Gold And Greece Both Begin With G...Monday July 13, 2015 15:38
But, oh gee, what does Gold really have in common with Greece? Both have thwarted the will of their investors, Greece's in a sense being those who voted "No" barely a week ago. 'Course, 'tis the lenders who in effect are the real investors. And Greece in a 180° 11th-hour turnabout plea, now aided with parliamentary support, is bowing toward their lenders' will whilst boffing that of the voters. But as an analyst put it in the wee hours yesterday (Friday) on Bloomy Radio when asked if Greece's bending to the wills of the European Union, its Central Bank, and the International Monetary Fund was finally the "icebreaker", the response was 'tis more of a "pick-ax", the results of which shall fail far more swiftly than the many Hellenic months of machinations to date. 'Tis common sense rationale, that.
What really has been axed recently, and not so recently, and for four years indecently, is Gold, whose investors' wills have been thwarted by those who've aborted and shorted, in turn having escorted the yellow metal 180° away from the common sense rationale of wealth preservation in the face of everything being thrown at it as we so oft herein enumerate. Amongst the email traffic this past week came the "M" word ("manipulation"), its unabashed application derailing Gold from behaving as a "normal" market, whether measured factually and fundamentally or in facing fractals and Fibonacci.
From our standpoint, we've recounted in recent missives just how abnormally compressed Gold's "expected daily trading range" (EDTR) has become given all that's swirling about, and the following image puts this into quite graphic perspective. Below, from one year ago-to-date, we've charted the "expected daily trading range" (EDTR) for both Gold and the Dollar Index, two tracks that one ought think move fairly in unison. But Gold's EDTR through better than the rightmost third of the chart has simply dwindled down into a rather inert state, hardly reacting in kind to the lurches seen in the EDTR of the Dollar, notably so since April. Moreover, the dashed linear regression trend lines show us how volatility year-over-year for Gold (despite its mid-chart upside excursion) is essentially flat, whilst that for the Dollar has basically been on the rise throughout. One year ago, Gold's EDTR was 14.4 points; today 'tis 13.3 points. For the Dollar Index, its EDTR a year ago was 0.254 points; today 'tis better than triple that at 0.888 points. The "M" word indeed:
It all brings to mind this quote from George Kennedy (in the role of Ben Bowman) from the 1975 film 'The Eiger Sanction' whilst peering through his scope in assessing the fate of the climbers on the nearly vertical north face of the great alpine ogre: "...they won't be able to come down, they won't be able to go up. They'll be stuck." That's Gold:
"Stuck" indeed is the apropos descriptor we've been employing of late for Gold's price. And as initiated a week ago, Gold is now further stuck back below the new parabolic Short trend of declining red dots that are depicted in this chart of the weekly bars:
To be sure, we know that only about one percent of total global financial asset ownership is in Gold, intrinsically by the mainstream having been cast aside as a relic. And yet the volume of COMEX contracts traded from the days of 2008's Black Swan-to-date has been fairly stable. In fact, the average daily contract volume for the last seven years is 146k; for 2015-to-date 'tis 143K, the difference thus negligible. Yet given the apparent at-large "disinterest", indeed avoidance, of the majority's having anything to do with Gold, clearly the level of volume tells us that 'tis nonetheless being churned: round and round goes Gold toward buttering the bread of those who stay bold. We trust that occurs sooner than later as we're getting quite hungry for higher levels, especially given our scoreboard reading, which by StateSide money supply [M2] growth alone shows Gold ought today be at $2,524/oz. Down here at $1,162/oz., we cue The Who's Roger Daltrey singing "I'd call that a bargain, the best I ever had..."
With respect to the earlier graphic of Gold's trading range not expanding a wit compared to that of the Dollar, such bizarre brain-teaser ought thwart the group-think of the theoreticians out there. So ought this: Gold and the S&P 500 continue to dance together, the reprise of the pas-de-deux ever so present, (if somewhat "short" of elegant):
'Course, 'tis not just Gold and the S&P that are in decline. Save barely for the Bond, the other seven BEGOS Markets all are presently in negative 21-day linear regression trends per the diagonal lines on each market's panel as below shown with daily bars. The "Baby Blues" are the dots indicative of the trends' consistencies. We've purposely shrunk the chart due to space constraints, but the point is to highlight the diagonally negative trendlines. Not too dissimilar a picture now from the insipient uneasiness of 2008's Black Swan, (as if you need be reminded). Here are the last 21 days through week's end:
Next to the 10-day Market Profiles we go for both Gold on the left and Silver on the right. Gold appears entrapped toward the lower end of the trading cluster that spans the 1160s, whilst Sister Silver sits in the mid-15s. Note that both markets per their white bars settled out the week yesterday near, if not on, their most commonly-traded prices (longest bars) since 26 June (10 trading sessions ago). That's "consensus pricing" right there:
Speaking of "consensus", in this instance per the minds of the mainstream thinking that the economy's roaring ahead, we round out this week's missive again with our latest reading of the Economic Barometer.
"Right on the heels of Yellen's thinking they're gonna raise rates this year, eh mmb?"
Well Squire, the Federal Open Market Committee does have a historical hankerin' for hit-or-miss timing. Still, the Econ Baro's trend just since May has been upward, albeit this most recent rescission during July incorporates increasing Jobless Claims, slowing Non-Farm Payrolls, stagnant Hourly Earnings, and declining Factory Orders. But 'tis just noise, right?
"But what about China's crazy stock markets right now, mmb?"
Nothing of which to worry there, Squire. From getting slammed down to seizing up and then zooming up. That, too, is just noise for us, right? Besides, vis-à-vis StateSide, China geographically is half-a-world away. Better still, they make everything and we buy it such that life is good on both continents. No, our focus for the time being remains on the EuroCurrencies' aftermaths from a potential "Grexit", such catalyst to perhaps propel Gold out of its malaise, as currency disruptions, let alone failures, are purported to do.
In any event with Sunday's full 28-member EU summit meeting in the balance, whither go Greece we've yet to behold, but in any event, let's go Gold!