Gold Rolls Higher on Casters Midst Natural Disasters
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Given a world rife these days with natural disasters, from hurricanes Harvey and Irma, to Mexico's monstrous quake and the madman of the NorK, Gold continues to roll higher, now having recorded "higher highs" in seven of the past eight weeks. High times indeed, for as in the above panel we see that Gold is further above where 'twas at this time a year ago, and moreover seems on a beeline to at least test 2016's high at the storied command post of Base Camp 1377.
With Gold's "expected weekly trading range" now at 29 points, price may well make that climb within a week's time, having settled yesterday (Friday) at 1351. And as graphically described a few missives back, above 1377 there is comparably little price resistance all the way up to the 1600s. As a friend of The Gold Update queried this past week: "Is this IT?"
The inference of said "IT" is for Gold to finally embark on the long-overdue run to a far higher, more sensible valuation. However, "IT" for others is for Gold to conclude what has been a +11% run in just these past eight weeks. The latter inference would be the typical, technically-expected case for a normal market that has been on a good run to now correct. Gold however through much of this millennium was also a market that was normal, rising as it ought in tandem with the StateSide money supply. 'Course come 2011, Gold pushed its tyres (as we say in Formula One) beyond the bounds of adhesion, the driver thus losing control to become but a mere passenger in an abnormal, four-year -45% shunt, completely disconnecting from the ongoing rise in the money supply. So which "IT" is it? Let's update our most favourite Gold chart:
For the present, "IT" to us is what happens as Gold looks to yet again retest Base Camp 1377. Aptly named during Gold's fallout following the 2011 All-Time Closing High of 1900, 1377 became the supporter from where back in 2013 price tried to re-establish itself for a renewed ascent, only to have that level instead become a dominant resistor as you can see across the green line in this next graphic. And note again how swiftly Gold fell prior to its first encounter with 1377; that's a lot of upside, unfettered territory to regain:
'Course as we all know, were support and resistance levels to always limit a market's travel, 'twouldn't go anywhere; rather, 'tis momentum which punches through such levels. So as we turn to Gold's weekly bars, the accelerating blue dots of the parabolic Long trend are indicative of price's "mo-mo". Thus the question remains: should Gold tap Base Camp 1377, shall price then garner further "mo-jo" in its "mo-mo" so as to really "go-go", or succumb again to that which is below? Stay tuned to this show:
Clearly lacking "mo-mo" is our Economic Baro. July's Factory Orders shrinkage of -3.3% was the worst monthly reduction since December of 2015, and the fifth-worst of the last five years. That didn't help the Barometer, albeit the stock market wasn't fazed one wit: our live price/earnings ratio for the S&P 500 (red line) is at an astronomically-high 42.1x:
We know historically that what's "Bad for the Baro" is "Good for Gold" as modern-day economic weakness invariably leads to quantitative easing. So we doubt the members of the Federal Open Market Committee shall raise their Reserve Bank's fund rate come 20 September, let alone for the balance of the year, barring the Baro markedly turning back up.
Still, what if this recent fine run for the precious metals is done? If 'tis, the following graphic shows us where we've support. These are the last three months of daily bars for Gold on the left and Silver on the right. The day-to-day consistency of both markets' 21-day linear regression trends is depicted by the baby blue dots. Should Friday's intra-session selling continue into the new week and the "Baby Blues" finally crack to the downside, the green rectangles of "price bunching" are where we'd like to see price hold. For Gold, that's basically 'round 1300, and 'round 17.00 for Sister Silver:
And speaking of Sis, her mining equities have hardly been up to par this year so far: to date, Silver herself is +13.0% ... but the exchange-traded fund Global X Silver Miners (SIL) is only +10.8% rather than two-to-three times that of the white metal by "expected" leverage, (nudge nudge, hint hint, elbow elbow). Comparatively for Gold, the yellow metal itself is +17.3%, yet the exchange-traded fund VanEck Vectors Gold Miners (GDX) at least is a bit better off at +20.7%, the leverage nonetheless lacking there as well. In either case, what is not lacking is the stellar performance up the 10-day Market Profiles for both Gold (left) and Silver (right):
So with Gold closing in on Base Camp 1377, 'tis worth bringing up the state of the stack:
The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2718
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
2017's High: 1362 (08 September)
10-Session directional range: up to 1362 (from 1281) = +81 points or +6%
Trading Resistance: 1358
Gold Currently: 1351, (expected daily trading range ["EDTR"]: 16 points)
Trading Support: numerous, notably 1344 / 1339 / 1323 / 1314
10-Session “volume-weighted” average price magnet: 1328
Neverland: The Whiny 1290s
The Box: 1280-1240
The 300-Day Moving Average: 1262 and rising
The Weekly Parabolic Price to flip Short: 1231
2017's Low: 1147 (03 January)
Finally, in having alluded to the NorK natural disaster, we've this from the "Endless Conspiratorials Dept." Did you happen to notice anything about the timing of the missile shot over Hokkaido on 29 August and the underground nuclear test on 03 September?
"I did, mmb: they both happened when the markets were closed!"
Spot on is our man Squire. How convenient, eh? The missile flew during the one-hour daily period when the universally-traded GLOBEX was closed, as 'twas during last weekend's nuke test. In both cases, naturally, the Gold futures gapped materially higher upon re-opening, as did the S&P 500 futures gap materially lower. Nicely planned, NorK, but in our book, 'tis cheating. No word yet as to whether the Commodity Futures Trading Commission, Financial Conduct Authority, or the like, have any evidence supporting an investigation of an entity being purposefully positioned ahead of time. But with all that's going wrong with the world out there, from natural disasters and currency debasement to the New England Patriots astonishingly losing their opening game, hang on to your Gold!