Gold - 1500 Quick as a Wit
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Just 10 weeks ago Gold was trading in the 1200s. Now 'tis trading in the 1500s. It can go quickly, (as you've so herein read these many years).
'Course, Gold's recent robust up move is not that much of a surprise, these missives having pointed out time and again that upon price clearing Base Camp 1377 'twould be a straight shot to our "conservative" forecast high for this year of 1434: it took just three trading days. Then expectedly, Gold got stuck in range-bound "flatlining" mode for 25 trading days ... following which price took but one trading week to find the 1500s.
As penned a week ago: "...should we see firm trading 'round 1490, then 1526 becomes very viable before the year is out, indeed quite swiftly so from 1490..."
That phrase "quite swiftly so" clearly was understatement. More apropos would have been "at light speed". Regular readers know that Gold in the 1400-1600 range has exhibited very little trading history, price having plummeted pell-mell down through that zone from November 2012 through March 2013. But contra to many of the world's other major markets, when it comes to Gold, what goes down must go up.
To be sure, Gold's price did not specifically (yet) reach 1526, the high this past week being but 1522.7, (albeit mere trading flutter from our target), before price settled yesterday (Friday) at 1508. But what we found to be absolutely incredulous was the FinMedia comprehensively having missed Gold's initially regaining the 1500s, if not to simply state it being one of those "milestone numbers". To wit:
Gold crossed up into the 1500s this past Tuesday evening (Pacific Time) and by Wednesday morning had already eclipsed 1520. We scanned down the entirety of MarketWatch's "Markets" page: the word Gold wasn't there. Come the end of Wednesday with price having settled at its highest level in over six years, we scanned through Bloomy's main page: nary a mention of the word Gold. Can you believe it? But wait there's more: come Friday morning's wee hours with Gold firmly dancing 'round 1515 came this direct quote from Bloomy via the bedside radio: "The strong Dollar is keeping a lid on things". Really??? One can only surmise that their vaunted "Bloomberg Terminal" must be broken. (The Dollar Index closed down for both Friday and the week as a whole).
Let's go to the truth. Here are Gold's weekly bars from one year ago-to-date, this latest edition now incorporating a new line at our "aggressive" forecast high for this year: 1526 -- which as noted thus far has been missed by mere ticks -- but we've yet to nix:
And as for Big Progress in the Big Picture, take a look at this gem, (no written description necessary):
'Course what defies description ad nausea is the StateSide stock market as measured by the S&P 500, depicted below from this time a year ago by the red line in the graphic of the ever-descending Economic Barometer. Yes the S&P is going through a wee dip, but it always goes back up, right? Yes the "live" price/earnings ratio of the S&P is 34.1x (portfolio theory having taught us that 20x is "expensive"), but the yield of 2.017% is better than boring 10-year dough paying only 1.734%, not to mention PIMCO's Joachim Fels stating that this past week that 'tis "...no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative...”, right? Yes in Q2 Earnings Season only 64% of the reporting S&P constituents have bettered their bottom lines from Q2 a year ago, but 72% have beaten estimates, right? And with 18 fresh metrics due in the new week for the Econ Baro, it, too, can right itself, right? Thus no worries, for life is good, right? Right. Have a look:
Next let's go 'round the horn with all eight components comprising the BEGOS Markets. Each panel shows the daily bars for the past 21 trading days (one month), the diagonal linear regression trendline, and the "Baby Blues" indicative of the trend's consistency. The prior time this graphic was included in The Gold Update was on 06 July, the trendline in every panel then being up. What a difference a month makes, eh? Rising: Gold, Silver, the Swiss Franc and the Bond. Falling: the S&P 500 ("SPOO"), Oil, Copper and the Euro. How are you positioned?
If positioned in the precious metals, you're riding high in Profile style. Here next are the 10-day Market Profiles for Gold on the left and Silver on the right. But what remains uncanny is Sister Silver's still under-performing Gold. Across the past fortnight the yellow metal is +6.3% (or +5.4% without the recently added 13 points of December contract "contango") whilst the white metal is but +3.3%. No surprise thus that the Gold/Silver ratio continues to be maniacally high at 89.0x. Moreover, regressing to the millennium-to-date average ratio of 64.6x puts Silver today at 23.34 (+37.8% above her actual present price of 16.95):
So what's next for Gold? Quick as a wit came Gold 1500. And save for the aforementioned "flutter", price for all intents and purposes has essentially reached our "aggressive" high for this year ... but we've nearly five months still to run with the probability obviously "odds-on" for 1526 and beyond. Yet just as price expectedly stalled out at our "conservative" high of 1434 by "flatlining" for five weeks, we may well see something similar play out here 'round 1526. Let's go back to that which we penned on 30 December 2017 when we first anticipated 1434 and 1526 being met back in 2018:
Â¦ You might recall the ... graphic [which] ... shows us that given the limited amount of time Gold spent in the 1400s and 1500s that 'tis really "nuthin' but air" up to the 1600s. Or as an esteemed trader colleague of ours would quip: "All gaps get filled". Why our specifically targeting 1526? 'Twas the key structural centerpiece low (in May 2012) in Gold's topping process that ran from August 2011 to April 2013.Â¦
Hence the hesitation that may ensue right 'round this region should the technical notion of prior support turning to resistance at Gold 1526 come into play. But if the bee in Gold's butt is big enough, the shaming of the Gold Shorts scarcely has started!