Gold-Dip Wary but the Picture Stays Merry
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Now just stay calm out there despite our starting with the following table which is internally-generated at the close of each trading day:
"But how can that be, mmb?"
Your query reflects that of thousands, Squire, as answered in the following graphic's left-hand panel:
Those of course are the daily trading bars of Gold across the last three months-to-date along with the "Baby Blues" which denote the day-to-day consistency of price's 21-day linear regression trend. And when the blue dots fall below their +80% axis as has just happened (per the red encircled dot), a "sell" signal is generated in the table as shown. That is the technical rule to subjectively regard given the fundamental exception, which is fancy-talk for "it works most of the time".
To wit, we had a like "Baby Blues" dip in early July, price succumbing but then quickly recovering given at long-last a fundamental awakening to Gold's being vastly undervalued by any and all of the 3Ds of Debasement, Debt and Derivatives, further exacerbated yesterday (Friday) with unsettling TariffTweets, FedSpeak and $TrillionSprees, (speaking of "D"s). For just as Gold 1526 -- the key price resistor we herein detailed a week ago -- clearly was capping the multi-month up run, yesterday's "power bar" rise to 1540 nearly printed a new high for this year (1546 on 13 August), the week settling out at 1537 for a net gain from the prior Friday of 13 points (+0.9%). And given our wariness, should Gold dip a bit, per the above right-hand panel, the key trading supporters in the 10-day Market Profile are denoted as 1524 and 1513.
Nonetheless, splendidly adding to the rah-rah for Gold came the regal Mark Mobius presciently telling Bloomy earlier in the week that "I think you have to be buying at any level, frankly, I think Gold's long-term prospect is up, up and up and the reason why I say that is money supply is up, up and up; you know with efforts by the central banks to lower interest rates they're going to be printing like crazy."
That in a nutshell, MM, is the Gold Story. (See, too, our opening Gold Scoreboard's right-most panel).
All that said, should Friday's "power bar" be retraced back down as so often happens with retractions to geo-political protractions, we'll be mindful of the portent of the "Baby Blues" for a price dip near term. Year-over-year there've been five such moves below the +80% axis leading to an average drop of 21 points within an average timeframe of five trading days. Averages of course are hardly precision, Gold's weekly bars maintaining their merry mission:
And in classic counter-correlation to Gold do we find the track of the S&P 500. To be sure, we provenly know that over the long haul both Gold and the S&P are inclined to rise as typically do wealth-valued assets, (save for failures of businesses, countries and currencies as we'll in time see). You may recall from earlier this year our portrayal of Gold and the S&P across the 13-year span from 07 March 2006 through 03 May 2019 as having both risen precisely 130.9%, yet hardly on identical tracks despite the same net increase. For far shorter durations however, we know Gold is in (or out of) play when 'tis in mirror image (either way) to the S&P as we here see from one month ago-to-date (21 trading days):
'Course 'tis the S&P (and moreover "The Dow") that gets a bazillion times more focus than does Gold: which for the latter's bulls ought will out to be wildly profitable upon becoming the broad focus. Remember: just to catch up to StateSide currency debasement alone, Gold's price need nearly double from its present level. Can you say "three thousand"? Thoroughly thrilling.
But for present levels of consternation, we need only look to the Economic Barometer as next shown here along with the S&P 500 from one year ago-to-date. "Now what?" indeed. China "Stop!" FedCuts "Don't Stop!" The S&P looks poised to drop, but just as the Baro beings to hop?
Finally, let's look at Silver. Obviously she's well-adorned in her precious metal pinstripes, producing a "power bar" of her own yesterday in concert with that for Gold. (Rather were she making the dark alley rounds with Cousin Copper which yesterday suffered its second-worst session in the last three weeks, we'd instead see Sister Silver wearing her industrial metal jacket). And in her like two-panel graphic to that shown for Gold, we next see at left Silver's "Baby Blues" having already dipped below their +80% axis back in early August, but with price having nevertheless recovered to remain firm. Her trading supporters per her Profile at right are as labeled at 17.15 and 16.95. But more importantly given Silver's having returned to be regarded as precious rather than industrial -- regardless of a near-term dip for our money metals -- we'll be watching for that which is white to gain ground on that which is yellow given the still historically high Gold/Silver ratio reading now at 88.4x:
To close, all those in favour of paying to tie up your dough for decades say "Aye!" (We can't hear you). But indeed, that is straight out of the "Better to Maintain What You Have than to Lose It Dept." Just freight your funds over to Frankfurt and for a wee yield of 0.69% to the Bundesbank they'll safely custodialize them for 30 years. 'Tis so easy! OR: (double-entendre française), you could just hang on to your Gold!