inflated numbers:  “Yeah, well we sold less product this year but we made more money ’cause we raised prices!”  Let’s see how long that lasts.  Here’s the Baro:

Therein the red line is of course the S&P 500, this year’s high (4607 on 27 July) we’re ruminating as it for all of 2023.  Yes, our “live” price/earnings ratio for the S&P remains unrealistically high at 44.3x (basically double the Index’s lifetime P/E mean).

That is even more significant given the overall poor quality of Q2 Earnings Season having just ended.  Doubtless you shan’t find the following on your favoured FinTv station:  because we actually do the math, for the 1,867 companies collected, only 49% bettered their bottom lines from Q2 a year ago.  Ex-COVID quarters, that is the worst year-over-year comparative performance since Q3 of 2015.  (‘Course 65% of earnings “beat estimates”, the brokering tool to suck in the ignorant).  And whilst 60% had revenue increases, this bottom-line decline means ‘tis getting more costly to run businesses.  “Uh-oh, say it ain’t so!”  See?  ‘Twasn’t on your FinTV.  From the website, here’s Q2 visually:

Visually for Gold we next go to our two-panel display of price from three months ago-to-date on the left and 10-day Market Profile on the right.  And as much as we hate being right when assessing Gold’s descending baby blue dots of trend consistency, again we say “Follow the blues instead of the news, else lose your shoes.”  (To wit, too, last week’s leading tweets [@deMeadvillePro] on Oil).  As for Gold, price again lies near the base of the Profile:

Then we’ve Silver — whose ratio from Gold is a value-grabbing 84.1x (this century’s mean being 67.7x) — and for whom the like display is looking a bit better.  Silver’s “Baby Blues” (below left) are just starting to curl upward, whilst price sits just above major trading support (22.75) in the Profile (below right).  Can Sweet Sister Silver actually lead Gold?  Absolutely!  (Your homework assignment is to review October-November 2022).  Whoo-hooo!  Here’s the current graphic:

Let’s wrap with a look at the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3719
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2023’s High: 2085 (04 May)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Weekly Parabolic Price to flip Long: 1982
10-Session “volume-weighted” average price magnet: 1945
Trading Resistance: 1923 / 1935 / 1950 / 1960 / 1969
Gold Currently: 1918, (expected daily trading range [“EDTR”]: 18 points)
10-Session directional range: down to 1914 (from 1982) = -68 points or -3.4%
Trading Support: (none by the Profile)
The Gateway to 2000: 1900+
The 300-Day Moving Average: 1851 and rising
2023’s Low: 1811 (28 February)
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf: 1454-1434
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland: The Whiny 1290s
The Box: 1280-1240

To sum, the two big (arguably non-) events in this week next spent are of course the FinMedia BRICS-speculative narratives plus the Kansas City Fed’s annually-sponsored summer camp at magnificent Jackson Hole, to a degree on par with The Who’s (indeed Krazy Keith Moon’s) “Tommy’s Holiday Camp” –[1969].  

So who’s camping your monetary value? Hopefully YOU with Gold and Silver too!

Cheers!

…m…

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

The Gold Update: No. 717 – (12 August 2023) – “Ain’t Just Gold Been Headin’ Down…”

by

The Gold Update by Mark Mead Baillie — 717th Edition — Monte-Carlo — 12 August 2023 (published each Saturday) — www.deMeadville.com

“Ain’t Just Gold Been Headin’ Down…“

Before we graphically elaborate on this week’s double-entrendre Texas-speak title, let’s be up front as regards a mis-guided inference from a week ago.  Therein we wrote with respect to Fitch’s downgrading StateSide credit from AAA to AA+ that:  “…it remains to be seen if raters Moody’s and S&P follow Fitch…” to which a charter reader of The Gold Update pointed out S&P already having dropped their rating to “AA+” 12 years ago.  Given we command accuracy in all that leaves these fingertips, this correction is obligatorily warranted.

Now in transiting from Kings’s English to this missive’s title drawl of “Ain’t Just Gold Been Headin’ Down…“, we begin with the following graphic normally reserved for our month-end missives.  ‘Tis our ’round-the-horn view of all eight BEGOS Markets across the past 21 trading days, (i.e. from one month ago-to-date).  The day-to-day consistency of the grey diagonal trendlines is denoted by the baby blue dots:

And quite clearly — save for Oil remaining bold even as the Dollar maintains a currency toehold — hardly is it just Gold that’s been getting sold; rather ’tis the balance of bunch, (again ‘cept for Black Gold).

Further, the firming Dollar suggests the Federal Reserve’s foot is “expected” to stay on the interest rate pedal, (or again as a long-time StateSide colleague would quip, the Buck continues to “lead the ugly dog contest”).

Indeed wholesale inflation — which for you WestPalmBeachers down there leads retail inflation — just recorded for July finds the Core Producer Price Index having made its largest monthly pace leap (+0.4% from June’s -0.1% to now +0.3%) since that for March 2022.  Such suggests the Fed’s money noose looks to remain tight rather than return to loose.  Recall too the Fed-favoured Core Price Consumption Expenditures Index through June still ran a bit in excess of the Fed’s 2% annualized inflation rate; the July PCE reading is scheduled for 31 August with the Open Market Committee’s next Policy Statement not due until 20 September.  And a lot can happen (understatement) between now and then.

