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

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

Gold’s Marginal High and Habitual Cry

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

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

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

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

 

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

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

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

“Yeah, it snuck right past me, mmb

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

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

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

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

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

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

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

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

  
 
Cheers!
 
 …m…

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

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

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

Another Gold All-Time High is Nigh

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Inflation + Shrinkage = Stagflation

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

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

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

 

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

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

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

 

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

Cheers!
 
 …m…

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

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

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

Gold Garners a Groovy Golden Ratio Retracement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!
 
 …m…

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

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

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

Own Gold with Reason into Bank Failure Season

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Math skills, mmb?

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

maintain sound reason and your wealth domain with Gold!

Cheers!

 …m…

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

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

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

Gold Falters, Treads Water

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

 …m…

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

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

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

Gold Fit to Pull Back a Bit

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cheers!

 …m…

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

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

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

Gold Achieves Our Forecast High for This Year

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

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

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

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

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

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

 

 

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

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

As to the Stateside economy, inflation and the Fed, the FinMedia still can’t seem to get the word “cut” out of their head.  Steadfastly — despite much math to the contrary — ’tis expected that the Federal Reverse shall cut rates this year:  except that there shan’t be three cuts, rather one, and not (so they now say) until after Summer.  Or perhaps not at all based on what former TreasSec Larry “Oh Not That Guy” Summers just said this past Thursday, (hat-tip Bloomy):  “You have to take seriously the possibility that the next rate move will be upwards rather than downwards…”  (We assume he’s actually done the math and/or regularly reads The Gold Update).

And to be sure, at the level of retail inflation, the Consumer Price Index (CPI) for March printed increases of +0.4% for both the Headline and Core readings.  Annualized, that pace is +4.8% and the 12-month summations are Headline +3.3% and Core +3.8%.  The “good news” is:  at the wholesale inflation level, growth in the Producer Price Index (PPI) slowed in March, which can in turn “lead” to lower CPI levels.  On verra, but no matter how we slice it, inflation remains running above the Fed-desired +2% annualized pace — and should it not be trending down that way — they may just have to raise.

Either way, in an otherwise light week of incoming data for the Economic Barometer, sustained inflation at the retail level along with other metrics’ deterioration still keeps us in mind of stagflation.  Notably (but not widely focused upon), February’s Wholesale Inventories tied for their worst backup since those of December 2022, indicative of product not moving so well.  Too, the University of Michigan’s “Go Blue!” Sentiment Survey for April declined from that for March.  Thus which way does the Baro itself march?  Have a look (should you dare) from a year ago-to-date, the stock market poised for a downward skate:

And just in case you’re scoring at home (courtesy of the “How Can We Fool ‘Em Today Dept.”) as regards The President’s “inflation was skyrocketing” comment:  when “they” took office on 20 January 2021, the 12-month summed data through December 2020 was as follows:  CPI Headline +1.3%, its Core +1.5%, PPI Headline +1.4% and its Core +1.3%.  (Oopsie Joey…)

Too, the “Casino 500” appears at long-last to be encountering an oopsie of its own, having recorded back-to-back down weeks for the first time since those ending last 20 and 27 October.  Our honestly-calculated capitalization-weighted “live” price/earnings ratio of the S&P is now 45.3x and the yield but 1.384%, whilst risk-free U.S. three-month dough pays an annualized 5.230%.  (A word to the wise is sufficient).

To our two-panel Gold graphic we go, featuring the Daily Bars from three months ago-to-date on the left, and 10-day Market Profile on the right.  The baby blue dots of trend consistency clearly depict Gold’s strong uptrend, albeit the Profile shows us how far the yellow metal fell from grace just yesterday (the white bar being present price):

 

And with the same drill for Sister Silver, both her Baby Blues at left and Profile at right fairly mirror those of Gold.  Silver’s high this past week of 29.905 hadn’t previously traded since 01 February 2021.  Yet, the Gold/Silver ratio remains historically high at 84.4x versus the century-to-date average of 68.2x.  By that average given Gold today at 2360, Silver “ought be” 34.67 (rather than the present 27.97).  So obviously whilst Gold fundamentally remains cheap, Silver remains super cheap!  Here she is:

To sum it all up with further Gold highs intact, let’s wrap with the stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3722
Gold’s All-Time Intra-Day High:  2449 (12 April 2024)
2024’s High:  2449 (12 April 2024)
10-Session directional range:  up to 2449 (from 2249) = +200 points or +8.9%
Trading Resistance 
(Profile selection):  2413
Gold’s All-Time Closing High:  2391 (11 April 2024)
Gold Currently:  2360, (expected daily trading range [“EDTR”]: 44 points)
Trading Support (Profile selections):  2358 / 2346 / 2304 / 2292 / 2278
10-Session “volume-weighted” average price magnet:  2340
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2023
The 300-Day Moving Average:  1996 and rising
2024’s Low:  1996 (14 February)
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

Next week brings 13 metrics into the Econ Baro, plus Q1 Earnings Season ramps up, notably featuring financial institutions.  We indeed sported a wry smile yesterday over the FinMedia’s concern of Wells Fargo (WFC) having beaten earnings “estimates”, but the stock then falling “on the news”.  Perhaps ’twas because the company actually made less money than a year earlier, (but we’re not supposed to point that out).  Best to point to that which broadly makes money and secures your world of wealth:  Gold!

Cheers!

 …m…

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

The Gold Update: No. 751 – (06 April 2024) – “Gold ‘Overbought’ is Great!”

The Gold Update by Mark Mead Baillie — 751st Edition — Monte-Carlo — 06 April 2024 (published each Saturday) — www.deMeadville.com

Gold ‘Overbought’ is Great!

We’ve penned it before, so let’s pen it again:

“Gold when technically overbought [as clearly now ’tis] might actually be considered a good thing … [as] great bull markets (or the resumption thereof) do breakout as such.”

That quintessentially describes the nature of Gold’s price over the past five weeks.  And the Gold bid is substantive:  the combined COMEX trading volume of Gold from 04 March-to-date is the largest for any five-week stint since the world balked at COVID in 2020.  Back then, the price of the yellow metal after having settled the prior year of 2019 at 1550, powered up to 2089 come 07 August 2020, a nearly +35% increase in 152 trading days:  that All-Time High then remained in place until ’twas eclipsed more than three years later this past 27 December.

