The Gold Update
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The Gold Update by Mark Mead Baillie --- 291st Edition --- San Francisco --- 13 June 2015 (published each Saturday) --- www.deMeadville.com
“Gold's Proof of its being Aloof”
'Tis no goof: with all the financial foundation fracturing that even the FinMedia are (finally) finding out there, Gold has seemingly gone aloof. Surfacing are concerns that the "mood" on Wall Street is shifting such that stock markets may actually pull back, (a phenomenon unknown, 'twould seem, to modern-day participants, given that savings account balances aren't supposed to decrease); a Federal Reserve Bank that has gone completely "squish" as to what its Federal Open Market Committee is (or is not) going to decide; so-called "Dollar-strength" at length having become lethargic, (its Index since 13 March having declined from 100.785 to settle yesterday [Friday] at 94.925); plus an Economic Barometer, despite some recent improvement, still far off its mid-December peak. And then there's Greece, its debt dilemma upon which has been so descriptively expounded as to have become a daily soap opera, effectively having run out of grease with the International Monetary Fund negotiators, who've now flown home from the table in Brussels.
Yet with all of these and other examples in play, (we're keen as well on "Experts worry about 'smoke and mirrors' in earnings reports as stocks hit record", not to mention the appearance of egregious cheating that we recently described in a calculation of the S&P 500's price/earning ratio so as to make it appear half of what actually 'tis), Gold -- rather than abounding with at least some kind of safe-haven bid, let alone moving far higher fundamentally -- has instead sort of wandered off the reservation. It does beg the question: "Has anyone seen Gold?" Response: "Who?"
To wit: from the "What's Wrong With This Picture Dept." we've the following chart of the last 21 trading days (one month), wherein the illogicity looks nothing short of spooky. These are the percentage tracks of Gold, the S&P, the Dollar Index, and the Athens Stock Exchange's ("ASE") General Index. Except just barely for the Dollar, the trends are lower, and notably from mid-chart (two weeks ago) onward, each entity is indeed down:
"But what about the Bond, mmb? Thursday was it biggest daily points gain since Halloween of 2011!"
Squire, I appreciate your having read the website commentary there. In fact, we were going to add the Bond the above chart as well, save for the sake of making it look too "busy". Nevertheless, the Bond's net track is similar to those of the entities already displayed, price being -1% month-over-month.
Still, Squire brings up a good point, for the "action" has been in the Bond as well as in the EuroCurrencies, all of which, one would think, ought have Gold in play as well. But here's more proof of Gold's having gone aloof. The following three-panel graphic depicts from one year ago-to-date the expected daily trading range ("EDTR") of points for the Bond (left), Euro (center) and Gold (right). Again these are not price tracks; rather they are weighted measures of daily trading range, and Gold clearly has been cast aside as an irrelevancy:
Indeed the irony of Gold's essentially being ignored borders on iniquity. 'Tis as if Gold has been irreverently discarded into the dustbin. Gold's trading range as shown above has become so compressed that neither is it being materially bought nor sold. Rather, 'tis as if Gold has assumed the role of a sedentary elderly person, seated along a seaside esplanade, sipping a café crème and gazing into space, whilst all around is becoming more turbulent. Let's go to Gold's weekly bars, the parabolic trend for which remains Long per the rightmost ascending blue dots. Although 'tis mathematically impossible to model a parabolic "Flat" trend, such description is quite accurately apt:
Notwithstanding the proof of Gold's having gone aloof, cognizance of its existence hasn't completely eroded. And whilst hardly a plethora let alone a proliferation, have you noticed in just recent weeks the handful of missives out there mulling over Gold's potential to reach levels of $25,000/oz., $50,000/oz., and even $60,000/oz.? Long-time readers of our stuff know we don't overly dwell on what other tried-and-true analysts pen about Gold, their work brilliantly based in logic; rather we simply try to glean as purely as possible our own notions as to what we see in the Gold tea leaves without biasing our brain by the writings of other fine folks. But when one starts seeing such five-figure Gold analyses, we tend to have a look. And as herein stated a week ago, our goal of seeing Gold merely get up to $2,000/oz. seems comparatively tiny. These au courant assessments for five-figure Gold aside, just one one-thousand at a time, please; why even one hundred upside points would be wonderful. (Heck, given the compressed trading range these days we'll take a mere ten! As noted, it took the entirety of this past week just to net a gain of nine!).
