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Gold grindin' 'n gatherin' toward groovin

Commentaries & Views

An alliterative title, indeed favourably flowery for Gold's having ground up the so-called "weak longs", its gathering fresh ones and getting grooved for the oft-seasonal price rise into year-end.

That's if at the very least "history repeats itself" as chronologically across the past three years Gold from this date through 31 December has respectively increased a net +4.9%, +2.9% and +2.8%. Moreover at the very most "and then some" is the above Gold Scoreboard's valuation being nearly double present price, which historically we know eventually catches up. In fact, a bar of Gold is practically the perfect stocking stuffer, albeit its weight may tear said stocking from its mooring to the mantle. Just a thought.

"But how do you know about these 'weak longs', mmb..."

My dear Squire, you'll recall some three weeks ago our deeming Gold's price to have been consolidating, only to then correct ourselves in acknowledging its further fallout as correcting. But just as 'tis said that the devil is in the details, so is the verité in the volume. And price declines lacking substantive volume are considered by analysts signs of "weak longs" abandoning the market, oft to the opportunity-thanking "strong longs" as they add to their stack. To wit:

'Tis been 14 trading days since Gold morphed from our cited consolidating into correcting, across which trading volume through yesterday's (Friday's) close at 1844 totals 3,090,344 "front month" contracts. That is the lowest amount of contract volume traded through the like period for the past four years as we see here:

"Out with the weak longs, in with those strong; Out with the weak longs, in with those strong..."

"Way to go inside the numbers there, mmb..."

Which, Squire, is why the data provider is very well paid, their annual subscription increase imminent in the face of nearly no inflation year-to-date per the Consumer Price Index (just +0.9% for 2020 cumulatively through November). But you know what they say: "No data, persona non grata."

'Course always grata is our weekly glance at the following staple of The Gold Update, price by its weekly bars from a year ago-to-date. And the "double bottom" of the prior two weeks 'round the 1770 level in the middle of The Northern Front has since seen Gold battle back up by better than 100 points all told into The Final Frontier. However, with price today at 1844 and Gold's "expected weekly trading range" at 77 points, 'tis still a bit of a stretch to expect the red-dotted parabolic Short trend to be taken out in the ensuing week at 1942. But perhaps that's something Santa has packed away for us in his own big red bag. As for the present, Gold is capable of regaining The Gateway to 2000 in the new week should price bring on some strong longs. That'd be "Workin' on a groovy thing, baby..."--[Patti D '68, 5th D '69]:

To be sure, Gold's net change from a week ago was essentially "unch". But hardly did the Dollar gain any material ground, (+0.5%) following last week's piece "Gold Finally Breaks Ties with the Dollar's Demise". Yet curiously this past Monday, Reuters cited the Dollar as "sturdy" with reference to the Basel-based Bank for International Settlements' concerns over weakening emerging market economies. We're not quite certain what the once-venerable news agency sees about the Dollar as "sturdy" in this year-to-date chart of Gold and the Dollar Index:

Certainly becoming less sturdy of late is the Economic Barometer. On one hand, a Wall Street Journal survey cites sentiment for further recovery slowing through 2021's Q1; on the other hand the National Association for Business Economics sees recovery in full by 2021's end. We sense that the Econ Baro on balance has exhibited quite robust recovery, although the past few weeks have shown renewed weakness, the most recent reports seeing a surge in Initial Jobless Claims, October's Wholesale Inventories backing up, and that month's Consumer Credit significantly slacking. Thus just in time for ski season, the Baro is providing a nice downslope:

Meanwhile from the "Gold Plays No Currency Favourites Dept.", the European Union is all in on spending rather than cutting, (not that such strategy is new), whilst the European Central Bank is further ramping up its Bond purchases and sub-0% bank lending. 'Tis said that Europe's economy is taking a harder COVID hit than has the U.S. (see the above Econ Baro) such that 'tis our sense the Euro (having climbed from $1.07 in March to $1.21 today, +13%) shall whirl right back down again should the U.S. continue to firm yet Europe squirm. Add, too, any trading fallout from Brexit. On verra mes amis, but just sayin'...

And yes, Gold can rise under Euro demise: 2008 into 2010 saw the Euro drop from 1.60 to 1.20 whilst Gold rose from 900 to 1200; or more recently from 2018 into 2020 the Euro dropped from 1.25 to the aforementioned 1.07 level whilst Gold rose from 1320 to 1780. "Got Euros?" (Uhhhh...)

China-side, demand for their goods finds exports +21% from a year ago and yet inflation at the consumer level actually shrank for the first time in better than a decade, -0.5% for November. Moreover, Chairman Xi, (conveniently with Buddy Biden apparently White House-bound), is taking comfort in increasingly overseeing private sector activity, which as history records doesn't pan out very well. Too, David Malpass over at the World Bank sees as many as three years passing before pre-COVID global output levels are re-achieved. All-in all: "Got Gold?" (Ahhhh...)

More technically, here's what we've got for Gold on the left and Silver on the right: their respective sets of daily bars from three months ago-to-date and baby blue dots of linear regression trend consistency. Given the oft-bullish seasonality in passing from one year to the next, 'twould appear at present that the precious metals' recent woes may have passed:

But problematic to the above bullish notion by the nearer-term narrative painted per the 10-Day Market Profiles for Gold (below left) and Silver (below right), there's hardly a wit of underlying trading support. Of note therein, both Gold and Silver settled out the week smack on their most heavily traded prices of the past fortnight, (the two respective white horizontal bars):

Now here's the broader-based stack:

The Gold Stack

Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 3612

Gold’s All-Time Intra-Day High: 2089 (07 August 2020)

2020's High: 2089 (07 August 2020)

Gold’s All-Time Closing High: 2075 (06 August 2020)

The Weekly Parabolic Price to flip Long: 1942

The Gateway to 2000: 1900+

10-Session directional range: up to 1880 (from 1767) = +113 points or +6.4%

Trading Resistance: 1865 / 1869

Gold Currently: 1844, (expected daily trading range ["EDTR"]: 30 points)

Trading Support: here at 1844, then 1840 / 1813 / 1783 / 1775

10-Session “volume-weighted” average price magnet: 1833

The Final Frontier: 1800-1900

The Northern Front: 1800-1750

On Maneuvers: 1750-1579

The 300-Day Moving Average: 1716 and rising

The Floor: 1579-1466

Le Sous-sol: Sub-1466

The Support Shelf : 1454-1434

2020's Low: 1451 (16 March)

Base Camp: 1377

The 1360s Double-Top: 1369 in Apr '18 preceded by 1362 in Sep '17

Neverland: The Whiny 1290s

The Box: 1280-1240

To close, did you read of oft first-to-move Fitch downgrading the city debt of New York? No surprise there, given it being the East Coast version of the San Francisco exodus. What with Goldman Sachs planning to move its asset management base to Florida, why stick around the Big Apple at all? 'Course, that ought open up a lot front row seats at Yankee Stadium, and better so at reduced prices...

Not logically to be reduced however is the price of Gold. Get some, and you young rascals, too, can be "Groovin' (with Gold) ... on a Sunday afternoon ..."--[Certified Gold: 13 June '67]

Cheers!

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.