Moreover, Gold’s June contract settled yesterday (Friday) at 2349 inclusive of an intraday 2350 All-Time High, just 25 points shy of our predicted 2375 high for the entirety of this year.  Further, Gold’s “expected daily trading range” (EDTR) is now 35 points:  so priced today at 2349, Gold is within a day’s range of reaching our 2375 target.  (Yes there are some +20 points of eroding premium in Gold’s futures price, but again given the EDTR is 35 points, such excess is at best noise).

“And it’s not too late to buy, right mmb?

Actually, Squire, in the broader picture — especially as “under-owned” as remains Gold — hardly is it late:  rather, tis still early!  We only mention this to dispel any investor concerns of having “missed the move” as Gold has still so far up to go.  Oh to be sure, ‘twould be untoward technically for Gold not to pullback near-term; but fundamentally Gold remains extraordinarily inexpensive relative to U.S. Dollar debasement, such valuation by our opening Scoreboard now 3720.

The key point here is:  Gold finally and rightly is getting repriced to a somewhat more reasonable level, albeit still well below said Scoreboard valuation.  Again, that is broad-term.  As for near-term, our 2375 looks ripe for the taking; indeed you may remember our couching that level as “conservative” when we first made the call; (see via the website The Gold Update from last 30 December, entitled “Gold – We Conservatively Forecast 2375 for 2024’s High”).  And now year-to-date, Gold is +13.4%.  As for year-over-year, ’tis +15.3% in turning to price’s weekly bars from 05 April a year ago, the rightmost blue-dotted parabolic Long trend now increasing its upside acceleration:

‘Course the thrust of this missive is that ’tis great when Gold becomes “overbought” as price climbs high into the sky.  Still, from the infamous “Nothing Moves in a Straight Line Dept.” Gold right now is truly, technically over-extended.  We thus update the following telling graphic from the website wherein we chart the daily closing prices from this time a year ago-to-date astride the smooth valuation line, (a near-term analytic unrelated to the broad-term Scoreboard valuation).  Those of you familiar with this proprietary measure know the drill:  when price breaks above or below the smooth line, ’tis the direction in which to trade, (albeit Shorting Gold is a bad idea).  Recall the smooth line is derived from relative price changes amongst the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500) as the flows between these critically important entities is significantly substantive; hence the inception of BEGOS some two decades ago.  Here’s our two-panel valuation view:  

Per the graphic’s lower panel (price less valuation), specific to Gold, a 100-point (on either side) deviation is considered “extreme”, and we’re essentially now +200 points above valuation.  Such extreme distance in concert with Gold almost at our year’s forecast high of 2375 can present a near-term reversal of fortune, (and if anything, an opportunity to add to one’s pile).  Whilst the extent of a reversal is unknown, the +200 level has basically been reached only three other times:  first on 22 August 2011 after which price within a year dropped by -19.8%, then again briefly on COVID-crazy 15 April 2020, the third time being on 06 August 2020, which then saw price similarly drop within a year by -19.4%.

So is another -19%ish drop within Gold’s cards?  We don’t see that a wit.  For positively, note on the above graphic the remark pointing to recent structural support just below 2200.  As we penned back in our 09 March piece:  “…gone are the days of the 1900s…”  Should this new “repricing” of Gold remain true to inevitable form, indeed those “days” ought well be histoire.  Thus the bottom line is:  Gold’s pending price plight shall morph into dip-buyers delight.

Yet for the StateSide economy, our Economic Barometer seems biased a bit more toward plight rather than delight.  Job creation in March was fairly firm, notably per the ADP Employment data having bettered consensus, as well as having improved over that for February, that month in turn having been revised higher.  But in looking at the past week’s Initial Jobless Claims as well as February’s Trade Deficit and Consumer Credit, all three worsened from the prior period, of which was revised lower in all three cases, and all three were worse than consensus.  Indeed, have we of late mentioned the word stagflation?  You know we have, especially given the graphic depictions in recent editions of inflation rising and/or still trending above the Federal Reserve’s 2% target.  More on inflation specific to the BEGOS Markets following this view of the Baro (with the inane “Casino 500” in red) from one year ago-to-date, “Oops…”:

Indeed one wonders if the earnings-lacking, nearly-yieldless S&P is at long last putting in a top.  (Yes, ’tis wishful thinking, right?)  We nonetheless stick to history at some point repeating itself yet again — and that mathematically — a third “correction” of worse than -50% across the past 25 years is justifiably in the cards.  ‘Course, preventing that is math no longer being employed in portfolio management.  But just when ’tis said: “It’s different this time”, it turns out not to be.  Perhaps “AI” shall save it all from going wrong … else hasten such.  Would you board a plane piloted by Assembled Inaccuracy?  “Have a nice fright…”  There’s still a lot of “learning” to do out there.

As to inflation, per our musings since the start of this year, we reprise:  “…might renewed inflation be taking first prize?  In other words:  what if the Fed instead tightens  surprise!”  Or as Bloomy printed this past Tuesday:  “Bond Selloff Builds as Fed Seen Delaying Rate Cuts”Oh say it ain’t so!

And yet, the old adage certainly seems in play:  “The rising tide of inflation lifts all boats.”  Or clearly so for the following BEGOS Markets.  This next four-panel display shows the past 21 trading days (one month) for our Metals Triumvirate, plus Oil, all including their baby blue dots of trend consistency.  Across the board ’tis up, up and away!  And those of you seasoned investors and traders know that markets have a hankering to lead that which fundamentally is coming, (which in this case for you WestPalmBeachers down there means more inflation).  Thus just maybe there’ll be a “Fed rate hike?”  We know, “Don’t go there!”  Here’s the graphic:

And specific to the precious metals, next is our two-panel display of the 10-day Market Profiles for Gold on the left and for Silver on the right.  Per the wee white bars, there’s nothing like sitting atop the respective stacks, eh?

To wrap, in that we’ve mentioned inflation, again ’tis on full display next week as the March data arrives at both the retail (Consumer Price Index) and Wholesale (Producer Price Index) levels.  In both cases, consensus expects cooling.  (We’ll believe it when we see it; on this side of the Pond it sure doesn’t feel like it).  Still toward staying first rate:  ensure your nuggets of financial wisdom include both Gold and Silver, as being “overbought” is great!

 Cheers!

 …m…

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

The Gold Update: No. 750 – (30 March 2024) – “Gold Reaps More Record Ground”

The Gold Update by Mark Mead Baillie — 750th Edition — Monte-Carlo — 30 March 2024 (published each Saturday) — www.deMeadville.com

Gold Reaps More Record Ground”

Welcome one and all to the 750th consecutive Saturday edition of The Gold Update.  Having missed nary a Saturday since our first missive (20 November 2009) with Gold then 1151, price since has nearly doubled (+94%), toward settling this past shortened trading week on Thursday at the latest All-Time High of 2234.  Thus we’ve a milestone price for Gold in synch with this milestone missive.