As for establishing any kind of near-term up trend on the daily bars, the flow of the Precious Metals trade itself is saying "nein!" Beware the declining baby blue dots that depict 21-day linear regression trend consistency in these three-month charts for both Gold (left) and Silver (right). Again mathematically, the "Baby Blues" cannot eclipse -100%, but the current -94% reading for poor old Sister Silver is her lowest level since 06 October, after which price then continued down further by better than $2/oz. over the ensuing five weeks. Let's hope she shan't repeat that episode. Get a grip, Sister!
Turning next to their respective 10-day Market Profiles, we see left for Gold the once mighty 1189 support/resistance apex now giving way to the 1180/1177 area; but again right for Sister Silver, she's been shoved (per the white bar) down into the floor of her 10-day range, smothered just below her 15.95 resistor:
Now before we get to the Gold Stack and a couple of closing comments, we acknowledged at the outset that the Econ Baro has seen some recent improvement, indeed having recouped 28% of its overall plunge from mid-December through mid-May; it thus warrants getting a look here:
Shall the Baro continue to burgeon back up? The Q2 Economic Outlook survey released by Business Roundtable concludes as reported (with our parentheticals) that "American CEOs plan to hire and invest at a slower pace in the next six months, with future economic growth hinging on trade agreements (Uh-Oh!) and tax reform (Really?)" Stay tuned. In the meantime, here's the present state of the Stack:
The Gold Stack
Gold's Value per Dollar Debasement, (per our opening "Scoreboard"): 2511
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
The Final Frontier: 1800-1900
The Northern Front: 1750-1800
On Maneuvers: 1579-1750
The Floor: 1466-1579
Le Sous-sol: Sub-1466
Base Camp: 1377
Year-to-Date High: 1307
Neverland: The Whiny 1290s
Resistance Band: 1240-1280
The 300-day Moving Average: 1239
Trading Resistance: 1189 / 1201
10-Session “volume-weighted” average price magnet: 1182
Gold Currently: 1181, (weighted-average trading range per day: 13 points)
Trading Support: 1180 / 1177 / 1168
10-Session directional range: down to 1162 (from 1205) = -43 points or -4%
The Weekly Parabolic Price to flip Short: 1155
Year-to-Date Low: 1142
Finally there's this: 'tis said a major catalyst to accelerate Gold higher would be a currency failure. Well, it looks like we've got one, albeit Gold hardly budged on such "breaking news", (broken to be sure being our own StateSide Dollar). Yet the currency breakage to which we refer in this case is that of Zimbabwe, as it bids "sara zvakanaka" to its "worthless" wads, notably the one hundred trillion dollar note, (35,000 of which will get you one US Dollar; to thus buy 1oz. of Gold, you'd need 41,335,000 of those notes, i.e. Z$41,335,000,000,000,000,000 -- which for you West Palm Beachers down there is 41 quintillion 334 quadrillion Z$):
Oh don't look so glum, Bobby: the currency maybe in imbalance, but not so its image of the buoyant Chiremba rock formation. Yes, your Reserve Bank's Gold reserves are all gone, (but for a few coin stacks whose value in toto is that of the typical annual salary for a mid-level Silicon Valley manager), however your country is known for having substantial deposits of Platinum. That'd certainly be a nifty hard asset upon which to standardize some new notes and coins. Then with credit due you, having some hard currency cents may make some common sense to be employed by other of the world's currency comptrollers, treasurers, and exchequers! We gotta start somewhere.
Highlighting the ensuing week's incoming Economic Data is Wednesday's grand salami centerpiece of the June FOMC Policy Decision, surely to be made all the more enticing by a follow-up press conference featuring UC Berkeley Professor Emerita and Fed Head Teller Old Yeller. "Whaddam I gonna say this time?" Go Bears, (for after all, they are "Golden").