first majestic silver

Gold Seeking $1240 On This Up Run

Market Analyst & Author
January 15, 2017

As you can above see, we've added a new panel to our weekly Gold Scoreboard: "Gold by the Week" compares the price track during 2017 to that of 2016, giving us an instant year-over-year assessment as to if Gold is faring better ... or not. And thus far, we like what we see. 'Tis also a relative chart for those non-followers who nonetheless on occasion query, "Where is Gold?" Given how often we're asked that question upholds just how much Gold is under-owned. If all those who that ask would instead buy, we 'spect Gold would be up through the Scoreboard's present valuation level of 2661 ... and beyond!

That said, the market never being wrong, we instead find Gold having settled out the week yesterday (Friday) at 1197. Still, +3.9% into this young year, certain of our technicals are suggesting there's continued upside ahead. Thus we're thinking this is a run up to at least the bottom of Gold's 1240-1280 resistance zone. Here's why.

First to Gold's weekly bars. Recall that 1220 was the price needed to be eclipsed this past week for Gold's Short parabolic trend to swing to Long; whilst we didn't quite get there (1207 being the week's high), now look to where the red dots have dropped: to that same 1207 level. In noting a week ago that "the parabolic trend appears poised to flip Long before month's end", such flip now looks essentially imminent, barring Gold's inability to test the 1207 high of that rightmost bar. So from 1207, 'twould then be on to test the underbelly of the purple-bounded 1240-1280 resistance zone:

Second let's turn to trend. If in recent days you've been reading the website's "Prescient Commentary", you already know that the 21-day linear regression trends for all eight BEGOS Markets are positive as below depicted by their rising grey diagonal lines in every one of the 21-day panels. And specific to Gold (top row, second from right), its baby blue dots have moved above their +80% level, denoting the firm consistency of that uptrend. Whilst markets do not move in straight lines forever, 'twould be fairly ballsy to Short against that kind of strength. Our sense thus is that on this run, Gold is good to go higher still until at least 1240 is reached, or until the "Baby Blues" crack to the downside below their +80% level, (and need you not be reminded that cash management is King):

"Well then so much for that dollar strength, eh mmb?"

Ah Squire, back from Chamonix, I see.

"And Cortina, too"

Rub it in mon ami. But he does make the point: in looking at those above eight panels, one doesn't need a Dollar chart to know it has to be trending lower. And whilst we understand that broadly Gold and the Dollar are not always correlated inversely, (Gold in 2016 having risen +8.6% and the Dollar Index +3.7%), -- i.e. "Gold plays no currency favourites" -- an eagle-eyed trading colleague has rightly been citing the marvelous inverse correlation of late betwixt Gold and the Buck. To wit, here they are hour-by-hour over this past week:

Gold may well be getting further support from the Economic Barometer, its magically having risen through the StateSide election period only to encounter its anticipated post-election exasperation. 'Tis questionable if one ought yet man the lifeboats, but the year-to-date economic reportings (primarily of December data) are evidently bumpy per the Econ Baro. (Further, should you peek at the website for Earnings Season, whilst we're only barely into those for Q4, fully 46% of the 24 companies having thus far reported have bottom lines lower than those of a year ago -- which in turn does not bode well for an S&P 500 with a "live" price/earnings ratio presently at 35.0x). Here's the Baro:

Notwithstanding the apparent cresting of the above Baro, our local FedHead John "It's All Good" Williams points to "the stars aligning" from rising wage inflation and strong hiring such that Congress need not provide fiscal boosting, (which for you WestPalmBeachers down there means no tax relief). 'Course when full-time jobs are split into multiple part-time jobs, and you throw in minimum wage hikes, your inflation and hiring numbers are bound to look pretty good. And thus as usual, they're seein' stars here in San Francisco, (not to mention the recent robust rains having fostered a proliferation in Golden Gate Park of fresh mushrooms...).

Yet conversely to such buoyant economic thought, 'twas reported that 'round the balance of the globe the World Bank sees "stagnant trade, weak investment and rising policy uncertainty", all upon which the international leverage lender opines could be righted from tax cuts being proposed by the StateSide President-Elect. That may be the oldest economic lesson in the history of the planet, but 'tis nice to see the World Bank's own above-the-head light bulb illuminate.

Meanwhile with all the ballyhoo over stock market highs, four of which in the last 21 trading days (one month) have been S&P all-time closing highs, per the aforeshown eight-panel markets graphic, the actual trend by the "Spoo" (S&P 500) is hardly impressive compared to that for Gold. The below chart moreover proves it so:

'Course, you know 'tis a "slow news day" when despite all-time index highs and Gold being bought by ever the more wise, the lead headline from the pink pages of the FinTimes this past Tuesday read "World Cup will expand to include 48 teams in 2026." Priorities...

Our priorities include seeking out key underlying trading supporters, and the yellow metal's got a bevy of 'em as we turn to these 10-day Market Profiles for Gold on the left and Silver on the right. And not that round numbers are very remarkable at these fundamentally, indeed inanely, low precious metals levels, but just as did Gold revisit the 1200s this past week, so did Sister Silver peek her head above 17:

So with the door open for Gold to continue its run to 1240, here's how it all stacks up at the moment:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2661
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
Neverland: The Whiny 1290s
Resistance Zone: up to 1280 (from 1240)
The 300-Day Moving Average: 1226 and rising
2017's High: 1207 (12 January)
The Weekly Parabolic Price to flip Long: 1207
10-Session directional range: up to 1207 (from 1147) = +60 points or +5%
Trading Resistance: 1204
Gold Currently: 1197, (expected daily trading range ["EDTR"]: 15 points)
Trading Support: 1195 / 1188 / 1183 / 1179 / 1165 / 1161 / 1152
10-Session “volume-weighted” average price magnet: 1180
2016's Low: 1147 (03 January)

Finally we've this, with which in being from a media family we can certainly empathize. Let's face it: the poor ole media at large has had a bad run of late, some might even say having finally been "found out". (Further, family experience proves that this boosts sales of adult beverages). But there's no doubt about it: our media colleagues had Carolina obviously winning the Super Bowl months ago, Senator Clinton obviously winning the Presidency weeks ago, and “The Dow” (that Index at which our parents look) obviously topping the 20,000 level days ago. None of which happened. 'Course back in Grandpa's day, that which was reported had already happened, as opposed to what hadn't yet happened ... such as Gold continuing this run up to 1240 ... So c'mon Gold! Make it happen!

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.


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