To be sure across the same stint, Gold supply’s tonnage has increased +23% for which we rightly account in the above Scoreboard valuation of 3719; but the U.S. liquid money supply (“M2”) has far more overwhelmingly increased +147% (that’s 2.5x for those of you scoring at home).  ‘Tis reason right there to make sure you own Gold!

So as we turn to Gold’s weekly bars and parabolic trends from one year ago-to-date, let’s again cue Rita Coolidge from back in ’83 with All Time High”:

Gold’s +3.1% (+68 points) gain this past week ranks fourth-best on both a percentage and points basis in better than a year (since the week ending 17 March 2023).  Moreover, the current 2234 level is -141 points shy of our forecast high for this year of 2375, (a further +6.3% gain from here), to which ’tis reasonable to say — with three quarters remaining in the young year — would seem well within range.  Indeed were 2375 to be reached by year-end, ‘twould be a +14.6% gain (from 2023’s close of 2072).  Possible?  Absolutely!  Across the past 49 trading years (from 1975 through 2023), Gold has recorded intra-year gains exceeding +14.6% in 26 of those years.  

As to the three notable near-term Gold negatives we herein cited a week ago, price has only been positive.  Still, recall then that price (per our Market Values page) was +71 points above our “smooth valuation line”:  that deviation is now +116 points which historically is both excessive and generally leads to some natural ebb within Gold’s overall up-flow.  Too, Gold’s daily (not weekly) parabolics a week back had flipped to Short, albeit they’ve now returned to Long.  But Gold’s “Baby Blues” (per our Market Trends page and as we’ll later below see) were — and still are — in decline.

Now including key precious metal equities and the month of March being in the books, we next go year-over-year with the following percentage tracks wherein we find Agnico Eagle Mines (AEM) +14%, Gold itself +13%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -2%, the Global X Silver Miners exchange-traded fund (SIL) -9%, both Franco-Nevada (FNV) and Pan American Silver (PAAS) -18%, and cellar-dweller Newmont (NEM) -26%.  But as lagging as the equities appear, there is a rather robust appearance in their most recent rises.  Notably thereto across the past 32 trading days (since 13 February), whilst Gold is +11%, AEM is +33%.

“Which is the way it’s supposed to be, right mmb?

Right, dear Squire:  live by the equities’ leverage, albeit suffer by it at times within Gold’s overall rich pageant.  Here are the tracks: 

 

However:  returning to Gold’s firm year-to-date performance (thoroughly so through March), and it being not only month-end but quarter-end as well, here are the BEGOS Markets’ percentage-change standings thus far in 2024.  Gold is on the podium with a +7.8% gain, third only to the “Casino 500” (+10.2%) and ever-burgeoning Oil (+16.5%).  Note, too, that the Dollar is +3.2%, contra to the conventional wisdom that it is negative-correlated to Gold, (which as you know plays no currency favourites).  Still, ’tis proof once again that the Buck gets a bid when interest rates are up.  Thus “francly” for the Swiss, ’tis become a complete miss following the Schweizerische Nationalbank’s rate cut as we disclosed a week ago:

Nearer-term in comparing Gold’s trend to those of all the BEGOS Markets, let’s go ’round their horn for the past 21 trading days (one month).  Therein we see the components’ “Baby Blues” depicting the day-to-day consistency of each grey linear regression trendline.  And as aforementioned, Gold’s blue dots are dropping, as is the case for every market, except Oil.  Oh to be sure, Gold’s trend clearly is up; however as those leftmost several days drop off the chart, the slope of the grey trendline shall become less steep.  And as you long-time readers and website followers well know:  “Follow the blues instead of the news, else lose your shoes”, (which for you WestPalmBeachers down there means some Gold selling near-term wouldn’t be untoward).  Here’s the graphic, (the “Spoo” essentially being the “never go down” S&P 500):

As to the StateSide economy, ’twas another week of rather “split” results for the Economic Barometer:  of the 12 incoming metrics, six improved period-over-period, which means six did not so do.  We were a bit alarmed to see February’s Personal Spending leap +0.8% (from +0.2%) even as Personal Income slowed to +0.3% (from +1.0%).  Paying more these days for the same stuff?

Moreover, yesterday (Friday) brought the “Fed-favoured” Personal Consumption Expenditures data, (which given the holiday shan’t face markets’ reactions until Monday).  February’s headline PCE increased +0.3%, the most since September, whilst the Core reading also increased +0.3%, the second-most since September.  Thus the trend of inflation across the past five reported months (Oct-Fed) is rising.

Thus in turn, ’tis no wonder that the FinMedia “call” for three FedFunds rate cuts this year is being subtly scaled back to one … or none … (or are rate hikes not done?)  Too, the Baro recorded further “contraction” in March’s Chicago Purchasing Managers’ Index as well as a pullback in the Conference Board’s measure of Consumer Confidence.  Are you confident?  Or is the notion of stagflation becoming an agitation?  Here’s our year-over-year Econ Baro view, the “Casino 500” yet to encounter its Waterloo:

Through it all as the economy potentially stagflates sans imminent relief for interest rates — with the three-month annualized yield of the U.S. Treasury Bill (5.2035%) nearly four times higher than that of the “Casino 500” (1.384%) — the Investing Age of Stoopid nonetheless rolls upward in comprehensive ignorance to an S&P 500 lacking both earnings support (the live price/earnings ratio now 46.9x) and monetary coverage (the market capitalization/money supply ratio now 2.2x).  Scary continues!

Comforting, however, are the yellow metal’s underlying layers of trading support as we turn to the 10-day Market Profiles for Gold on the left and for Silver on the right.  Note:  the labeled Gold supports are basis the June contract — inclusive of its +21 points of fresh premium (June Gold having settled at 2255) — as April is now put to rest:

And proudly pointing to Gold’s new All-Time High is the happy guy in our 15-year view by the month of the layered price structure.  This year’s Gold goal remains as shown at 2375:

To close — given that the yellow metal is at an All-Time High — nothing could be more appropriate to wrap than with The Gold Stack, with the June contract but one row below debasement valuation:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3719
JUNE Gold Currently:  2255, (expected daily trading range [“EDTR”]: 30 points)
Trading Support (basis June):  2241 / 2232 / 2228 / 2211 / 2199 / 2186 / 2183
Gold’s All-Time Intra-Day High:  2234 (28 March 2024)
2024’s High:  2234 (28 March)
10-Session directional range:  up to 2234 (from 2149) = +85 points or +4.0%
Gold’s All-Time Closing High:  2234 (28 March 2024)
Trading Resistance:  (none)
10-Session “volume-weighted” average price magnet (basis June):  2202
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2023
2024’s Low:  1996 (14 February)
The 300-Day Moving Average:  1983 and rising
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

So there we’ve missive No. 750 as magnificently aligned with a Gold All-Time High.  Will it get any better?  ‘Course ’twill!  Just make sure you make your move with Gold!