Within the debiting deluge we turn to Gold’s weekly bars and parabolic trends from a year ago-to-date.  And even initially inclusive from two weeks ago of +40 points of December futures premium over spot, Gold has been unable to break above the red-dotted Short trend, price settling out the week yesterday (Friday) at 1946, (still +33 points over spot’s 1913 level).  To break said trend in the ensuing week requires a rise of at least +43 points (from 1946 up through 1989), which technically is “in range” given Gold’s “expected weekly trading range” is now 50 points.  Specific to statistics, century-to-date Gold is now in its 48th weekly Short trend, the average duration from 2001-to-date being 11 weeks, this current stint now 12 weeks.  Thus if stretching for positives, one might opine that the current trend is getting a bit “short in the tooth, partner”…

Meanwhile, still “short” on establishing any kind of trend these days is the Economic Barometer, this past week’s 10 incoming metrics finding six having improved — and thus four having not — period-over-period.  “But it’s an uptrend!”, they say.  “No it’s a downtrend!”, they say.  To be sure, the yo-yoing chop-chop continues it way:

‘Course, within the overall FinMedia rah-rah of inflation nearing the Fed’s 2% target such that another “pause” is in the offing, we’re nonetheless told that borrowing money to purchase real estate is nearing a cost of 7%.  Why so high if inflation is so low?  Seems quite the large income spread for the bank that pays some 3% to collect some 7%. Yet as Q2 Earnings Season drifts towards its close, in glancing at banks’ earnings, about 40% of those reporting had lower bottom lines than in Q2 a year ago.  The good news is:  at least that sudden spate of bank illiquidity during this past March quickly stopped, right?  “Whew! That was close!” 

As for the S&P 500, at least it finally is correcting, albeit thus far to a rather wee extent.  From the year’s high of (4607) to yesterday’s low (4444) spans just -3.5%.  And given our initial S&P Futures target from that top is 4455, having since reached down to as low as 4459, we’re nearly there, albeit as herein previously penned:   “Other in-house measures suggest the 4300s.” As well, our “live” price/earnings ratio for the S&P 500 — which recently was nearly 60x — has come off, such reading now still an otherwise ridiculously-high 44.8x given annualized risk-free dough pays 5.265% at the three-month T-Bill window; (the yield on the “all-to-risk” S&P is now 1.526%).  Still, we believe reversion to the mean will out:  it always does.  (Anyone remember the March 2009 month-end P/E of the S&P?  13.3x).  Too as we tweeted (@deMeadvillePro) this past week, mind the website’s MoneyFlow page, its leading measures of late now weaker than the decline in the S&P itself.

“Also don’t forget that we’re getting close to September, mmb…“

A little seasonal spice there from our Squire.  Indeed, September into October have on occasion been torrid times for stocks.  Certainly the stars are well-aligned for fallout this time.  But then again, they’ve been well-aligned as such since the days of COVID came to be with nary a material pullback to see.

In the interim (short or long as it may be) what we can below see are the 10-day Market Profiles for Gold on the left and for Silver on the right.  Therein we’ve present prices (Gold 1946 and Silver 22.75) buried at their respective bases.  Moreover as noted in Gold’s aforeshown weekly bars, the Gold/Silver ratio is now 85.5x, the highest week-ending level since that on 23 June (86.0x).  Again from the “Means Reversion Dept.” to price Silver via the century-to-date mean ratio of 67.7x puts it at 28.76, (i.e. +21% above today’s 22.75).  Again:  “Got Silver?”

So as these “Lazy-Hazy-Crazy Days of Summer” –[Nat King Cole, ’63] now work through the so-called “Dog Days of August” let us not be too remiss to “check out”.  For the data drums continue with the ensuing week’s slew of 14 incoming metrics for the Econ Baro, including the Conference Board’s lagging “Leading Indicators” for July.  Uptrend?  Downtrend?  The consensus leans to the latter.

Thus what’s on your platter?  Hopefully Gold!

Oh nice touch there, Squire, on the Sam Pepys’ Silver plate!

Cheers!

…m…

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

The Gold Update: No. 716 – (05 August 2023) – “Gold is Always AAA; the USA? uhhhhh….”

by

The Gold Update by Mark Mead Baillie — 716th Edition — Monte-Carlo — 05 August 2023 (published each Saturday) — www.deMeadville.com

“Gold is Always AAA; the USA? uhhhhh….“

We’ll get underway with our title’s “uhhhh….” 

To which you wily readers weren’t surprised a wit this past Tuesday upon “Forever First Fitch” downgrading the credit rating of the dear ol’ USA from AAA to AA+.  For as herein penned 10 weeks ago (on 27 May):  “Rating agency Fitch (which always figures to be first) is said to be ‘considering’ a downgrade of its StateSide credit rating.”

