Gold's near-term brush with the 1600s
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
No, we're not revising downward our Gold forecast high for this year of 2401.
However, from the "Nothing Moves in a Straight Line Dept." -- and as has been our cautionary concern of late -- Gold's weekly parabolic trend just flipped from Long to Short. To which, (employing our slide rule, protractor and French curve), we find Gold's nearby structural support zone ranging from 1789 down to 1672: hence this piece's suggestive title.
Either way, here it all is by Gold's weekly bars from a year ago-to-date, the rightmost encircled red dot heralding the new parabolic Short trend and the 1789-1672 structural support as delineated:
"But, mmb, wouldn't it be a stretch for Gold to then get all the way up to 2401 from 1672?"
'Twould at first blush so seem, Squire, even with some 10 months left in the year's balance. Not that 1672 shall actually trade: indeed Gold just settled the week yesterday (Friday) at 1783, an ample 111 points above 1672. Further in reviewing the past five years of Gold's overall uptrend, therein just three of the past ten parabolic Short trends incorporated drops exceeding 100 points.
Still to Squire's query, were Gold to sink during this parabolic Short trend to as low as 1672, yet then nonetheless recover all the way up to our year's forecast high of 2401, 'twould be an increase of 43.6% within 10 months. Can Gold do that?
Absolutely! Gold has done exactly that on multiple occasions across the last 15 years. The following table depicts those stints of mutually-exclusive up-runs of at least 43.6% within 10 months for Gold; the bottom row then hypothesizes a repeat of same should Gold have a near-term brush with the 1600s, as measured from the structural support low (1672) up to 2401:
And from the "Oh By The Way Dept.", have you been tracking Cousin Copper? Well, 'tis worth following, (see our 28 July 2018 missive entitled "Gold is Copper???", wherein is detailed the positive correlation of the yellow metal vis-à-vis the red metal). Moreover, 'tis said that broadly Copper leads Gold. And of late, Copper is doing great given post-COVID expectations for economic expansion, China being a leading consumer of Copper, and anticipation for ramped-up inflation. Thus within that context in looking at the percentage tracks of Gold and Copper from one year ago-to-date, think Gold has some catching up to do?
'Course, the cynic shall simply say that Copper had overshot Gold to the downside as COVID came on, and that now 'tis overshot Gold to the upside. But here's the but: Copper today is 4.0670, having not traded at that level since 09 September 2011 ... on which date Gold settled at 1861, just three days after having broken above 1900 for the very first time. Moreover by today's Gold Scoreboard, price today "ought be" 3683. (We analyze to make you wise).
And wise or otherwise came word this past week that forecasters are raising their 2021 economic growth expectations, (which is why the stock market never goes down despite the disastrous dearth of earnings). The new Stateside Administration says it "can't promise" that in a year's time we'll be "distancing" less and so forth, but the Economic Barometer says "smile for the camera", for after all it too is again on the rise. Reports this past week included increases in February's New York State Empire Index as well as in January's Retail Sales, Capacity Utilization, Wholesale Inflation, Building Permits, Existing Home Sales and Export Prices. "Smile away"--[McCartney, '71]:
Plenty of good news there, even as the Federal Open Market Committee's 26/27 January Meeting Minutes inferred that easy monetary policy shall remain in vogue. (By the way, have you noticed that both the U.S. Department of the Treasury and Federal Reserve are going into the Climate Change business? We'll see up with which potential Treasury-positioned Sarah "Bloomin'" Raskin and FedGov Lael "The Brain" Brainard come). "In other news, the Fed looks to maintain its monthly purchases of both fertilizer and organic air..."
Meanwhile: economies this side of The Pond don't seem to be faring as well. 'Tis reported that the United Kingdom is attempting to weather its worst economic slump in three centuries; newly-named Italian Prime Minister Mario Draghi is trying to pull all of his nation's parties together to weather the deep downturn there; and 'twill be a tough task for Europe at large to weather weaning itself off of some €1.5 trillion in COVID economic relief programs. Bonne chance à tous...
'Tis time too for a little good luck to come the way of the precious metals, even as Gold's aforeshown weekly parabolic trend is now Short. In next looking at the last three months of daily bars for Gold on the left and Silver on the right, their "Baby Blues" patterns of trend consistency hardly are encouraging, albeit both metals recorded a firm Friday per their respective rightmost bars:
As for the past fortnight, here we've the Market Profiles for Gold (below left) and for Silver (below right). Clearly, Gold really needs the 1770s to hold, else get sold, (perhaps with that low structural support price of 1672 in the balance). And again for Silver, 27 continues to be her key area below which not to breach:
So let's assess the Gold Stack:
The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 3683
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
2021's High: 1963 (06 January)
The Weekly Parabolic Price to flip Long: 1963
The Gateway to 2000: 1900+
10-Session “volume-weighted” average price magnet: 1807
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
Trading Resistance: (prices as noted per the Profile) 1795 / 1817 / 1825 / 1843
Gold Currently: 1783, (expected daily trading range ["EDTR"]: 28 points)
Trading Support: 1782 to 1774; (structural support as mentioned: 1789 to 1672)
The 300-Day Moving Average: 1773 and rising
10-Session directional range: down to 1759 (from 1857) = -98 points or -5.3%
2021's Low: 1759 (19 February)
On Maneuvers: 1750-1579
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf : 1454-1434
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
Now ahead of another busy week of incoming economic data, let's close with these few observations:
¦ We read this past week that "U.S. Airlines Saw 60% Drop in Passengers in 2020"; from our observations in airports and on planes during the year, 'twould seem more like a 90% drop...
¦ We cannot make sense of this Dow Newswires bit from Thursday: "Supporters of a higher minimum wage can argue the move is proof employers can afford wage increases, while opponents can say it is an example of effective free-market forces." What? Folks are actually paid to write this unintelligible dribble. (If Grandpa Hugh were still running the show today, the "pink slips" would be flying)...
¦ We honestly had a good grin over this one: "Cannabis Stocks Nosedive as Rally Driven by Hopes for U.S. Legal Reforms Comes to a Screeching Halt", the time-honoured '60s phrase coming to mind that "Only dopes smoke dope" -- or put into current context -- "buy into earningless stock manias"...
So don't be a dope: yes, perhaps a 1600s brush with which to cope, but keep Gold focused in your scope!