Cheers!

 …m…

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

The Gold Update: No. 749 – (23 March 2024) – “Gold’s Fresh Highs; Fed’s Cred Demise?”

The Gold Update by Mark Mead Baillie — 749th Edition — Monte-Carlo — 23 March 2024 (published each Saturday) — www.deMeadville.com

Gold’s Fresh Highs; Fed’s Cred Demise?”

Gold recorded another series of fresh All-Time Highs this past week in eclipsing the 2203 level (from 08 March) in a swift run up to 2225 on Thursday before coming off (as we’ve written “expectedly”) in settling yesterday (Friday) at 2167.  Still, given Gold’s momentum with but a week to go in Q1 of 2024, our forecasted year’s high at 2375 remains rightly reasonable.

But let us again head with the Fed, indeed query if ’tis losing its cred.  Clearly that which we herein penned a week ago “…Obviously the FOMC shall unanimously vote to do nothing with its Bank’s Funds Rate…” is exactly what occurred per the Open Market Committee’s Policy Statement issued on Wednesday.  Our takeaway these many years — rather than watch all the FinMedia bilge — comes from simply reading the Statement, in which for 20 March are these three key sentences:

  • “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.”

     

  • “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

     

  • “The Committee is strongly committed to returning inflation to its 2 percent objective.”

Yet even as inflation is ticking higher — above and beyond 2% — three FedFunds rate cuts remain on the table for the balance of 2024?  What?  “Curiouser and curiouser!” cried Alice…

To be sure, you’ve already seen the inflation tables we’ve presented in recent missives.  So this time, let’s get graphic(!)  Thus from 12 months ago-to-date (March ’23 through February ’24), below are the headline and core charts for the Consumer Price Index (CPI-retail inflation), Producer Price Index (PPI-wholesale inflation), and Personal Consumption Expenditures (PCE-Fed-favoured inflation).  Note:  the PCE February data points are the consensus estimates as the report is not due until next Friday, 29 March (the markets actually being closed that day).  Therein:  each data point is annualized per that month’s reading; each inflation track is accompanied by its dashed trendline; each panel is identically scaled; and the Federal Reserve’s 2% target level is in red.  And again we say:  “We’re going the wrong way”.  Still, Bloomy ran this past week with “The Great Inflation Scare is Fading.”  Clearly they don’t have these charts:

Demonstrably, the rightmost datapoint (February ’24) in every case is above the Fed’s 2% target.  Moreover:  most of the dashed trendlines are rising up and away from that target, the notable exception ironically being the “Fed-favoured” inflation measure of “PCE – Core”, the trend for which is admittedly nearing said 2% target.  But really:  three rate cuts?  How about a rate hike?  (Perhaps we ought apply to be on the FOMC, but the pay cut would be too dear…)

Hardly dear is dear old Gold.  Its present 2167 price is -42% beneath our opening Gold Scoreboard’s Dollar-debasement valuation of 3719.  So to Gold’s weekly bars we go, the rightmost blue-dotted parabolic Long trend now a young three weeks in duration in this year-over-year view:

However, let us temper the rejoicing of Gold Going Great with some present technical negatives, courtesy of the “Party Pooper Dept.”, albeit with this caveat as penned a week ago:  “…they’re clearly stretched to the upside, however great bull markets (or the resumption thereof) do breakout as such…”  That for you WestPalmBeachers down there means Gold when technically overbought might actually be considered a good thing.

Either way, we’ve the following two-panel graphic.  On the left again is Gold vis-à-vis its smooth valuation line from three months ago-to-date.  Price at present is +71 points above the smooth line, the red down arrows suggestive of the eventual meeting of price with value, (that line itself on the rise; the points difference between price and value is at the foot of the panel).  On the right are Gold’s daily candles across the past 21 trading days (one month) along with the Parabolics study that currently is our leading Market Rhythm for Gold:  note the rightmost red-encircled dot which heralds the start of a Short trend.  (Too, we’ll later see Gold’s “Baby Blues” of trend consistency suggesting lower price levels ahead).  Here’s the graphic:

“So, mmb, the question becomes ‘How low is low’, eh?

So ’tis, Squire, (barring the technicals instead catching up to price, which again in a bullish breakout is mathematically natural).  Regardless, in looking above at the right-hand panel of Gold since a month ago, “The Big Move” in round numbers was +100 points from 2050 to 2150.  Thus by structural support, that latter number ideally would be as low as Gold goes near-term.  But with three technical negatives all simultaneously in play (price above value, Short daily parabolic trend, and as noted we’ll see, a breakdown in Gold’s “Baby Blues”), we sense 2150 shall bust, (this past week’s low having already touched 2149, but ’twas prior to Thursday’s 2225 All-Time High).

Nonetheless, does all that mean a full retracement back down to 2050 is warranted?  ‘Tis dependent on buyside enthusiasm:  through the 57 trading days year-to-date, Gold’s average daily COMEX contract volume is 208,633; yet for these past five days, the average is +15% higher at 240,638.  We can therefore say that “Gold is in play”:  however, Friday’s down day (high-to-low from 2188-to-2158) sported Gold’s largest one-day contract volume this year at 391,750, such “mo-mo suggesting more low” should dip buyers wait out more downside show.  ‘Course, broadly on balance, Gold continues to look good to go with eventually higher levels to bestow.

Meanwhile, bestowed upon a needy, stagflative Economic Barometer this past week was improved data for housing.  The National Association of Home Builders Index gained ground in March as did February’s readings for Housing Starts, Building Permits, and Existing Home Sales.  In an otherwise light week for incoming data, the only “negative” metric was a slowing in March’s Philly Fed Index:  but its result (3.2) was positive for just the fourth time in the past 22 months: Fly, Eagles Fly”[Borrelli/Courtland, ’55].  Here’s the Baro:

Yet does stagflation still lurk for the economy?  Next week for the Econ Baro we’ve 14 metrics, just seven of which are expected to show period-over-period improvement.  And again, the aforementioned February PCE, along with that month’s Personal Income/Spending, are to be released on next Friday’s holiday, meaning they can’t be traded upon until Monday, April Fools Day … oh baby.

