first majestic silver

Gold Superb Through The Year's First 8 Months

Market Analyst & Author
September 3, 2017

For the fervent follower of gold, to say 'tis been "superb" year-to-date may seem at first blush an excessively exaggerative stretch, given the above panel's showing us that price is but one point above where 'twas at this time a year ago -- and to just be in sync with currency debasement -- ought be at 2716 rather than at yesterday's (Friday's) settle of 1330. Indeed to some, "paltry" might appear a more proper adjective, even as this is gold's highest weekly settle since mid-September a year ago.

Still, let's go inside the numbers. Through August and a day in 2017, gold is +15.4%. For the 45 years going back through 1975, this is gold's eighth-best January through August percentage performance, and the fourth-best like performance millennium-to-date. Considering the drudging gold has endured these past six years, not to mention its ridiculously low valuation, we'd say this year's performance-to-date is superb.

Further, given our quip that "change is an illusion whereas price is the truth", let's take a look at this present 1330 level: 'tis but 47 points (-3.4%) below last year's high up at Base Camp 1377. And as you regular readers know, from 1377 up to the 1600s is a fairly unfettered path. That's pretty superb as well.

Fact is, were it not for our topper Cousin Copper, 'twould be gold sitting atop the year-to-date BEGOS Market Standings with eight months plus one trading day in the books:

Time was, of course, when one referred to the red metal as "Dr. Copper" given its prowess as a leading economic indicator, prior to global demand then softening, in turn relegating Copper to merely a metals-family cousin. But in 2017 with a purported pickup in China's demand and striking supply concerns, pedal-to-the metal Copper is red-lining its tachometer, in stark negative correlation to our StateSide Economic Barometer. Below with the Baro we've also the red line which is the ever-correctionless stock market as depicted by the S&P 500 Index from one year ago-to-date:

"Jeepers, mmb, that's quite a sudden plunge!"

Squire, just because some of the "headline" numbers such as an upwardly-revised Gross Domestic Product, along with improvements in Personal Income & Spending, Consumer Confidence and the Institute for Supply Management's manufacturing survey are all attractive, other core foundational hard data is not looking so good: growth in Non-Farm Payrolls slipped as did that for Hourly Earnings; the Unemployment Rate ticked up; the Average Workweek was reduced; the rate of layoffs rose; vehicle sales declined; and Construction Spending actually shrunk as did the level of Pending Home Sales. Still confident after reading that?

Here's something that is a confidence builder: below in the chart of gold's weekly bars we see the blue dots of parabolic Long trend now ascending at a better pace than that of their four-week failure during June. And not only does the rightmost bar mark gold's second strongest week year-to-date, moreover the dashed trend line across the graphic now is rising in rousing Vicki Sue Robinson "Turn the Beat Around"(1976) style:

"That's nice, but don't slip your disco there mmb..."

Tu parles toi, Squire. (En route in visits to Amsteg, the lad's own dancing antics have become quite popular at Lausanne's XOXO Club).

But the point is: 'tis energizing to see gold improving both near-term and broader-term, rather than suffering through the annoyance of up stints running out of puff within an overall downtrend. That looks to be changing, and explains to some degree why gold's "Baby Blues" -- those dots below shown that depict 21-day linear regression trend consistency -- have hovered as high as they have for as long as they have. More so, they've curled back upward as we below see on the left, the 10-day Market Profile on the right:

'Course, leave it to our "Nothing Keeps Going in a Straight Line Dept." to caution us from the website's Market Values page with this next graphic, wherein we see from one year ago-to-date Gold presently some 50 points "high" above its smooth pearly valuation line, born of the yellow metal's changes relative to those of the other four primary BEGOS Markets. You can see per the oscillator in the lower panel that the 50 level has repetitively led to pullbacks in price:

Speaking of from one year ago-to-date and this being month's end, here is our comparative chart of gold's percentage track with those of major precious metal equities brethren. Therein we find Franco-Nevada (FNV, +14%), gold itself essential "unch", Newmont Mining (NEM, -2%), the exchange-traded fund of mining companies (GDX, -6%), Goldcorp (GG, -12%), and the exchange-traded fund of silver miners (SIL, -21%). But note the steeper acceleration for the miners vs. gold over the past month. And specific to laggard Sister Silver herself, the average millennium-to-date Gold/Silver ratio is 59.8x, yet is at present 74.7x. Silver settled the week at 17.805; but bringing her price in line with that ratio's average puts her at 22.220, nearly a 25% increase. Then figure in some of that good old-fashioned miners leverage, and you may just be lookin' at silver equities double. Something about which to think:

Finally to our monthly Gold Structure as charted since the All-Time High for which the sixth anniversary is this Wednesday (06 September). Again, 'tis all about regaining Base Camp 1377, morphing that level from resistance into support, and then standing by for gold to fly:

In closing, a tip of the cap to one Danielle DiMartino Booth over at Bloomy, who rationalized that the next rate decision (20 September) by the Federal Open Market Committee could actually be one of easing. That would true up nicely with the declining Econ Baro, wouldn't you say? May gold continue to light the way!

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.

USA has the world’s largest holdings of gold: 8,134 - representing 77% of its Total Foreign Reserves.
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