The Gold Update
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The Gold Update by Mark Mead Baillie --- 379th Edition --- San Francisco --- 18 February 2017 (published each Saturday) --- www.deMeadville.com
"Gold Getting Repelled by Resistance - That's What!"
Having a week ago penned "Gold Reaches Resistance - Now What?", 'tis apt we now pen "Gold Getting Repelled by Resistance - That's What!" for 'twas the case over these past five trading days. Price made both a lower weekly high and a lower weekly low vis-à-vis those of a week ago, albeit Gold's net change for the week was +1 point, settling out yesterday (Friday) at 1236 ... which per the above panel is nonetheless nine points above where we were seven weeks into 2016, (at 1227). Not very impressive, despite Gold's having now recorded six up weeks of seven total into 2017. But given the interim volatility, for the trader who's bought 'em on the way down so they can then sell 'em on the way up, 'tis been money, (" 'em " of course being the miners and their attendant leverage of 2x, 3x, 4x ... ∞x the change in the price of Gold itself). To wit: Gold year-over-year is +0.8%, but the miners' exchange-traded fund GDX is +34.9%, whilst Silver itself is +17.1%, but its exchange-traded fund SIL is +71.9% ... Happy Birthday, baby!
So with Gold now banging on the underbelly of the purple-bounded 1240-1280 resistance zone, let's go to the weekly bars wherein for the past two weeks we see price's valiant forays only barely making it up into that repelling area. We thus either successfully summon some buyers to come in, else this multi-week up streak shall appear to have peaked:
That noted, 'tis actually Sister Silver over which we're a bit more concerned near-term. You know the old axiom: if you put precious metal Gold into a blender with industrial metal Copper and press the purée button, you get Silver. And there's no doubt about it, "The Silver Streak" --(20th Century Fox, '76) of late has been practically pristine-perfect. From left-to-right in the following three-panel graphic we've the daily bars over the past 21 trading days (one month), for Gold, Silver and Copper, with their respective grey diagonal 21-day linear regression trend lines, and the baby blue dots which measure trend consistency.
To be sure, Silver had been running somewhat behind schedule, the average Gold/Silver price ratio millennium-to-date being 62x, its being above 80x from February into March a year ago, and presently still above-average at 69x. Then add in the strength of late from Cousin Copper and 'tis flicked on Silver's turbo-charger. But now with Gold bumping up against resistance and Copper backing off from its mining strike (double entendre) spike, Sister Silver is quite vulnerable to slinking back a bit, barring Gold's gettin' some more giddy-up.
To stretch the point a bit further, here we've the same "Baby Blues" depiction, in this case from three months ago-to-date, with the dots instead represented by the metals' actual colours. Again, these are not price levels, rather measures of trend consistency, Sister Silver clearly of late dancing 'cross the ceiling, but now lacking sympathetic "umph" from Gold and Copper. "Get Crazy"--(Sparks, '83):
Taking a moment to allow your eyeballs to re-align ... we turn next to the Economic Barometer, for which a week ago we were unceremoniously citing its decline.
"But not anymore, eh mmb?"
Well, Squire, we're not putting forth that 'tis been completely righted, however this past busy week of incoming economic data certainly whirled the Baro 'round to the upside. Why, I nearly fell from my chair when I saw the Philly Fed index reading sky-rocket to 43.3, its second highest level in nearly 20 years, (the average reading for which is just 5.6). Strong, too, were the NY Empire State Index, Building Permits and Retail Sales, as were both the Producer and Consumer Price Indices. Here's the picture:
As to how the Econ Baro fares -- with better than three weeks to the mid-March Federal Open Market Committee's potential interest rate trigger-pull -- remains to be seen; but for the present, a portion of the incoming data is heating up, (in spite of the somewhat overlooked Industrial Production reading coming in at -0.3%).
In any event, should the precious metals slip-'n-slide near-term, here are the 10-day Market Profiles for both Gold on the left and Silver on the right, their nearby trading support levels as noted. More broadly for Gold, we view 1220-1180 as structurally supportive, as do we also see 17.30 to 16.60 in the like case for Silver:
As for stacking it up, here is...
The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2662
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
Gold’s All-Time Closing High: 1900 (22 August 2011)
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
Neverland: The Whiny 1290s
Resistance Zone: up to 1280 (from 1240)
2017's High: 1246 (08 February)
Trading Resistance: 1242
The 300-Day Moving Average: 1237 and rising
Gold Currently: 1236, (expected daily trading range ["EDTR"]: 15 points)
Trading Support: 1235 / 1227
10-Session “volume-weighted” average price magnet: 1233
10-Session directional range: down to 1218 (from 1246) = -28 points or -2%
The Weekly Parabolic Price to flip Short: 1151
2017's Low: 1147 (03 January)
Finally for this week we've these few observations:
■ Q4 Earnings Season (with still a couple of reporting weeks to go for the stragglers) is showing the best improvement for companies bettering their prior year's quarter (61%) since Q1 for 2011 (62%); add to that the so-called "Trump Trade" and we've the S&P 500 having crossed above the $20 trillion market capitalization line for the first time. Too bad, really, that the absolute level of earnings still need double to quell our very expensive "live" price/earnings ratio for the S&P presently at 33.9x. 'Tis not like 'twill never go back into the teens, right?
■ Marketwatch this past week referred to the "Trump rally" as "phenomenal". Really? Year-to-date, the S&P is +5.0% ... but Gold is +7.3%, Silver is +12.6%, (and yes, I get it, the miners are up a bazillion percent). But with respect to the stock market, (and our above paragraph), the piece soberly observed that "Of course, things can pivot on a dime."
■ Speaking of which, a survey released this past week by the Federal Reserve Bank of New York found that delinquent new car loans in the US just hit their highest mark since the fallout from 2008's Black Swan. One ought instead purchase a dinghy?
■ The Indian Space Research Organization amazingly crammed some 104 satellites into a single rocket-ship's hold, sending them up into space this past Wednesday and distributing them into orbit, all in a mere 18 minutes. Details of congestion in your next traffic update.
■ Dr. Ted Malloch has been tapped by Trump to tromp on over to Brussels as our Ambassador to the European Union. Already, economists in Greece are bending the doctor's ear for dispatching their use of Euros in favour of Dollars. For us StateSiders, 'twould marvelously eliminate our having to change bills at the local αλλαγή. Might even induce our writing a new episode of "Greek Bonds 'R Us".
This week brings us the minutes of the FOMC's 31 January/01 February get together: recall, there was no press conference following that go-round, so even with Chair Yellen's Congressional testimony this past week, what did the rest of 'em have to say, eh? We'll know on Wednesday!
In the meantime, mind your Gold, especially should it a bit fold.