As for the Casino 500, ’tis “nuthin’ but new highs” as the stock market continues to “price in” the same news over-and-over-and-over again.  Week-after-week we read of the market rising day-after-day because of “Breaking News:  The Fed Will Cuts Rates Three Times This Year!”  The S&P is now “textbook overbought” to the tune of 45 consecutive trading days:  going all the way back to the year 1980, that streak ranks in the 98th percentile of such overbought condition.  Indeed yesterday, Janus’ Bill Gross characterized today’s investing climate as “excessive exuberance”.  ‘Course, Smart Alec shan’t sell his shares until he (along with everyone else) is scared, the broker then crediting his account with IOUs when the money isn’t there*.  (“Pssst:  Got Gold?”)

* As of 22 March ’24:  S&P 500 market cap:  $45.7T; U.S. liquid money supply (M2):  $21.0T.

Next we’ve got more of Gold, and Silver too.  Beginning with the yellow metal is our two-panel display of Gold’s daily bars from three months ago-to-date at left and 10-day Market Profile at right.  Note the “Baby Blues” which depict trend consistency:  we’ve actually coloured the rightmost one in red given its having dropped below the key +80 axis level.  That generally leads to lower Gold levels near-term.  For example:  from one year ago-to-date, such “Baby Blues” slip phenomena has occurred on three occasions, the downside price movement within 21 trading days (one month) ranging from -10 points to -49 points, (i.e. were that to pan out in this case from today’s 2167 level, Gold would head down into a range between 2157 to 2118, just in case you’re scoring at home).  As for the Profile, Gold is now sitting just above the trading support labeled as 2164:

For the white metal, Sister Silver’s resent sweet ascent is now being met with some dissent.  With the like drill as shown for Gold, her “Baby Blues” (below left) have just kinked down, and Profile support (below right) shows at 24.65.  Should Silver sustain a bit of a hit, the high 23s would likely seem fit:

To close, we’ve these few quick quips.

This past Tuesday we awoke to read that Kazuo Ueda and his mates at Nippon Ginkō — for the first time in 17 years — put positive the bank’s overnight lending rate in raising it from -0.1% to a sought range of 0.0% to 0.1%.  Still, it all seems rather wee, but as goes the saying:  “Saké to me, Saké to me, Saké to me…”

This past Thursday with Swiss precision at 09:00 CET, Tommy Jordan and his lads at Schweizerische Nationalbank cut — without scheduled notice — both their key lending and deposit rates to 1.50%.  This in turn elicited the Swiss Franc’s largest single session high-to-low drop (-1.69%) versus the Dollar in better than a year.  Or how would Emmental Robin put:  “Holy cheese, Batman!”

And from the “You Can’t Make This BS Up Dept.”, hardly complete would be the week without having learned from “ABC News!” that according to The World Happiness Report, the Good Old USA no longer ranks amongst the Top 20 Happiest Countries.  Aw shucks.  But when your nation averages some 45 murders per day (per the Kaman Law Firm), ’tis hard to be happy.  Indeed, that’s America, babe:  “Death and Taxes!”

Rather, seek that which is more life-and-monetary sustaining: 

And Gold in any denomination is still Gold!

Cheers!

 …m…

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

The Gold Update: No. 748 – (16 March 2024) – “Gold’s Expected Detinue; Fed HIKE Must Ensue?”

The Gold Update by Mark Mead Baillie — 748th Edition — Monte-Carlo — 16 March 2024 (published each Saturday) — www.deMeadville.com

Gold’s Expected Detinue; Fed HIKE Must Ensue?

We start with the Federal Reserve, the Open Market Committee scheduled to deliver its next Policy Statement this coming Wednesday, 20 March (at 18:00 GMT).

Obviously the FOMC shall unanimously vote to do nothing with its Bank’s Funds Rate, the devil then being in the Statement’s details, followed by those then exorcised by the FinMedia from Chair Powell during his presser.

Now as you regular readers know, we’ve herein mused (albeit not predicted) since the beginning of this year that the Fed — rather than cut rates as everyone expects — instead have to further raise rates if for no other reason than the math suggests inflation is running well above the Fed’s infamous, annualized 2% “target”.

Recall two weeks ago our inflation summary for January.  ‘Tis below on the left.  Since then, the Bureau of Labor Statistics has chimed in for February with both retail inflation (Consumer Price Index) and wholesale inflation (Producer Price Index).  Thus we’ve updated that graphic as now shown below on the right, (February’s Personal Consumption Expenditures not due from the Bureau of Economic Analysis until 29 March).  Regardless:  look at the “Averages” row at the foot of both panels:  we’re continuing to go the wrong way, (i.e. inflation is increasing).  And yet conventional wisdom is staying the rate reduction course“C’mon, man!”  Again, if in red, the metric is ostensibly “too high” for the Fed:

 

But nary a day goes by wherein we don’t read about the “timing” of the Fed’s cutting rates.

So query:  what about the “timing” of the Fed instead rightly raising rates?  Just sayin’ … for after all, math is a marvelous science for detecting the truth.  (‘Course, “Math Class” has been long-removed from many a public school curriculum and replaced with “How to Grow a Tree Class”).  Still, the insistance for the Fed to cut rates remains a core issue for the FinMedia.  Following all this past week’s increasing inflation metrics for February, here are some choice headlines per the parroters:

  • Bloomy:  “Fed gets more reasons to delay interest cuts” (why not raise?);
  • DJNw:  “‘Perpetually optimistic’ investors worry Fed won’t cut rates three times this year” (dumb);
  • CNBS:  “This week provided a reminder that inflation isn’t going away anytime soon” (duh);
  • Bloomy:  “Fed Seen Sticking With Three 2024 Cuts Despite Higher Inflation” (denial).

At least Dallas FedPrez Lorie “Logical” Logan gets it, her saying in January:  “…we shouldn’t take the possibility of another rate increase off the table just yet…”  Too bad she is not (as yet) an FOMC Member.