‘Course in classic Rodney Dangerfield empathy, Fitch initially “got no respect”, the S&P 500 back then blowing off any threat of a StateSide downgrade by instead rising +9.6% right through this past Tuesday.  But late that day suddenly appeared the actual downgrade and the S&P Futures immediately lopped off -26 points (basically a whole day’s range of S&P Index trading) in just two minutes.  Further on Wednesday, Fitch too cut Fannie and Freddie.  “Oh no, say it ain’t so!”  

Either way, Fitch justified the credit rating cut given an “erosion of governance”, toward which the Secretary of the Treasury took umbrage, Old Yeller disparaging the downgrade as both ‘‘puzzling” and moreover “unwarranted”.  Still at long last, “It all going wrong” may be more materially underway.  Duly noted however (for the present) it remains to be seen if raters Moody’s and S&P follow Fitch (as on occasion is their wont).  We’ll wax a bit further on the state of the stock market, but next let’s go to our title’s “AAA” for Gold!

Now as we cautioned a week ago, Gold’s COMEX contract volume has since rolled from August into December as is the norm at this time of year. Yet ever so noticeable this time ’round was the +40 points of (already eroding) premium of December over August (for the storage cost rationale we’ve previously detailed), the older contract going out as usual essentially at “spot”.

Thus in charting Gold’s “continuous contract”, price has the appearance of having gained +19 points (+1.0%) by the weekly bars, whereas in reality price instead dropped -22 points (-1.1%) settling yesterday (Friday) at 1943 vs. December’s 1978.  Regardless, one might deem that 35-point difference as “noise” given Gold’s “expected weekly trading range” is now 52 points.

Still, Smart Alec may be tempted to Short the futures at 1978 on the vapid assumption that Gold shan’t go anywhere these next several months such as to collect 35 points of ShortSide profit (which at $100/pt/cac on 100 contracts would net Alec a profit of $350k).  Our view, ‘natch, is that Gold shall go the other way (i.e. up) and ’twill be Alec that shan’t have gone anywhere but down, (let alone be around anymore).  But the weekly bars certainly shall be.  Here they are from one year ago-to-date, with the “spot” change as also noted:

And even as you WestPalmBeachers down there can figure, with Gold now (1978) just 18 points below the ensuing week’s flip-to-long level (1996), that 52-point weekly range expectation can easily get us there.  Yet, ’tis critical that we be fair:  through the past trading month (21 days), both Gold and the S&P 500 have been in positive directional correlation (i.e. moving both up and down together) as too have been both the Bond and the Euro; indeed Oil is the only primary BEGOS Market (Bond / Euro / Gold / Oil / S&P) that has wandered up-and-away from that bunch.  Still, such notion puts us in mind of 2008’s “Black Swan” when all five primary BEGOS components simultaneously suffered (the least so the Bond and Gold).  The point is:  if the S&P has put in its high for this year (4607), as it continues to tumble, shall Gold so ride astride, or ideally move up against the tide?  We think broadly the latter will out, but for the present, here are the percentage tracks of Gold and the S&P 500 from one month ago-to-date:

As to the StateSide economy, this past week’s set of 13 incoming metrics for the Economic Barometer was nearly a replay of the week prior.  Six metrics improved, six worsened, and one was “unch”.  Thus the Baro looks stuck in a crunch:

And no, Pinocchio, the Baro does not lie, albeit we oft wonder about the jobs data.  Wednesday’s ADP Employment report for the rate of job growth in July declined by -29% (from June’s 455k to 324k) whereas come Friday, Labor’s Payrolls rate increased by +1% (from June’s 185k to 187k).  Again as we oft quip, it depends upon who’s crunching what.  Too for June, the Factory Orders rate did well (from +0.4% to +2.3%) … but the rate of Construction Spending fell (from +1.0% to +0.5%).

And now just beginning to fall is the stock market.  As we tweeted (@deMeadvillePro) this past  Wednesday:  “Following a streak of 41 consecutive trading sessions as “textbook overbought”, the S&P finally is coming off a bit.  (The record across the past 44 years is 59 days).  Seeking initially Spoo 4455 on this downleg.” (The “Spoo” is the long-beloved nickname for the S&P 500 futures contract).  And ’tis well on its way toward the noted level from the past week’s high (4635), having settled yesterday at 4498.  Other in-house measures suggest the 4300s.  And then more broadly there’s this:

“Ahh, the P/E’s ‘inevitable’ (as you would say) reversion to the mean, eh mmb?“

Spot-on steady you are, Squire.  Since instituting the honestly-calculated “live” price/earnings ratio of the S&P 500 a decade ago, you clearly can see the P/E (green) always reverts to its evolving average (red).  Let’s too be honest about the “E”:  thus far in Q2 Earnings Season, some 80% of S&P 500 constituents have reported, their combined capitalization-weighted EPS increase from a year ago being +6%, a respectable gain fairly in line with the rate of inflation (of which the stock market is a hedge).  The problem remains that stock prices collectively indexed per the S&P 500 — vis-à-vis earnings — are terrifically expensive, especially given the positive interest rate environment, (such extreme risk variance upon which herein we’ve gone on ad nauseam).

