The Gold Update: No. 745 – (24 February 2024) – “Gold – Short n’ Sweet”

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’”

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?)”

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 GoldThat’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”

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”

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”

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”

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”

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 tightenssurprise!

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”

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 highlightnext 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”

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”

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”

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!”

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 questionhow 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 questionwill 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 anAll 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 GoldGot SilverGot 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”

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”

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”

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”

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”

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?”

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”

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.  Repeatscary.  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”

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 !”

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”

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”

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”

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?”

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!”

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) suggest