Also — were the Fed to raise rates — are the fallout issues both for equities and political support.  As you know ad nauseum, the S&P 500 is ridiculously over-extended, (see the historical case in last week’s missive for a material “correction” of some 16%-to-18% within these next three months).  The last thing the Fed wishes to foster is a rate-hike-elicited stock market collapse, especially in a Presidential election year.  As the U.S. Senate in May 2022 extended FedChair Powell’s term through May 2026, ’tis favourable for him not to see a power shift therein should higher rates cream equities.  On verra…

The bottom line is:  if the Fed truly desires annualized inflation not exceed 2%, they need tighten rates, and in turn, tighten belts of America.

As entitled for “Gold’s Expected Detinue” (which for you WestPalmBeachers down there means “a person or thing detained”), certainly so was Gold’s recent advance.  For the week just past, Gold’s net change was -1.2% (-27 points) in settling yesterday (Friday) at 2159.  Why “expected?”  Recall from last week’s piece this now updated graphic of Gold vis-à-vis its smooth valuation line as derived from the relative movement of the five primary BEGOS Markets (Bond / Euro / Gold /Oil / S&P).  Oh to be sure, per the Gold Scoreboard, price (2159) is vastly undervalued given its currency debasement level (3717); but more momentarily per the website’s Market Value graphic, price at present is nearly 100 points “too high” given what near-term typically ensues per the red encircled bits as displayed from one year ago-to-date:

‘Course, across the same time frame by Gold’s weekly bars and parabolic trends, hardly does it get any better than this.  And yet with respect to that just displayed for Gold being some 100 points above its BEGOS Market Value, our weekly graphic’s dashed linear regression trend line is similarly about 100 points below price, (that courtesy of the “Means Reversion Dept.”)  Here ’tis:

Nonetheless more broadly — indeed by the day since 22 August 2011 (when Gold achieved an All-Time Closing High at 1900) — the upward tilt of price looks nice.  This next display retains several of Gold’s more notorious levels of the past, along with this year’s 2375 forecast (green line) as rather ripe for the taking:

But taken for a ride of late — indeed one quite steeply down — is the Economic Barometer.  That combined with increasing inflation maintains the reality of stagflation as detailed in our prior two missives.  In fact, the StateSide economy did get a net bump for this past week, albeit the increasing CPI and PPI headline levels aided and abetted the Baro given “the rising tide of inflation lifts all boats” … until of course stagflation digs in deeply:  “It now costs how much for that?”  Not pretty:

As for the Casino 500, (red line in the Econ Baro chart), its “live” price/earnings ratio is now 45.3x (basically double its inceptive reading a dozen years ago) and the “textbook” measure (a concoction of John Bollinger’s Bands along with the classic measures of Relative Strength and Stochastics) is currently “overbought” through the past 40 consecutive trading days, (historically never sustainable).

Fortunately, both Gold and Silver — especially the latter — remain cheap relative to currency debasement.  For Gold to match today’s debasement valuation, price need rise from 2159 to 3717 (i.e. +72%).  And with the century-to-date average of the Gold/Silver ratio at 68.1x, priced to that per Gold’s 3717 valuation puts Silver from today’s 25.41 to 54.58 (i.e. +115%) … just in case you’re scoring at home.

Drilling down to the near-term view, here next we’ve the daily bars and baby blue dots of trend consistency from three months ago-to-date for Gold at left and for Silver at right:

“Both do look over-extended, mmb…

Squire, they’re clearly stretched to the upside, however great bull markets (or the resumption thereof) do breakout as such.  ‘Course, market participation with a buy-side bias is foundational for the bull to run, and credit due both Gold and Silver, their contact trading volume for the past two weeks having been above average.

Indeed to further focus on the past two weeks, here we’ve the precious metals’ 10-day Market Profiles for Gold (below left) and for Silver (below right), their respective trading support and resistance levels as labeled.  Of note, whilst Gold’s volume is toward the higher prices, that for Silver is around mid-Profile.  But the aforementioned Gold/Silver ratio is now 85.0x, down from 89.1x a week ago.  So Silver is getting a well-overdue bid, price having just closed above 25.00 for three consecutive days, an event not having occurred since last 29 November through 01 December:

Towards the wrap, here’s The Gold Stack:

The Gold Stack
Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”):  3717
Gold’s All-Time Intra-Day High:  2203 (08 March 2024)
2024’s High:  2203 (08 March)
10-Session directional range:  up to 2203 (from 2088) = +115 points or +5.5%
Gold’s All-Time Closing High:  2189 (11 March 2024)
Trading Resistance:  2185 / 2164
Gold Currently:  2159, (expected daily trading range [“EDTR”]: 26 points)
10-Session “volume-weighted” average price magnet:  2157
Trading Support:  2155 / 2135 / 2126 / 2107 / 2092
The 2000’s Triple-Top:  2089 (07 Aug ’20); 2079 (08 Mar ’22); 2085 (04 May ’23)
The Weekly Parabolic Price to flip Short:  2001
2024’s Low:  1996 (14 February)
The 300-Day Moving Average:  1974 and rising
The Gateway to 2000:  1900+
The Final Frontier:  1800-1900
The Northern Front:  1800-1750
On Maneuvers:  1750-1579
The Floor:  1579-1466
Le Sous-sol:  Sub-1466
The Support Shelf:  1454-1434
Base Camp:  1377
The 1360s Double-Top:  1369 in Apr ’18 preceded by 1362 in Sep ’17
Neverland:  The Whiny 1290s
The Box:  1280-1240

‘Tis a fairly quiet week ahead for incoming Econ Baro metrics:  just seven are scheduled, four of which relate to Housing.  Still as cited, The Main Event is Wednesday’s FOMC “maintain the target range” decision.  But in and amongst the Statement, Powell Presser and FedSpeak, might the phrase “rate increase” slip out … just as a little future possibility?  Quel drame, mes amis…

Either way, with Gold paused per its detinue, consider adding more to your metals’ milieu!

Cheers!

 …m…

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

The Gold Update: No. 747 – (09 March 2024) – “Gold Flies to Fresh All-Time Highs”

The Gold Update by Mark Mead Baillie — 747th Edition — Monte-Carlo — 09 March 2024 (published each Saturday) — www.deMeadville.com

Gold Flies to Fresh All-Time Highs

With The Gold Update now in its 16th calendar year and price having just made a series of marginal fresh All-Time Highs these past three trading days (2161 Wednesday, 2172 Thursday, 2203 Friday), on the surface we deem this as a somewhat exciting event, Gold having then settled out the past week yesterday at 2186.