Nevertheless with respect to the above P/E graphic, let’s do the foreboding math (a rarity in financial management these days).  The “live” P/E today is 54.9x, varying vastly from your stockbroker parroting that “it’s twenty-something”.  The evolving average is 40.3x.  Thus to bring the “P” in line with the “E”:  the reversion calls for an S&P 500 price “correction” from today’s 4478 down to 3290, (i.e. -27%). As well — rightly or wrongly — we’d written earlier in the year for the S&P perchance to reach sub-3000; or as our initial reader (one J.G.S.) from the inception of The Gold Update quipped away back in 2009:  “There’s always the overshoot”.  And by the above graphic, indeed there regularly is negative overshoot down through the red line.

Further we again remind:  had COVID never occurred such that the money supply had never ballooned, the top of the S&P 500’s 50-year regression channel today would be 2800.  Isn’t math wonderful?

As for the usually “rah-rah for ratings” FinMedia, we credit Bloomy with having come ’round to reality a bit, their headlining this past Tuesday that “Stocks pull back from July rally on weak earnings”, albeit we did ask ourselves for the bazillionth time “They’re just figuring this out now?”  ‘Tis why we maintain the Earnings Season page at the website, which deep into Q2 results shows 50% of some 1,400 reporting companies having beaten their bottom lines from a year ago … which means 50% have not so done, (just in case you’re scoring at home).

Let’s next move on to assess Gold’s scoring via the following two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  (Note:  both panels are fully in December contract pricing; to view the effect of the aforementioned 40-point premium gap, please see the website’s page for either “Gold” or for “Market Trends”).  Either way, yesterday Gold was well in play as you can see by its rightmost daily bar, even as the baby blue dots of regression trend consistency continue to descend.  As for the Profile, the most dominantly-traded price in December terms for the past fortnight is that 1972 supporter, the overhead resistors as also labeled.  And yes, Virginia, by the December contract, Gold in the past two weeks has traded to as high as 2022, just 67 points below the 2089 All-Time High from basically three years ago to the day (07 August 2020):

The like setup is much the same for Silver, her declining “Baby Blues” (at left) nearly identical to those for Gold; and as for her Profile support (at right), Sweet Sister Silver is sitting right on it at 23.70:

Peering into next week, the more generic (i.e. less Fed-favoured) July inflation data takes center stage.  And by consensus at the retail CPI level, the headline number is again expected to be +0.2% with the core rising to +0.3%; and at the wholesale PPI level, both the headline and core numbers are expected to increase from June’s +0.1% to +0.2%. In other words: “expectations” are that inflation shall not have slowed but instead picked up during July.  And stocks still are way too high.  And the Econ Baro is hinting goodbye.  And the StateSide credit rating has gone awry.  To quote the late, likeable sports broadcaster Dick Enberg:  “Oh my!”

And thus the bottom line for today:

Don’t become “fitched to be tied” like the USA; go with AAA Gold all the way!

Cheers!

…m…

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

The Gold Update: No. 715 – (29 July 2023) – “Gold Behaving; Stocks Still Raving!”

by

The Gold Update by Mark Mead Baillie — 715th Edition — Monte-Carlo — 29 July 2023 (published each Saturday) — www.deMeadville.com

“Gold Behaving; Stocks Still Raving!“

Let’s start with this, courtesy of the “It’s Not About Us Dept.”

A week ago we herein thoroughly vetted the state of these Big Three eventualities:  Gold’s stop, Fed’s pop, S&P’s flop.

Thus in the spirit of the late, great Meatloaf:  ““Two Out of Three Ain’t Bad“–[1977] here’s a swift three-bullet update:

  • As penned for Gold: “…we can thus see the 1940s-to-1930s near-term…” price in turn this past week reaching down to 1942;
  • As penned for the Fed: “…preparing for another +0.25% FedFundsRate pop…” which unsurprisingly came on Wednesday;
  • As penned for the S&P: “…concluded its 34th day as “textbook overbought … akin to nearly falling off the edge of the Bell Curve…” now instead having extended through 39 days!

But wait, there’s more per this seasonal note:  as July comes to a close each year, Gold is seeing its COMEX contract volume roll from that for August into that for December.  Annually, this the largest volume transfer leap by months for any of the BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500).  And given the increasingly higher cost of money, Gold’s contango this time ’round is a whopping +40 points, the largest we’ve ever witnessed for the August-into-December contract rollover.  In round numbers, August Gold settled this past week yesterday (Friday) fairly “spot on” (if you will) at 1959; whereas December Gold settled at 1998.

“Such phenomenon arising from what, mmb?

We love Squire’s occasionally leading question toward making the author look good, (especially in this case as our good man ostensibly worked on vault design in Amsteg). 

