first majestic silver

Gold Price Scoreboard

Market Analyst & Author
April 19, 2015

One might even substitute the word "flight" in the above title with "fight", for 1200 is proving more and more to have become a battle line in the sand for Gold. You may recall from three missives ago (28 March's "Gold Managing The Madness") that upon first achieving the 1200 level over six years ago, Gold on a closing basis had since completed 20 flip-flops across 1200. Now another three weeks hence, chalk it up to 24 flip-flops. And obviously on an intra-day basis, the number of flip-flops is vastly higher.

But we prefer "flight" descriptively rather than "fight" because in a broader context, Gold essentially appears as an aircraft flying on auto-pilot at 1200 units of altitude above sea level. And as you real-world pilots and flight simulator aficionados out there know, an altimeter set for a specified level hardly maintains it perfectly: wind currents and buffets, the effects on air density from humidity, temperature, barometric pressure and so forth all cause the auto-pilot to constantly make minute adjustments in attempting to maintain the desired setting of the altimeter. Thus, the aircraft's indicator of vertical speed per minute is always fluctuating, rarely resting at zero, and yet the almost constant compensating remains to the passenger and on-tray beverage oblivious. Which is specifically analogous to how Gold is traveling along these days. The following chart is Gold's minute-by-minute flight from the opening of the 01 April session through yesterday (Friday). It typifies that of an aircraft on auto-pilot set to maintain 1200 units of altitude:

'Course, making much ado over Gold 1200 is rather pitiful, for 'tis a paltry pittance of a price given that by currency debasement alone, we instead ought be flying high right now per our opening scoreboard at over 2500. Heaven forbid we have to endure such repetitive drawn-out episodes of horizontal flight at 1300, 1400, et alia, en route higher to more "fuel-efficient" valued altitudes of 2000+. But then again, excavating, pile-driving and pouring the foundation of a great edifice requires a terrific amount of time and work, from which then out of the dust more swiftly rises the substantive structure. Should we later in hindsight determine 1200 to be Gold's new foundation, we'll have then likely enjoyed constructively brisker periods of ascent. And one arguable take-away today from Gold's altimeter being set at 1200: the selling has stopped.

For the time being however, as we glide through the sky either side of 1200, one does not need radar to see through the cockpit window that dead ahead is the "weather front" of declining parabolic Short trend red dots through which Gold hopefully will get some lift to emerge on the far side supported by the first blue dot of a new parabolic Long trend. 'Twould be marvy to see that when we reconvene in a week's time To wit, Gold's weekly bars:

Meanwhile, from the "Bad News is Good News Dept.", we saw that poor export data from China has furthered expectations for the government's bringing on new stimulus, such that major stock market indices this past week in the PRC reached seven-year highs. The World Trade Organization then chimed in to reduce its 2015 forecast for global trade, whilst cautioning about activities being impacted by swings in currency valuations and geo-jitters. Speaking of which, Greece found its paper downgraded into the "Cs", which in education (or lack thereof these days) is a passing grade, but in the real world of debt is the drive to default. Then we've Japan, wherein growing losses in McDonald's second-biggest worldwide market are fostering a reduction in the number of outlets and jobs, as well as a more stringent performance-based pay (oh-NO!) for its employees. Perhaps they ought move over here, where in StateSide contrast, McDonald's is out to raise wages. Things must be going along quite well here, what?

"Hey mmb, after all these years, it looks like that Econ Baro has stopped leading the stock market, huh?"

Actually, Squire, we're sure to see that it hasn't so done. 10,297 data inputs collected-to-date since 1998 shan't suddenly go wrong; 'tis the market's follow-through that shall so do, on the heels of which we'll all be reassured that enough dough will be created to keep us happy. 'Twill make Gold happy, too.

In fact, we mentioned above for Gold that "the selling has stopped", (contextually 'twould so appear on balance). And indeed so during a time when the conventional wisdom would expect Gold to have resumed being pummeled as 'twas in the last few years, for so-called "dollar strength" has been dominating the whirling world of bow-wow currencies. But as we've on occasioned quipped, "Gold plays no currency favourites", and below we've the most current example. The following chart depicts the Dollar Index over the last six months-to-date, during which time FinMedia headlines have fawned over its strength, and to be sure, 'tis been an impressive move, (albeit we hasten to point out as usual that today's 97.615 level is only 59% of the all-time high recorded back in February 1985 of 164.720). But look, too, at Gold in the chart: yes, it couldn't maintain the 1300 area during the Buck's now multi-month run, but the yellow metal nevertheless is higher today at 1203 than 'twas back in beginning November (1170) when the Dollar Index was 87...

...and once the Ugly Dog Contest Winner shifts over to some other currency, (the un-€uro-pegged Swiss Franc for example), one ought think 'twill redound quite positively for Gold. (And this aside: a lot has been made over how much cheaper 'tis now for us StateSiders to travel abroad -- although air fares haven't cracked a wit despite the halving of the Oil price. But if Europe, which is the most cited El Cheapo example, was "horrendously expensive" when at this date a year ago one €uro cost $1.38, today at $1.08 'tis still "terrifically expensive". But should it get back down as 'twas in 2001 to 81¢, then we can talk).

As for the present, let's talk trends. Here from left-to-right we've the 21-day linear regression trends across daily bars (from one month ago-to-date) respectively for Gold, the €uro and the S&P. Of the three, where would thee prefer to be? Gold's trend is up, admittedly with less consistency because its "Baby Blues" are descending; the €uro's trend is down and becoming more consistently so as the blue dots make lower sub-0% lows; and as for the S&P, we can only say "uh-oh...":

Next, ahead of our Gold Stack, we've this two-panel graphic of the 10-day Market Profiles for both Gold (left) and Silver (right). Both panels denoted prices are those with the larger volumes of contracts traded and thus represent near-term support and resistance guidance. The red bars are yesterday's respective settling prices in closing out the week for Gold (1203) and Silver (16.225):

And thus without further ado, we bring to you...

The Gold Stack
Note: we've removed the "Structural" Support and Resistance levels as they're subjectively chosen and thus lack the specificity of the other categories:

Gold's Value per Dollar Debasement: 2515
Gold’s All-Time High: 1923 (06 September 2011)
The Gateway to 2000: 1900+
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: 1307
Neverland: The Whiny 1290s
The 300-day Moving Average: 1256
Resistance Band: 1240-1280
The Weekly Parabolic Price to flip Long: 1225
Trading Resistance: 1204 / 1219
Gold Currently: 1203, (weighted-average trading range per day: 15 points)
10-Session “volume-weighted” average price magnet: 1202
Trading Support: 1199 / 1195
10-Session directional range: down to 1184 (from 1225) = -41 points or -7%
Year-to-Date Low: 1141

Finally this note on the Bloomy terminal, the network for which had quite the global outage yesterday, purportedly spurring the Great Escape from Equities, ('cept of course if your Bloomy terminal was bloomin' down, you couldn't actually escape very readily). And, if you don't have one, like me you're a nobody: indeed there is approximately just one Bloomy terminal for every 22,000 people on the planet. The service, to which to subscribe for an individual, is frightfully expensive, and rightfully so, for the terminals can do just about anything: place trades, call up quotes on any traded entity from, I suppose, stocks and bonds to wine and snow futures, perform intricate regression analyses limited only to the imagination of the user, perhaps even cross-breed an ibex with a pizza... truly amazing stuff. I was privileged as a guest of an investment firm to dabble about with their Bloomy terminal in Monte-Carlo back in '93 whilst tracking options on the S&P 100 (OEX). Never did get the bill...


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.

The term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.
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