However:  from a more studied purview, ’tis admittedly adequate to couch it all as rather “ho-hum” given how vastly undervalued Gold remains vis-à-vis the above Scoreboard.  Therein, the current market level of 2186 is -41% below the Dollar debasement valuation of 3716.  Or for you WestPalmBeachers down there, Gold still has a very long way to go up — and moreover — that ’twill so do given price historically always catches up to prior high levels of valuation.  This is starkly shown in the above right-hand panel, wherein clearly Gold whilst now nicely getting some up-curl remains well behind the money supply green line’s continuing to unfurl.  And to be sure:  this time ’round such catch-up process is seemingly taking forever.

Still, we take heart in Gold’s having thus far traveled this year some 38% of the route from last year’s settle (2072) toward this year’s forecast high (2375).  And from the “Wishful Thinking Dept.”, extrapolating the current year-to-date pace would place Gold at our 2375 forecast high come 21 June, followed by 2764 for year-end.  ‘Course, hardly are we holding our breath for it to all go that exquisitely perfect, but ’tis nonetheless a tasty technical tidbit.

Further from the “Keeping One’s Feet on the Ground Dept.” whilst such an extensive BEGOS Market (Bond / Euro / Gold /Oil / S&P) movement (be it up or down) naturally pulls price away from our proprietary “smooth valuation line”, as this next graphic shows, reversion to said smooth line eventually recurs over time.  And per the lower panel oscillator (price less valuation), at present, Gold (2186) is +128 points above that line (2058):  obviously the prior two such extremes (red vertical lines) from a year ago-to-date in turn both lead to at least some material near-term price retrenchment. That cited, Gold’s recent peaks across the past three months in the 2090-2070 area appear supportive, (or more optimistically:  gone are the days of the 1900s).  Here’s the graphic:

Next let’s turn to Gold’s weekly bars and parabolic trends from one year ago-to-date.  This past week’s price upthrust comprehensively hoovered away the remnants of the ever so short-lived red-dotted parabolic Short trend, flipping it to Long in fine style per the new rightmost blue dot.  Therein, we can’t help but notice the past two parabolic Short trends could not manage more than three weeks of red-dotted duration.  Gold’s +5.5% low-to-high intra-week gain was the best in nearly a year, since that ending 17 March 2023, and the +4.5% net weekly gain the best since that ending this past 13 October. Think the buyers are in charge?  “YES!!!” indeed:

Meanwhile in charging along with the stagflation theme nauseatingly herein detailed a week ago, the Economic Barometer’s set of 13 incoming metrics produced — as surmised — just five period-over-period improvements, notably with respect to job creation, albeit the rate of February’s Unemployment (despite the increase in Payrolls) jumped two pips from 3.7% to 3.9%.  Still, there were some sore stinkers in the past week’s bunch:  January’s Factory Orders sank at a -3.6% pace, the month’s Trade Deficit was the worst since that of last April, and credit cards rocketed into orbit as January’s Consumer Credit level leapt from $0.9B in December to $19.5B.  “When ya don’t gots da dough, get out da plastic!”  Afterall, there was almost no growth in February’s Hourly Earnings.  And as for the Econ Baro itself, straight down continued as … well … straight down, even as Federal Reserve Chairman Jerome Powell in his Humphrey-Hawkins Testimony remained non-committal toward any near-term change in his Bank’s Funds Rate, (for which as you regular readers know the case can be made to actually increase it).  “Oh, say it ain’t so!”  Here’s the Baro:

“But the S&P 500 keeps sailing right along, eh mmb?

So ‘twould appear, Squire, albeit the mighty Index did just (barely) record a down week (-0.3%), only its third such demise of not just the past the ten weeks year-to-date, but indeed since that ending 23 October … which for those of you scoring at home means the Casino 500 has spun 16 up weeks of the last 19.  How rare are such streaks? On a mutually-exclusive basis, before this run, it had only occurred on two other occasions across the past 25 calendar years (during 2018 and 2011, prior to which was  during 1989).  And following the 2018 stint, the S&P then “corrected” as much as -18.3% within three months, whilst after the 2011 stint, the Index similarly dumped -16.9%.  Also, this Casino 500 is now characterized as 35 consecutive trading days “textbook overbought”.  So Get Ready”–[The Temptations, ’66].

Tempting, too, is the track of Gold, certainly so since mid-February from the rightmost dominant low (1996) in the following left-hand panel of price’s daily bars from three months ago-to-date.  In the right-hand panel we’ve Gold’s 10-day Market Profile with its bevy of volume-dominant support levels as labeled:

Silver’s setup is quite similar with her daily bars (below left) and Profile (below right).  Again to expound upon that which we regulary harp, Silver — given the Gold/Silver ratio now at 89.1x — remains CHEAP!  The ratio’s century-to-average is 68.1x:  plug that into your HP 12C to see where Silver “ought” be(!)

To finish, with 15 metrics due next week for the Econ Baro including the Bureau of Labor Statistics’ reads on the pace of February inflation at both the retail and wholesale levels, we can’t resist going with this closing graphic as — after all — ’tis The Gold Update No. 747:

What fuels your financial jet?  We trust ’tis Gold!

Cheers!

 …m…

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

The Gold Update: No. 746 – (02 March 2024) – “Gold Grabs Center-Stage as Stagflation Starts to Rage”

The Gold Update by Mark Mead Baillie — 746th Edition — Monte-Carlo — 02 March 2024 (published each Saturday) — www.deMeadville.com

Gold Grabs Center-Stage as Stagflation Starts to Rage

A bold title to head this recital, Gold on Friday posting its best low-to-high intraday gain (+2.4% or +50 points) since 13 December toward settling the week at 2092, essentially tying its highest-ever weekly closing price (with that recorded this past 01 December).  To maintain perspective, Gold’s All-Time High remains 2152 (per last 04 December).

Credit Gold’s Friday flight with our Economic Barometer consumed by blight.  Straightaway as the incoming metrics low-lighted economic decay, no sooner had we posted the Econ Baro just after the 16:00 (CET) barrage of negative data that Gold got the bid, the FinMedia in full throat for the Federal Reserve to cut rates.  But as to inflation:  ’tis going the wrong way!

So as succinctly set out in his 2008 tome “When Markets Collide”, one Mohamed El-Erian writes of stagflation as “a situation characterized by disappointingly low economic growth and high inflation.”  Is such situation suddenly starting?  From our bold title, let’s get straight to two bold graphics: first the economy and second inflation.

1)  The Economic Barometer:  just as ’twas all going great for the StateSide economy, the FinMedia consistently reminding us of the successes in having embraced Bidenomics, what just happened?  In turning below to the Econ Baro from one year-ago-to-date, that rightmost vertical drop is its second-worst six trading-day plunge since this time a year ago.  Should such reversal of fortune continue to work its way into the data for computing Gross Domestic Product, that’ll be El-Erian’s disappointingly low economic growth” … Whoomp! There it is!” 