But ’tis quite simple:  as interest rates rise, so in turn does the cost to storers of physical Gold; they thus pass such cost on to those obliged to purchase that Gold in the future.  The point is:  when we again meet in a week’s time, the change in Gold’s price for this ensuing week shall “benefit” from a +40 point bump … just in case you’re scoring at home.  Moreover, such bump could lend enough “umph” to flip Gold’s key weekly parabolic trend from Short to Long.  For the present, here’s the picture, the rightmost red dots of declining trend having completed their stint’s 10th week:

Either way, it being month-end (save for a day), scoring the most so far this year as we turn to the BEGOS Market Standings is again the ridiculously overvalued S&P 500, the podium positions still respectively rounded out by Gold and the Swiss Franc.  And pity the poor ol’ Dollar:  back at February’s end, the Buck placed third in this stack, from whence ’tis sunk like a leaden sack.  Thus for you StateSiders contemplating that late-summer spree to The Continent:  how’s that travel budget workin’ out for ya?  Hat-tip ZurichSpots:  the average cost of your two-sip espresso therein is CHF4.50 (i.e. USD5.20).  Your five bucks “Gone in 60 seconds!” –[1974, Halicki Junkyard & Mercantile Co.]  Here’s the table:

‘Course as we all know, the more Dollars there are, the less is their worth.  And even as the Federal Reserve has shrunk the StateSide money supply (basis “M2”) by -6% from $22.05T (18 April ’22) to $20.76T (today), ’tis still nonetheless +34% net since the $15.45T level at the commencement of 2020.  

However, the rate of inflation by the Fed’s favoured gauge (Core Personal Consumption Expenditure Prices) is trending toward the 2% goal per the following graphic.  Indeed, annualizing Core PCE for June (0.2% x 12) we’re nearly there at just 2.4%; but by the 12-month summation, ’tis still nearly double (3.9%) that desired by Jay Powell and his Merry Open Market Committee.  How might this appear and be judged through July’s Core PCE (due 31 August) with the FOMC’s next Policy Statement (on 20 September)?

Too, there’s the old adage that “the rising tide of inflation lifts all boats” which (save for the price of the descending Bond, its yield thus rising) we next see via these grey diagonal trendlines across the last 21 trading days in going ’round the horn for all eight BEGOS components.  ‘Course, the cautionary note now is the “Baby Blues” of trend consistency beginning to run out of puff…

Further, “a lot can happen in seven weeks”, including the Fed having to acknowledge a massive stock market “correction” … at least we continue to anticipate such.  As we penned away back on 28 January with respect to the S&P 500 for this year: “We anticipate sub-3000”, a mere -35% from here (4582 –> 3000).  Simply for our “live” S&P price/earnings ratio now 58.0x to revert — as always happens — to its own lifetime mean of 40.1x (from the year 2013-to-date) necessitates an El Plungo of better than -30%. Too, as we tweeted (@deMeadvillePro) on Thursday, the S&P’s MoneyFlow relative to the Index itself clearly is becoming less supportive.  And ’tis the Flow that leads your invested dough, (to the extent it can be retrieved upon it all going wrong, you know).

Yet fortunately for stock market bulls, earnings generation (or lack thereof) no longer matters.  And you may have caught on to that at which we hinted in last week’s missive.  But this time ’round let’s do the math:

One year ago today the S&P 500 stood at 3819, its “live” P/E that day 30.0x:  the imputed earnings (i.e. price ÷ ratio) thus 127.  Now let’s impute that for today … Oh Dear!  Only 79!  Have S&P year-over-year cap-weighted earnings actually plummeted by -38%?  How come this isn’t on Foxy, nor Bloomy, nor CNBS? (Rhetorical question).  As is our wont to say, the Investing Age of Stoopid continues.

Meanwhile continuing to yo-yo like there’s no tomorrow is the Econ Baro, its 22-year record of directionally leading the S&P 500 having come to a halt during 2020, concurrent with the commencement of COVID.  The following view from one year ago-to-date is not indicative of the StateSide economy being poor; rather ’tis merely reprising the 1995 Chris Isaak piece:  ““Goin’ Nowhere“:

And yo-yoing indeed:  of the past week’s 12 incoming Economic Barometer metrics, period-over-period six were better and six were worse.  Belying the most recent months of the Baro was the first peek at Q2 Gross Domestic Product having picked up by an annualized rate of +2.4%; however, some 48% of total nominal growth was purely inflationary (per the Chain Deflator).  Still, the best of the week’s reports were for July’s Consumer Confidence along with June’s Durable Orders and Personal Spending, all three of those beating consensus and their prior periods, all also revised upwards.  However: the week’s biggest stinker was June’s New Home Sales, which missed consensus and slowed from the prior period, itself revised lower. 

But at least the S&P 500 yesterday recorded a nearly 16-month closing high … whew!  To again quote former Buffalo Bills Head Coach Marv Levy:  “Where else would ya rather be?”  Ummm… Gold?

Speaking of which, again it being all but month-end, let’s next assess Gold year-over-year along with the cream of its equities crop.  From worst-to-first we find Pan American Silver (PAAS) -18%, Newmont (NEM) -7%, the Global X Silver Miners exchange-traded fund (SIL) +8%, Gold itself +13%, Franco-Nevada (FNV) +14%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) +20% and Agnico Eagle Mines (AEM) +30%.  Yet have we said in the past not to pass on PAAS?  Its average ratio to the price of Silver century-to-date is 1.23x … but per yesterday’s settle ’tis just 0.64x.  “A word to the wise is sufficient” –[Plautus and Terentius, 200 BC].  Here’s the graphic:

From latin playwrights to living profiles we go, specifically with Gold’s 10-day Market Profile on the left and same for Silver on the right.  Note that the yellow metal’s pricing is calibrated for the now volume-dominant December contract, whilst the white metal is still attuned to September, both metals well off their respective fortnight highs:

Toward this week’s wrap we bring up Gold’s Structure by the monthly bars from 2011-to-date.  Ripe for the taking remains that “triple top”:

Peeking ahead to the ensuing week’s barrage of incoming Econ Baro metrics, we find four “by consensus” expected to improve, but seven expected to slow, including StateSide job creation.  Which with rising interest rates portends stagflation?

