first majestic silver

And The Golden Turkey Award Goes To...Gold!

Market Analyst & Author
November 27, 2016

Again we commence with that which was stated in our prior missive when Gold's price was 1207: "... the [price of] 1199 ... appears tenuous, especially as the 'Baby Blues' have plenty of room to further fall ..."

Now, with Gold having since failed to hold 1199 and trading this past week to as low as 1170 toward settling out yesterday (Friday) at 1183, 'tis easy to quip: "What a turkey...", (which for our many international readers out there is, per the wordsmiths over at italki, an expression for failure, disappointment, ineptitude or stupidity). We can thus segue, (in borrowing from the film industry's accolade for its most pathetic performances), to Gold's falling flat in attempting to dance upon 1199, its morosely meriting the Golden Turkey Award:

"That's pretty bad, mmb..."

That's the point, Squire. Gold's having given back 61% of its year-to-date gain (from 1061, to Base Camp 1377, to today's 1183) is bad. Yes, were the year to end right here with price +11%, 'twould still rank as Gold's best in its last six. But bad is bad, "...really, really bad..."--(MJ, '87). Further, it begs the usual questions such as: "How bad can it get? ... How low can it go? ... Is it really just a relic?" Good grief, no.

That said, by the below weekly bars, the picture does appear a bit gamey, price having penetrated under the white line at 1199, that mid-year support now not looking so fine. When the technician peers back in time, areas of price congestion, consolidation or "bunching" can offer guidance as to where Gold may end its sliding trend. But when Gold's been sub-1199 during 2016, there's really not been any material bunching following January's price stallage in the lower 1100s to upper 1000s, from which price ascended during February as quick as a wit, well up into the 1200s. So to give back February's run would be beyond bad. Fortunately, there are other measures to which analysts shall point for rationalizing buying, (in turn toward eventually curtailing the current parabolic Short trend), including the Art of the Fib, the Angle of Gann, or even just good old-fashioned "funnymentals", which for the latter our favourite is Gold's present price of 1183 being but 45% of its money supply debasement value of 2657. Regardless, 'tis time to brake hard, swap ends with a flick of the wheel into the skid, feather that throttle, and drive this baby back up!

And as noted of late, 'tisn't just Gold that has been succumbing to the post-election hyper-active Doggie Dollar as we see in these percentage tracks of the five primary BEGOS Markets over the last 21 trading days (one month). Odd therein the S&P 500 is rising, given that so-called "dollar strength" is an earnings negative; but then again "earnings don't matter anymore", right?

In fact, from "The Selling May Just Be Overdone Dept." we've the following two-panel graphic that depicts a market's "value" by its movements relative to those of its other BEGOS components. On the left is Gold, which by its oscillator at the panel's foot of "price less value", is 59 points under its smooth value line at 1242. On the right is the S&P, which by its oscillator is 129 points too high, the second-highest reading in any month millennium-to-date, (topped only by readings in November 2014, from which the S&P then fell from the 2000s into the 1800s some nine months later):

Meanwhile, the countdown continues, the ensuing week alone to bring 19 incoming data metrics for the Economic Barometer, which quite curiously as you can see, is essentially right back to where 'twas as of last year's Fed hike:

Further, given that the Federal Open Market Committee's "pro-rate-hike" vote of next 14 December is already priced into Gold, we say, "Bring 'em on!", you regular readers out there certainly being familiar with this chart:

Still, down is down, with the "Baby Blues" below left as we referenced at the outset extending their decline in reinforcing the consistency of the 21-day linear regression downtrend. Trade the news and lose yer shoes, but follow the blues and your dreams may come true. Also as we can see below right in Gold's 10-day Market Profile, 1186 is the first upside resistor to overcome, the success of which can swiftly place price back up into the 1200s:

As for poor ole Sister Silver the picture is very similar. Being adorned in her precious metal pinstripes has not helped her cause. Were she instead dressed in her industrial metal jacket, she'd be soaring alongside Cousin Copper, (at present +25% year-to-date, the most of all eight BEGOS Markets).

"But to be short to here has been pretty good, eh mmb?"

Now you know better than that, Squire, for as we've oft said: "Shorting Gold is a bad idea." albeit to lighten up on one's Long position when the "Baby Blues" begin declining from high levels is not a bad idea. However to give credit where due: one must tip one's cap to those who've been Short Gold not just through here, but from many-a-point since Gold's All-Time High of 1923 back on 06 September 2011. That said, I 'spect 'twould by extremely stomach-churning if positioned Short Gold and it does one of its famous "gap up" openings. I recall Gold closing at 889 on 18 March 2009 and opening the next day +6% at 942 with nary a trade between, the margin calls in turning driving the S&P down -4% within 48 hours as the Gold Shorts raised cash to cover their Gold accounts which were going "ker-plooie", (technical term for account death).

Nonetheless, Gold in the stack is hardly top tier as we see here:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2657
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
Gold’s All-Time Closing High: 1900 (22 August 2011)
The Final Frontier: 1800-1900
The Northern Front: 1750-1800
On Maneuvers: 1579-1750
The Floor: 1466-1579
Le Sous-sol: Sub-1466
Base Camp: 1377
Year-to-Date High: also 1377 (06 July) or 1385 basis the December '16 contract
The Weekly Parabolic Price to flip Long: 1337
Neverland: The Whiny 1290s
Resistance Zone: up to 1280 (from 1240)
The 300-Day Moving Average: 1225 and rising
10-Session “volume-weighted” average price magnet: 1216
Trading Resistance: 1186 / 1208 / 1214 / 1226 / 1259
Gold Currently: 1183, (expected daily trading range ["EDTR"]: 23 points)
Trading Support: (none)
10-Session directional range: down to 1170 (from 1265) = -95 points or -8%
Year-to-Date Low: 1061 (04 January)

In closing, might we construe the passing of Cuba's communist leader as a Gold positive? Certainly so, as news attention is taken away from the markets, allowing them to revert a bit back to their respective means, (which for Gold, obviously, would be a move higher). For let's face it: the StateSide election took a terrible toll on much of the media, their dyed-in-the-wool expectations and credibility demolished. But now our news "colleagues" have a time to heal, their fawning over Fidel certainly to be nothing short of a feel-good festival in moving the man toward martyrdom. And at this point, we'll take our Gold positives any way we can get 'em!

www.deMeadville.com
www.TheGoldUpdate.com

Mark Mead Baillie

Mark Mead Baillie has had an extensive business career beginning in banking and financial services for two years with Banque Nationale de Paris to corporate research for three years at Barclays Bank and then for six years as an analyst and corporate lender with Société Générale.
 
For the last 22 years he has expanded his financial expertise by creating his own financial services company, de Meadville International, which comprehensively follows his BEGOS complex of markets (Bond/Euro/Gold/Oil/S&P) and the trading of the futures therein. He is recognized within the financial community of demonstrating creative technical skills that surpass industry standards toward making highly informed market assessments and his work is featured in Merrill Lynch Wealth Management client presentations.  He has adapted such skills into becoming the popular author each week of the prolific “The Gold Update” and is known in the financial website community as “mmb” and “deMeadville”.
 
Mr. Baillie holds a BS in Business from the University of Southern California and an MBA in Finance from Golden Gate University.


It is estimated that the total amount of gold mined up to the end of 2011 is approximately 166,000 tonnes.
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