 

 

2) Inflation:  the rampant FinMedia speculation as to the timing of the Federal Reserve cutting rates into rising inflation is one of the most oxymoronic concepts across the financial spectrum in our memory since dear old Dad taught us how to read the newspaper’s stock tables back in the 1960s.  (The other two more glaring incongruities being the S&P 500 trading at double its historical earnings support and Gold trading at half its currency debasement valuation).

Increasing inflation, indeed.  The retching selection of puke-green for the following table summarizing January’s key inflation measures is ever so appropriate.  Therein are the six key StateSide inflation gauges as reported for January, their respective 12-month summations, and January’s pace annualized.  Remember:  the Fed’s annualized inflation target is 2.0%:  every reading in this table above 2.0% is highlighted in red, the average readings now running from 3.4% to 4.4%.  And there’s El-Erian’s high inflation”:

 

To be a FedHead right now is fraught with trying to avoid making a “policy mistake”.  Ostensibly-speaking,  the Federal Open Market Committee is comprised of smart, intelligent folks, (yeah they’ve got the always-lovable Goofball Goolsbee in there); but the FOMC candidly know in their souls that inflation is going the wrong way.  To cut rates is to further stimulate inflation even as economic data deteriorates.  The FinMedia comprehensively expect the Fed to cut; and the Fed has to now deal with the confidence (or lack thereof) of “How can we fool ’em today?”

Therefore: this one-two bold combination of the Econ Baro’s sudden distress and inflation frustration is not a pretty picture.

As to Gold finally getting a bid, ’tis delightfully satisfying to see price bucking its weekly parabolic Short trend.  Even given our expectations for Gold to succumb to said trend which was confirmed three weeks ago, price essentially has gone nowhere but up, and we thus revel in the joy of being wrong, at least to this point.  For as you can next see in our year-over-year graphic of Gold’s weekly bars, price at present has moved well up and away from the underlying 2020-1936 green-bounded structural support zone:

‘Course what really continues to stand out for us is the lagging performance of the precious metals’ equities.  It being month-end (plus one trading day in March), here also year-over-year are the percentage tracks of Gold and those of its key equities brethren.  From worst-to-first they rank as follows:  Newmont (NEM) -28%, Franco-Nevada (FNV) -20%, Pan American Silver (PAAS) -16%, the Global X Silver Miners exchange-traded fund (SIL) -13%, the VanEck Vectors Gold Miners exchange-traded fund (GDX) -3%, Agnico Eagle Mines (AEM) +6%, and Gold itself +13%.  So out of favour remain the equities!  (Nudge-nudge, wink-wink, elbow-elbow…):

As for 2024’s brief stint year-to-date, despite Gold’s Friday upstate, price so far hasn’t done that great.  For in turning to the BEGOS Markets Standings to this point of the year, Gold is up but a wee +1.0%, (even as the Dollar Index is +2.8%, but as you know, Gold plays no currency favourites).  Topping the podium at present is Oil, +11.9% followed by the “Casino 500” +7.7%.  Indeed specific to the S&P, through the first 42 trading days of this year, that +7.7% gain ranks second only to 2019’s stint (+11.4%) across the same number of days.  But there’s a glaring difference between  Now and Then” –[The BeaTles, ’23].  Then the “live” price earnings ratio of the S&P 500 was 30.6x (yield 2.054%).  Now ’tis 46.5x (yield 1.400%.).  Three-month risk-free dough then?  2.375%.  And now?  5.215%.  Yet you’re still in the stock market?  Sheer guts.  Regardless, as the fuse burns off, let’s get to the Standings before the whole thing blows up:

Too, how about Q4 Earnings Season for 2023 which just finished yesterday (Friday).  Within that calendar window, 457 of the S&P 500’s 503 constituents reported their results:  only 273 (60%) improved over Q4 of 2022.  Out of the past 27 quarters, this most recent one ranks ninth-worst as four in ten of the best and brightest from the equities world couldn’t increase their earnings.  And yet the S&P now sits at an all-time high (5137)?  What is going on?  Indeed, we’ve now the Index as 30 consecutive trading days “textbook overbought”.

 “And, mmb, it seems like the S&P keeps going up on the same news again and again…

‘Tis quite diabolical that, Squire.  These days, the S&P 500 goes up on anything, even if ’tis already priced-in a billion times over.

‘Course the precious metals relative to currency debasement remain stubbornly cheap.  Vis-à-vis our opening Gold Scoreboard, priced today at 2092, Gold is -42% below its U.S. “M2” money supply debasement value of 3715, even in accounting for the creeping increase in the supply of physical Gold, (today 213,056 tonnes).  And with the Gold/Silver ratio now 89.6x, to “right it” to the century-to-date average of 68.1x puts Silver (currently 23.35) up an additional +24% to 30.72.  Further, were Gold priced today at that Dollar debasement value of 3715, applying that average ratio puts Silver at 54.56 … just in case you’re scoring at home.  Again, do not forget the Silver.

And as we go ’round the horn for all eight BEGOS Markets by their daily bars from 21 trading days ago-to-date (one month), both Gold and Silver per Friday sport impressive price spikes.  Still by the baby blue dots, the precious metals continue to lack trend consistency:

Next for both Gold on the left and for Silver on the right we’ve their respective 10-day Market Profiles.  Silver’s stack looks a bit more protective by its underlying bars, whereas Gold which moved swiftly over less recently-priced territory appears more porous:

Finally it being month-end plus a day, here we’ve the broad view of Gold’s strata-defined structure across the past 15 years, our 2024 forecast high sitting up there at 2375.  That rightmost candle is 01 March alone:

To sum it all up for this week, we’ve emphasized the Fed having to face what appears as the early machinations of a stagflating economy, a “damned if they do, damned if they don’t” scenario.  Despite all the FinMedia blather about inflation being tamed — given we instead do the math — ’tisn’t.  Our puke-green table with the red 2.0% overages ought be on every news desk in the nation and ’round the world.  (But as is sadly typical, the truth wrecks the narrative).  And as for the suddenly slipping economy, 13 metrics hit the Econ Baro next week, of which just five “by consensus” are supposed to show period-over-period improvement.

Thus as the cost to survive goes on the rise whilst that upon which you rely slips by, ’tis probably a good idea to have a little Gold!  Or a lot of Gold!

Cheers!

 …m…

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

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

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