first majestic silver

Gold Price Gets Life…Sorta

Market Analyst & Author
January 27, 2019

'Twas just one week ago wherein we bemoaned that a lifeless Gold had fallen out of bed. Today 'twould appear Gold's getting banged on the floor has brought some life back to price, and moreover, some volatility.

To be sure, the year is thus far young. Nevertheless after making a year-to-date low at 1275 just 48 hours ago on Thursday, Gold then made a year-to-date high at 1303 less than 24 hours ago on Friday, indeed settling at that price yesterday for the week. And from the "Oh Goody Goody Dept." with Gold's trading volume this ensuing week rolling from the February contract into that for April, in a week's time we'll have added another five-to-six points of premium into price. Life is good. 'Course we ought point out that 'twas in the final hour of Friday's GLOBEX trading (from 21:00-22:00 GMT) that gold got a good dose of pop (from 1299-1303) on volume far higher than is normal for that period. Perhaps 'twas you coming through? Chummer...

Still, Friday alone was gold's best intra-day low-to-high percentage move (+1.9%) since 20 December, and further 'twas the best intra-day low-to-high points move (+25) since 12 October. However, said move flew in the face of one of our most favoured technical readings -- the "Baby Blues" -- with which we start straight away. Regular readers know these blue dots as portrayed by the day from three months ago-to-date for gold on the left and Silver on the right represent the consistency of price's linear regression trend. And at present the dots are in full cascade for both precious metals, Friday's "wunderbars" notwithstanding:

Either way, in turning to gold's weekly bars, a tip of the cap is due the present parabolic Long trend: now sporting 20 weeks of duration, it ties for the fifth such lasting trend (with that ending 09 January 2004) millennium-to-date. Notable Technical Note: for the prior five Long trends of like or further duration, following their then subsequent Short malaises, the low-to-high price ranges in two cases of their next Long trends exceeded +30%. Whilst we don't how low Gold's next Short trend may go (and let's say 'tis modest), if then arbitrarily measuring from the top of The Box (1240-1280) such that a +30% move be realized, we're talkin' gold well north of 1600. Impressive? Sorta... Of late, gold has yet to fully escape The Box, nor has the Gold/Silver ratio departed the lofty 80s levels. And as we've said a bazillion times, ya ain't really goin' anywhere 'til ya clear Base Camp 1377:

Now as we turn to the Economic Barometer, coincident with the StateSide partial government shutdown having been partially resolved (i.e. for these next three weeks), 'tis time once again for a brief stint of "Facts, Hercule ... Facts!"

■ Fact Un: The "shutdown" ran from 22 December through 25 January (35 calendar days);
■ Fact Deux: Sans weekends and holidays the "shutdown" was 22 days;
■ Fact Trois: 3 of 4 federal civilian employees stayed on the job (Office of Personnel Management);
■ Fact Quatre: The S&P 500 posted a net change throughout of +10.3%;
■ Fact Cinq: Gold posted a net change throughout of +3.4%, +Silver 7.2%, and +Oil 17.9%;
■ Fact Six: Four weeks into the "shutdown" found first-time jobless claims posting a 50-year low;
■ Fact Sept: Hence the mildly (albeit barely) up-turning Econ Baro:

'Course the real EconStinkers this past week were a slowing in December's Existing Home Sales to a reading below 5 million for the first time since December 2016, along with a negative change in the month's "lagging" Leading Indicators, (no surprise there given the Baro's overall downtrend).

Elsewhere, across the pond European Central Bank President Mario Draghi put the kibosh on anticipation for growth in the EuroZone, FinMedia accounts thereto initially confusing us that "risks have moved to the downside": is not less risk better? Oh wait, 'tis a double negative. Got it. Then in China, their Q4 Gross Domestic Product annualized rate came in at +6.4%, the weakest in some 28 years, (but by StateSide measures a level not achieved here since Q4 of 2000 ... indeed, half that rate today is considered pretty darn good).

Pretty darn good as well are the precious metals' price positions in their 10-day Market Profiles, respectively for gold (below left) and Silver (below right). A week ago at this time, price was buried at the bottom of both stacks; now present price tops both stacks:

Speaking of which, here is the state of The Gold Stack with price positioned just above the Whiny 1290s:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2873
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
The 1360s Double-Top: (1362 in Sep '17 and 1369 in Apr '18)
2019's High: 1303 (25 January)
10-Session directional range: up to 1303 (from 1275) = +28 points or +2.2%
Gold Currently: 1303, (expected daily trading range ["EDTR"]: 11 points)
Neverland: The Whiny 1290s
Trading Resistance: none, per the profile
Trading Support: 1298 / 1291 / 1282
10-Session “volume-weighted” average price magnet: 1288
2019's Low: 1275 (24 January)
The 300-Day Moving Average: 1272 and flat
The Weekly Parabolic Price to flip Short: 1271
The Box: 1240-1280

Next week already welcomes February. 'Tis also the busiest week year-to-date for the Econ Baro which looks to receive some 15 metrics and add to which comes the Federal Open Market Committee's first "do nothing" policy foray for 2019. Remember, as in sports, this season's FOMC lineup is somewhat altered with Clearly Richard Clarida moving up into the No. 2 slot (as Vice-Chairman) bumping Jumpin' Johnny Williams. 'Tis also expected the team mascot may morph a bit from hawk into dove. 'Course separate from the government as the Fed may be, the way Washington is these days, we'll probably end up with a pigeon. So best to end up with Gold!

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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