Best to avoid that which is raving and go — as is this wise youngster — with what’s behaving … Gold!

Cheers!

…m…

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

The Gold Update: No. 714 – (22 July 2023) – “Gold’s Push Hits Stop; Fed Preps Rate Pop; S&P Set to Flop”

by

The Gold Update by Mark Mead Baillie — 714th Edition — Monte-Carlo — 22 July 2023 (published each Saturday) — www.deMeadville.com

“Gold’s Push Hits Stop; Fed Preps Rate Pop; S&P Set to Flop“

Quite the trifecta in our title:  Gold, the S&P and the Fed all well in play for the week ahead.

And straightaway we start with Gold — which considering ’tis still within its Short trend — had nonetheless been firming well of late, price having proceeded from 1901 to 1990 across just 15 trading days.  Indeed just a week ago we mused that given Gold’s expected ranginess, price could flip such Short trend to Long basically by month’s end.  Quantitatively that’s still in play as we turn to Gold’s weekly bars from a year ago-to-date, the rightmost re-dotted parabolic Short trend having completed its ninth week in duration.  Given the yellow metal’s having settled the week yesterday (Friday) at 1964, the upside distance to the trend’s “flip price” at 2014 is precisely 50 points — which whilst a stretch with but six trading days left in July — is “reachable” as Gold’s expected weekly trading range is now 54 points:

However:  in that vein, this past week saw Gold’s prodigious push hit a sudden stop on Thursday, well-exemplified by the following two-panel graphic.  On the left we’ve Gold’s past week as charted by 8-hour candles, wherein we see the “push” suddenly morph into the “stop”.  On the right we’ve Gold’s month-to-date view as charted by 12-hour candles, the key there being the lower panel’s MACD (“moving average convergence divergence”) provisionally making a negative cross as encircled:

And specific to that negative MACD crossing, such study at present lists as our best “Market Rhythm” for Gold, as direct from the website’s “Gold” page comes the next chart.  ‘Tis the price of Gold again by 12-hour bars, but this time from as far back as 28 February-to-date:  when the bars are green, the MACD is in positive mode; when they are red, the MACD in negative mode; and the next bar to paint shall be in red upon Monday’s commencement of trading.  ‘Course, hardly are MACD designations perfect, for as is the case with conventional technical studies, they are behind the curve, albeit directionally helpful should price continue to actually “go somewhere” as you can see:

 “But is this negative 12-hour MACD really that damaging to the price of Gold, mmb?“

Actually ’tisn’t, Squire.  But it does give us an idea of how low Gold may go before price resumes northward.  The past eight negative MACD crossings saw price fall by an “at most median” of -20 points or by an “at most average” of -30 points.  Soley in that vacuum, with price today at 1964, such suggestion is we can thus see the 1940s-to-1930s near-term … which for the long (indeed eternal)-term Gold-holder is mere “noise”.  The point is:  be thee not discouraged by perhaps a week of price retrenchment as the Federal Reserve rears its rate hike head come Wednesday (26 July).

Yes the Federal Reserve’s Open Market Committee is preparing for another +0.25% FedFundsRate pop.  As we’ve previously opined, we doubt such desire to raise shall be thwarted by the recent perception  that inflation is slowing:  recall that June’s CPI rate rose to +0.2% from +0.1% in May, whilst that for the PPI rose to +0.1% from -0.4% (i.e. deflation).  Fairly acknowledged however, both measures via 12-month summations are declining.  But:  this is the Fed and ’tis in their head to go with Core Personal Consumption Expenditure Prices, which when last reported for May were running at nearly double the Fed’s desired annualized +2% rate … and which for June shan’t be reported until two days (28 July) following these next Fed Follies (26 July), lest we not also overlook the first peek a Q2 GDP on Thursday (27 July).  Thus following those two post-Fed vital reports, we’ll have “nuthin’ but Fed” through the FinMedia thread right into the FOMC’s 20 September Policy Statement:  you know, “Can the Fed reverse this market crash?” and so forth.  (Keep reading).

