Gold in Top Gear

For on a closing points basis from Gold‘s low of 1683 this past 30 March, price in settling yesterday (Friday) at 1882 has since driven 199 points (+11.8%) higher across those 37 trading days. Apply that rate from your tachometer to your speedometer’s odometer and you’ll find it reads Gold 2713 at year-end. (‘Course hardly is Gold’s undulating circuit a straight-line dragstrip).

Still, like point-acceleration paces happened essentially twice in last year’s COVID-driven “fear-and-debasement” volatility, prior to which we must go all the way back to 2012 to find like points changes up through the gear box. Nevertheless, cue Monsieur Le Chiffre, [‘Casino Royale’, 1967]:

“…Mr. Bond, we aren’t playing for marbles…”

Indeed we are not, for Gold is now being played — and positively so — for real.

So purposeful across the past seven-plus weeks has been Gold’s gain that — even more impressively — ’tis been up and largely through the 1800s’ structural price resistance to which we’ve alluded in recent pieces. Were such pace to continue, Gold would reach our forecast high for this year of 2401 come 08 October. But as inferred, we give all due deference to the “Nothing Moves in a Straight Line Dept.”, albeit ’tis an intriguing mathematical point.

Intriguing as well is the entirety of the BEGOS Markets’ metals triumvirate leading the trading pack from one month (21 trading days) ago-to-date. In the following two-panel graphic at left we’ve the percentage tracks for robust Gold vs. the languishing S&P 500 (the latter in the throes of what traders may in hindsight refer to as a “massive top”). Then at right we’ve a table of those changes for all the BEGOS components plus a few other markets; (and that’s no “typo” at the bottom):

Meanwhile, Team Gold’s engineers are analyzing the overall picture on their monitors, at present displaying the following chart of the weekly bars from one year ago-to-date. The rightmost bar sports Gold’s second-best weekly gain of the year by both points and percentage as the blue dots of the fresh parabolic Long trend ascend. Obviously Gold needs fundamentally to “keep pushing” (a little F1 lingo there) up through the technical resistance structurally created during the decline from last year’s All-Time High of 2089:

“Well mmb, the metals really have their pedals to the metal, eh?”

A fine pun there, Squire, as they truly are flat throttle. So much so that they may have to pit for fresh tyres ahead of what next transpires. Key note: the average low-to-high points gain of Gold’s prior five such parabolic Long trends (extending back nearly three years) is 290 points. The low thus far in the current Long trend is 1766; to then add that “average” of 290 points brings us to the 2056 level, materially near the 2089 All-Time High such that it could be met/exceeded on this run. (“You hoid it here foist!”)

And yet as significantly undervalued as Gold is, there’s plenty of ongoing rationale for the aforementioned fundamental push as we turn to the Economic Barometer. Clearly it took a bit of a caving this past week as the Federal Reserve’s regional indicators for May of both the New York State Empire Index and Philadelphia Index weakened, as did the April readings of both Existing Home Sales and Housing Starts. Oh yes, the lagging indicator of The Conference Board’s Leading Economic Index improved, (but that was from back in April when we already saw the Baro on the rise). But now has it peaked? Have a peek:

Moreover from the “Money Grows on Trees Dept.”, 39 million StateSide households with kids are to begin receiving upwards of $250-$300 per month. “Hey Mabel! We got us a $3,000 raise for the year!” Just like that. (Don’t tell the kids). “Got Gold?”

Elsewhere, the EuroZone (depending on your FinMedia source) is bouncing back from recession, else it already has, or it hasn’t. Meanwhile in Asia, economic activity in China is characterized as “slowing”, whilst Japan’s economy for Q1 outright shrank.

All the foregoing in mind, we remind you as well of last week’s missive “Gold Works Whilst Stagflation Lurks” should you seek a refresher course there.

Refreshing too is our two-panel image of Gold’s daily bars from three months ago-to-date on the left and the 10-day Market Profile on the right. So positive are the two panels that we might have to withstand the contrarian Shorts exposing themselves for a bit, as is their wont. But at the end of the day, both the 1600s and 1700s may well be for Gold’s race car histoire:

Here’s the same setup for Silver (daily prices below left and Profile below right). Relative to Gold, Sister Silver by her Profile has come off a bit; but more importantly she’s been maintaining her historical pricing ratio with Gold (as shown earlier in the weekly bars graphic at 68.0x):

We’ll close it our here with these few observations on what narratives are deemed “important” rather than their focusing on the terrifically overvalued stock market (aka the “Great American Savings Account”):

• We read from our own University of $poiled Children’s Marshall School of Business Professor Paul Adler that “Climate change presents a critical challenge to our capitalist system”; no mention there of the S&P 500 trading at double the value of its earning support, a critical challenge to the Great American Savings Account.
• We read that “Cryptocurrency Has Yet to Make the World a Better Place”; no mention there of our quarterly measure of the S&P 500 MoneyFlow valuing the Index lower than currently ’tis, neither making the Great American Savings Account a better place.
• We read via the FOMC’s April policy meeting minutes that “the Fed should be nimble as the economy recovers”; no mention there that the economy already has recovered (as you regular readers know), let alone any dire implication for the Great American Savings Account when it all goes wrong.

So don’t end up in the financial Armco with a shunt; stay in top Gear with Gold to be out front!

Cheers!

www.deMeadville.com