first majestic silver

Gold Gets A Restful Dose Of Southern Hospitality

Market Analyst & Author
May 15, 2016

Greetings from the Land of the Bayou, where a mid-May stroll along the banks of the slowly flowin' Big Muddy here in Louisiana's capital is a walk through nature's own steam bath: 'tis easy on the joints and great for gettin' the suitcase wrinkles out of one's clothes.

As for southern hospitality, Gold is getting a well-earned dose of rest and relaxation after having recently accelerated to new highs for 2016, at one point being up year-to-date by as much as 23.1% when 1306 traded on 02 May. Since then, The Whiny 1290s have been somewhat "expectedly" price-repelling, Gold then trading as low as 1258 just this past Tuesday (10 May). But to now see price having settled out the week yesterday (Friday) at 1274 -- given respect to the 1240-1280 resistance zone and those Whiny '90s -- Gold merely has eased back a bit, stopped by a country house, and deservedly put its feet up.

That said -- Gold's having a rest -- 'tis for time that we're presently pressed. Thus for this week's somewhat abbreviated missive, let's run through the most salient of our graphics in fairly quick order. You valued, regular readers will be familiar with these charts, which we'll then culminate with the Gold Stack.

And so to Gold's weekly bars we go as graphed from one year ago-to-date. Note that the ascending parabolic Long trend blue dots have moved inside of the purple-bounded 1240-1280 resistance zone: thus the next flip to Short will be either within or above that zone, a technically-squeamish challenge for Smart Aleck Shorts:

Next let's look at Gold's interaction with the S&P 500 via their respective percentage tracks from one month ago-to-date, (21 trading days). Clearly we've Gold's stark rise followed by more of a resting period of late, both markets at best languishing these last two weeks (below from mid-chart); but the overall energy has been with Gold, whereas the S&P is losing its foothold. To quote from a FinTimes piece this past week: "Redemptions from stock funds have reached nearly $90bn so far this year as portfolio managers and hedge funds struggle to navigate a market that no longer appears driven by radical central bank policy." So we again ask: does this mean we're going back to valuing stocks "the old-fashioned way", (i.e. by earnings)? Uh-oh...

And speaking of interaction, the S&P itself is hardly in harmony with the StateSide economy as we below see vis-à-vis the Economic Barometer from a year ago-to-date. To be sure, there were some favourable EconData metrics out just yesterday for the EconBaro, as both wholesale inflation and retail sales swung from negative changes for March to positive changes for April, whilst the University of Michigan's Consumer Sentiment gauge leapt from 89.0 to 95.8 in the initial May reading, the largest such points up-swing since the December 2013 measuring, and 10th largest in the 18 years of our collecting data for the Baro:

As for the trending of the Precious Metals, here next in this dual panel graphic are their daily bars for the past three months-to-date, Gold being on the left and Silver on the right. The "Baby Blues" depict the day-by-day consistency of the markets' 21-day linear regression trends, both of which are up, (their respective blue dots being above 0%), yet are at best now taking that southern hospitality rest:

Our final graphic for this week is of the 10-day Market Profiles for Gold (left) and Silver (right). Were Gold to bust its 1268 supporter, such event ought technically be viewed in the context of the aforementioned weekly parabolic potentially getting tripped to Short at 1253, and then the ability of price to hold within the 1240-1280 resistance zone. As for Sister Silver, she is precariously perched on her profile supporter of 17.10:

Therefore, here is how it all stacks up for the present:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2584
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: 1306
Neverland: The Whiny 1290s
10-Session “volume-weighted” average price magnet: 1281
Resistance Band: up to 1280 (from 1240)
Trading Resistance: 1275 / 1278 / 1288 / 1296
Gold Currently: 1274, (weighted-average trading range per day: 19 points)
Trading Support: 1268
10-Session directional range: down to 1258 (from 1306) = -48 points or -4%
The Weekly Parabolic Price to flip Short: 1253
The 300-Day Moving Average: 1163
Year-to-Date Low: 1061

Must now press on due to the constraints of time; looking out the window here across the street to the Mighty Mississippi, one's barge could come in at any moment. Yours truly may not have been "Born on the Bayou"--(CCR, '69), but the southern hospitality 'round here sure is infectious, and indeed for Gold, a well-deserved respite. And we're all gonna need it as next Wednesday (18 May) are revealed the Federal Open Market Committee's meeting minutes from its 27 April policy statement. Recall there was no follow-up Chair Yellen press conference? So what did they really say? Regardless of their view, as down here at LSU where Gold is a primary hue, 'tis also of value for me and you!

Cheers and "Geaux Tigers!"

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.

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