And “conventionally”, both Gold and the Dollar are sensitive to Fed interest rate moves.  Moreover, we’re already seeing it.  As comprehensively detailed above, Gold appears poised to retrench just a bit.  For respect to the Dollar, it tends to get a bid given an increased rate of interest.  Which is why from the website’s “€uro” page, we see that currency (similar to Gold’s healthy run of late) having just now penetrated down through our “Market Magnet”, a leading event that perceives lower levels near-term, (i.e. the Dollar gaining back ground against the €uro). To wit the graphic of the €uro (thin line) across the past three months-to-date displaying the rightmost downside penetration of its Magnet (thick line).  See how the Fed can making trading fun? (If you “know” in advance what’s to come): 

As to what’s to come for the S&P, hardly do we see it as pretty.  Rather ’tis primed to flop.  Yes, of course there’s its massive overvaluation, the S&P 500 today at 4536, its “live” price/earnings ratio having settled the week at 57.5x.  And ’tis not getting much help from Q2 Earnings Season:  thus far with 71 constituents having reported, just 56% have improved their bottom lines from a year ago (when the mighty Index was 3962 and the “live” p/e then “only” 31.6x).  What does that say about Earnings relative to Price?  Uh-oh…

But wait, there’s more.  As we tweeted (@deMeadvillePro) last Thursday:  “S&P only -0.7% today (Thu) but the MoneyFlow drain was the most for any one day since 13 Sep ’22.  Suggests near-term top is in place.”  The S&P was buffered Thursday by a spritely Dow, (i.e. that Index at which our parents used to look).  But the S&P’s negative MoneyFlow — a favoured leading indicator — was massive as dough poured from these 10 constituents:  Telsa (TSLA), Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), “Faceplant” (META), Netflix (NFLX), Advanced Micros Devices (AMD), and both tranches of Alphabet (GOOGL and GOOG).

Moreover, do you remember what happened from last year’s noted autumnal day of like massive MoneyFlow negativity? From the following day’s high, the S&P careened -393 points (-10%) in a mere 20 days.  And now here we are again.  Such fact hasn’t made it through the FinMedia — their focus being on “how the S&P makes a new high” — but as usual, ’twill become apparent well after the selling has kicked into gear.  Or if all of this is too complex for you WestPalmBeachers down there, as of yesterday’s close, the S&P concluded its 34th day as “textbook overbought”.  That is akin to nearly falling off the edge of the Bell Curve.  Reprise with emphasis:  Uh-oh…

Then there’s the tried-and-true Economic Barometer, which as you long-time readers know from its inception back in 1998 led stock market direction for some 22 years until the Fed’s distortions of the StateSide money supply in the name of COVID essentially made the S&P unilaterally rise despite meager growth in both the economy and earnings.  That cited, the divergence now between the Baro and the S&P 500 is becoming somewhat startling:

The good news of course is that “everybody knows” the stock market never goes down in summertime, (the exceptions being the S&P 500’s double-digit percentage “corrections” during the summers of ’74, ’75, ’81, ’90, ’01, ’02, ’07, ’08, ’11, ’15 and ’22).  Might we press you to another cucumber sandwich and lemonade?

Pressing a bit is this next two-panel view of Gold, its daily bars from three months ago-to-date on the left and 10-day Market Profile on the right.  The rising baby blue dots of trend consistency are as firm as ever, but to remain so, price has to stay on its upside go, else see them kink lower as you know.  And present price in the Profile says it all, that 1965-1963 apex now the support/resistance wall:

Similar yet again is the picture for Silver, her “Baby Blues” (at left) having just eclipsed the key +80% level but with a bit less puff, whilst 25.05 in the Profile (at right) appears more resistive in our sight, with present price 24.78 having slipped a mite:

So quite a lot there to digest from this week’s missive, with material we trust you find useful if unavailable anywhere else.  And speaking of anywhere, a lot is on table for all of our BEGOS Markets (Bond, Euro/Swiss, Gold/Silver/Copper, Oil, S&P 500) as these next days unfold, the FOMC’s Wednesday’s rate hike certainly to play into the mold.  But you know what monetarily to love and hold:  Gold!

Cheers!

…m…

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

The Gold Update: No. 713 – (15 July 2023) – “Gold Garners Glow; Stocks Go Whacko”

by

The Gold Update by Mark Mead Baillie — 713th Edition — Monte-Carlo — 15 July 2023 (published each Saturday) — www.deMeadville.com

“Gold Garners Glow; Stocks Go Whacko“

On the off chance you somehow missed this past Monday’s early morning tweet (@deMeadvillePro) with Gold then wallowing about in the 1920s, here ’tis:

“Gold’s ‘Baby Blues’ have confirmed moving above their -80% axis, indicative of higher price levels near-term; a run to the overhead 1980-2020 support structure would not be untoward; still, the broader weekly parabolic trend remains Short”

Thus for the nonillionth time, we repeat:  “Follow the Blues…”  Here’s the animated picture by the day from one week ago through yesterday (Friday) as Gold went on the ascent:

Indeed for this past week, Gold’s low-to-high gain of +50.5 points was on a percentage basis its best (+2.633%) in over three months (since the week ending 06 April) toward settling yesterday (Friday) at 1959, the high en route being 1969.

Enthused by it all, as email-queried a most-valued charter reader of The Gold Update:  “When is Blast-off Time?” We responded in part as follows:

“’Blast-Off Time’ is a function of getting the herd awake and engaged … albeit the weekly parabolic trend remains Short until ‘tisn’t…” 

We below see such remains the case through now eight weeks of descending parabolic red dots, the prescient wee green support line nonetheless still marking the precise recent low, (should it not later let go): 

And what the professor therein is going on about per Gold’s EWTR (“expected weekly trading range”) being 55 points — the distance from present price (1959) to the parabolic “flip trend” price (2024) being but +64 points — is that Gold appears well within range of reaching up there in a couple of weeks, (save for the cruelly conniving COMEX crushers coming first to the fore to beat price down more, as is their ardour).

