Gold Lacks Nerve; Silver A Concern

June 14, 2020
Market Analyst & Author

The track of Gold's weekly closes in the above Scoreboard tells quite the tale of the tape: that Gold thus far this year has been unfit to defeat the overhead resistance forces of The Northern Front (1750-1800).

This in spite of Gold having in its corner as good a team for which could be asked, monetarily led by head trainer Jerry Jay Powell and his Dollar Debasement Dudes, with further coaching by Fiscal Fiasco, not to mention the expanding bussed-in unknowing fan base of Anarchists "R" Us. (In what bank is your safe deposit box?)

To be sure, Gold has lacked the nerve to as yet conquer The Northern Front when reasonably it ought well by now be in the rear-view mirror, the one-two Fed-supportive punch regarding COVID and Revolt missing Gold's due mark.

Yes a week ago we wrote "Gold 1600 before 1800" and yet price today at 1737 is certainly nearer the latter than the former. But with respect to 1800, until the overhead resistance is defeated, we're reminded of the late Hervé Villechaize line: "So near... and yet so far..." --[The Man with the Golden Gun, '74].

Hardly far from other analytical lines, we were privy yesterday (Friday) to a major investment bank's piece which opened as follows: "Gold rises sharply ... [week-over-week] to US$1,737...", indeed to where it settled out the week. 'Tis yet again ad nausea the same old reality of change being the illusion whereas price is the truth. Yep folks, Gold has risen sharply to the same old place 'tis basically been since early April: 1737. That's "unch" in our book. Again, you can see it in the above Scoreboard, and 'tis further made manifest below in the chart of Gold's weekly bars from a year ago-to-date:

"But maybe it's forming a base there, mmb. Then it can go up..."

We certainly shan't rule out yours (and others) very perceptive notion there, Squire. But given the aforementioned fundamentally Gold-positive events of the day (indeed of the year), one again queries, "Why is price here?" It seems as if one and all are jumping up-and-down about Gold ... and yet price is the only thing that is not jumping. Lack of nerve to hit overhead offers makes Gold reluctant to rally up through the ever-firm-to-date overhead resistance.

This past week recorded Gold's fifth failed foray to even stay within The Northern Front. For those of you still scoring at home, the ins and outs have been as follows: in 09 April, out 16 April; in 23 April, out 24 April; in 15 May, out 21 May; in 29 May, out 02 June; in 11 June, out 12 June. Have a nice swoon.

Still, there's the sense for Gold 2000... and beyond! Analysts at one Roth Capital see (and this is not a phrase for the dyslexic) Gold 2200 by 2022. (Way to go out on a limb there, lads). That'd be a two-year increase (from today's price of 1737) of 27%. Low-to-high, Gold climbed by nearly that percentage amount in less than one month just this past 16 March to 14 April. Hope springs eternal, 'specially given our present money supply debasement value for Gold of 3556 which is 105% above today's 1737.

Meanwhile, continuing to grow a fresh new up limb is the Economic Barometer, albeit in contra-movement to the "It's All Good" S&P500. Of the nine metrics that entered into the Baro this past week, seven improved over their prior period's report, a trend we expect to on balance continue into next week's collection for 12 further incoming data units. So break out the popcorn and enjoy the ride, even should the S&P (red line) further its slide:

Elsewhere on the isles off Europe, the Bank of England continues to ramp up its bond-buying spree whilst on the Continent the European Central Bank is to draw up a toxic debt "bad bank" plan. Further on, Japan faces its most difficult economic period since that following WWII, S&P revising the nation's outlook downward from "positive" to "stable". Indeed globally, the Organization for Economic Cooperation and Development sums up the macro economic effect from COVID as the last 100 years' worst such event in peace-time.

Peaceful may not necessarily be the state of Gold Bulls' sleep these days as we go to the two-panel graphic of the daily bars from three months ago-to-date on the left and 10-day Market Profile on the right. The overall sideways chop of price now two months on has sent Gold's "Baby Blues" -- those dots of trend consistency -- into comprehensive inconsistency. So much so that for those of you teaching Economics 101 and in need of an example of "trendlessness", there's your chart. As for the profile, pick an apex, any apex, and do so to The Animals tune from '65: "We gotta get out of this place, If it's the last thing we ever do...":

Now in this missive's title we specifically point to Silver as "a concern". And oh how our wayward Sister is at times as we turn to her like two-panel view. Cowering in fear near the base of her Profile (at right) she senses the punishing history that typically follows her "Baby Blues" (at left) going into accelerative decline. Silver did put in a fairly buoyant week in settling at 17.59. But should she not get off the schneid right quick, the 16.30 level as herein mentioned a week ago could indeed come right quick, especially should price slip sub-17.19, from there being "nuthin' but air" to 16.30 as depicted:

As for the last 21 trading days (one month) in general, here are the percentage tracks of the five primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P). Clearly Oil is the runaway winner, not that overwhelming an achievement given it having been priced below zero a mere 38 trading days ago. Then there's the S&P having just come off over "concerns of COVID cases spiking", (to which the Lieutenant Governor of Texas suggested is what happens when testing having initially been in 12 counties increases to now 254 counties, even as hospitalizations actually decrease). The Euro has picked up against the Buck, however we shan't be surprised to see that reversed given the EuroZone's COVID recovery not being as swift as that StateSide. And there's the two safe havens of the Bond and Gold, both literally flying beneath the radar of the red 0% axis across the graphic:

And thus let's go to where Gold sits in its Stack:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 3556
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
2020's High: 1789 (14 April)
The Northern Front: 1750-1800
Trading Resistance: 1745 / 1751
Gold Currently: 1737, (expected daily trading range ["EDTR"]: 31 points)
Trading Support: 1723 / 1712 / 1704 / 1698 / 1684
10-Session “volume-weighted” average price magnet: 1722
10-Session directional range: down to 1672 (from 1761) = -89 points or -5.1%
The Weekly Parabolic Price to flip Short: 1605
On Maneuvers: 1579-1750
The 300-Day Moving Average: 1511 and rising
The Floor: 1466-1579
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

In closing we've this biting bit from the "You Cannot Make This Stuff Up Dept". Who can forget from back in August 2017 the diversion of a Transportes Aereos Portugueses flight from Brazil to Portugal due to (according to Reuters) "...a passenger who was biting other people on board and assaulting crew members..." all in turn causing a passenger to miss their connecting flight to Norway. In bringing the case for the passenger's being compensated all the way up to the European Court of Justice in Luxembourg, 'twas ruled as an "extraordinary circumstance" such that TAP was relieved from having to so pay. To be sure, biting even in the boxing ring is against all the rules (albeit there have been high-profile highlights of such). But the bottom line is: if you're boxed into any corner, make sure 'tis that of Gold!

"Oh nice pants, baby!"

www.deMeadville.com
www.TheGoldUpdate.com

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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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