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

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

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

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

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

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

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

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

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