Either way, ’tis good to see Gold getting a bid as “’tis said” inflation is shutting its lid, the Dollar Index in turn having just traded to as low as 99.260, a level not seen since 05 April 2022.

‘Course, you know, and we know, and everyone from Bangor Maine to Honolulu and right ’round the world knows:  the StateSide June inflation reports this past week for both the retail and wholesale levels are not those at which the Federal Open Market Committee preferably view; rather ’tis Core Personal Consumption Expenditures pricing, which for June shan’t be reported until 28 July, two days after the FOMC’s next Policy Statement of 26 July.  And you’ll recall, the annualized May Core PCE reading was nearly double that ultimately sought (+2%) by the Fed, which of course on 14 June “paused” … but prematurely?

Or as put forth this past week in a headlining opinion piece by one Peter Morici to Dow Jones Newswires:  “Fed fumble on inflation has left the U.S. economy vulnerable to stagflation.”  No argument here.  Further as SanFran FedPrez Mary Daly just said:  “It’s really too early to declare victory on inflation”.  In tow, perhaps long-time Fedder (34 years!) James “Bullish” Bullard is stepping down in St. Louis at just the right time to become the Dean of the Boilermakers’ Business School.

Then from the “Fun With Numbers Dept.” came another DJNw piece offering “Measure It Differently, and Inflation Is Behind Us … Gauge U.S. price changes the way Europe does, and inflation was already just below 3% in May.” Right.  That plus a subway token won’t get you anywhere.

But wait, there’s more.  ‘Twas also reported this past week that the larger StateSide banks face growing loan losses, for which Fed ViceChair of Supervision Mike Barr says more capital shall be required.  From where does that come, hmmm?

Or how’s this for an inflation gauge:  when we took up skiing back in ’64 at the eternally-charming Sugar Bowl, a child’s all-day lift ticket cost $2.  As of last season, ’tis $96 for your kid, a 58-year increase of +4,700%.  Inflation indeed.

Meanwhile, incoming metrics to the Economic Barometer have lost all sense of direction, the blue line now tracking as a yo-yo whilst yo-yo’s flock to stocks.  Did you see where the “live” price/earnings ratio for the S&P 500 settled yesterday?  58.2x.  And the Index itself recorded its 29th consecutive day of being “textbook overbought”.  The good news however for the S&P is that math illiterates still parrot the P/E as being “twenty-something”.   Remember that hit by Chicago from back in ’77  “Baby, what a big surprise”?  Oops…   Here’s the Baro:

To be sure, what the stock market does have going for it is the modern-day irrelevancy of earnings.  And the unaware herd feed on it.  Per this past week’s settles, paying 235x earnings for a share of Nvidia is peanuts; to shell out 321x earnings to own Amazon is a steal.  In fact whilst we’re at it, 33 of the S&P 500’s 503 constituents presently have P/Es exceeding 100x.  Again reprising Jerome B. Cohen:  “…in bull markets the average [P/E] level would be about 15 to 18 times earnings.”

Regardless, whilst it appears that money continues to be wantonly thrown at the stock market, this glance from website’s MoneyFlow page suggests Flow relative to Price may finally be just starting to run out of puff, albeit the rightmost panel (one quarter) differential remains on balance bodaciously bullish:

And how about the “VIX”?  Such infamous measure of equities’ “complacency” is down to 13.34:  sub-13 can be regarded as “overly-complacent”.  Got stocks?  (We don’t).  More on that in this missive’s wrap.

Returning to the precious metals (yeah we got those), here is our two-panel graphic featuring the daily bars for Gold (expanded from the aforeshown animated view) on the left and for Silver on the right.  And therein Silver is the real story:  in just the past 16 trading days, the Gold/Silver ratio has dropped from 86.4x to now 77.9x, (yet still well above the century-to-date average of 67.6x).  But ’tis basically a three-week Silver gain of +12.9% versus just +1.8% for Gold.  How many times have we herein written “Don’t forget the Silver!”  Here’s the graphic … Boom!  

So as we next turn to the 10-day Market Profiles for Gold (below left) and for Silver (below right), ’tis no surprise to see Sister Silver essentially at the top of her stack, whereas Gold did back off a bit into week’s end:

And now for the teased wrap.  Since dear old Dad taught us how to read the newspaper stock tables (back during that same year in which we learned to ski), never to this day have we seen our FinMedia colleagues so “All-In!” on the stock market.  The left-hand panel in the following graphic (with a tip of the cap to Getty Images’ iStock Photos) was displayed this past Thursday by DJNw.  Certainly over the many generations of financial reporting, seasoned investors — from Joe Kennedy and his shoeshine boy to today’s few alert folks who are misvaluation-aware — regard such wreckless abandon as “The Top … That’s it.”  

Whether ’tis or ’tisn’t, our view clearly is that of the right-hand panel, if for no other reason than history repeats itself:

And thus: we repeat ourselves as Gold gets some glow but stocks go whacko:  “Got Gold?”

Cheers!

…m…

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