Good Week For Gold And PM Mining Shares

November 14, 2021

On Monday, the Dow Jones made its 50th BEV Zero in the Bear’s Eye View chart below for the past year. Then on Tuesday, the Dow Jones, along with the rest of the market began selling off, but remained well within scoring position. All this is to be expected following a three-week period of many new all-time highs in all of major market indexes I follow.

Here’s the table listing the BEV values for the major market indexes. On Monday it wasn’t just the Dow Jones that made a new all-time high. But as I pointed out last week, with the Dow Jones’ 15-count reaching an extreme of +9, I was expecting the market may enter a period of selling. And as seen in the table below, that is exactly what the stock market did this week.

Seeing the week close with eighteen of these indexes in scoring position, or within 5% of their last BEV Zero, it’s best assuming the market has entered a period of consolidation to digest the gains of the past month. It may be a few weeks or even months before we see again days like Monday, with its multitude of new all-time highs. Then, maybe next week we’ll see the market take off again.

I’m out of the market prediction business. But one thing I’m very aware of is, for the past year the Dow Jones has daily closed either at a new all-time high, or within 5% of one. This is a very long-established market trend, one that a year later is now getting stale. But, until the market sees some extreme-market events; Dow Jones 2% days (days of extreme volatility), and or NYSE 70% A-D days (days of extreme market breadth), I believe the path of least resistance for the stock market remains upward.

This week looked bad in the daily-bar chart for the Dow Jones. Should next week look the same, that wouldn’t be good. But the chances of that happening are slight, unless we see those extreme-market events as mentioned above.

I’m remaining bullish on the stock market, but don’t confuse my bullishness with a recommendation to buy, as most of the potential for profits in the stock market are now best seen in the market’s rearview mirror. Look at the gains for the major market indexes above; from their March 2020 lows, they’re huge. It’s just not reasonable expecting more of the same for 2022.

The idiot savants at the FOMC “injected” an additional $26.44 bil into the financial system this week (table in chart below). On a short-term basis, I guess that is good for the stock market, as this additional “liquidity” is supporting valuations in the stock market.

But on a longer-term basis, what is seen below is how the best & brightest from the Ivy-League Establishment is going about destroying the US dollar as a global-economic unit. Don’t think the members of the FOMC, those I call idiot savants, don’t know exactly what they are doing.

Why are they doing this? According to some people, the “policy makers” are determined to reduce Earth’s population down to a more “manageable level.” Do you think that’s ridiculous? Look at the TV. What do economists and other “experts” call people? Consumers; a clinical definition that to my ears is something less than human. A dehumanizing term used by our self-described elite, the “policy makers” to define their fellow human beings that’s no better than calling us specimens.

Why define us as consumers when the “policy makers” could have as well chosen to define us as producers? Am I being a bit too sensitive? Maybe. And then maybe not.

All during the 20th Century, as a prelude to mass murder; before Lenin’s Bolsheviks liquidated the capitalists as a class, they first had to redefine the capitalists as parasites on society. Hitler’s National Socialism (Nazi Party) did the same with Jews, Gypsies, and Slavic people. With this historical insight, I look at today’s Critical Race Theory (CRT), another “policy initiative” from academia with increasing suspicion.

Should the “policy makers” succeed in creating a Greater Depression, an economic dislocation greater than they created during the depressing 1930s, they just might accomplish what they believe they need to “save the planet.” Because there is only one way to reduce humanity’s carbon footprint on Earth – reduce the number of “consumers”, consuming Earth’s precious and finite resources.

The price of crude oil is going up. It’s what’s to be expected when the buffoon currently occupying the Oval Office limits crude oil flowing into American refineries by shutting down pipelines from Canada. Doubtless, in the months and years to come there will be pullbacks in the price of oil. But before the current “bull market” in crude oil is over, we’ll see petroleum, and gasoline and natural gas trading at new all-time highs.

So, what’s happening with gold this week? Good stuff! Last week I commented that gold had only so much to move to get above its BEV -10% line ($1855.30), a gap of only $37.64 from last week’s close. I said that in a good market gold could easily close this gap in a single week – BUT – was this market that good?

As it turned out, this week wasn’t just a good market, but was better than a good market. One that took gold up $46.35, which allowed gold to close within 10% of its last all-time high in its BEV chart below. Well, it’s one thing seeing gold close above its BEV -10% line. It’s another thing for it to stay above this critical level, and then go on to making a new all-time high (0.00% / BEV Zero). I’m optimistic that in the weeks or months to come, gold will soon be making market history somewhere above $2,061.44 an ounce.

This is also good news. Gold, from last week’s close to this week’s advanced by 2.58%. The Barron’s Gold Mining Index, from last week’s close to this advanced by 9.50%, as the XAU advanced by 7.08%. Historically, the gains seen in gold mining during gold and silver bull markets have always been greater than the gains seen with gold or silver bullion themselves.

So, if it walks like a duck, and quacks like a duck, is it a duck? What do I know about ducks? But as far as gold and silver bull markets go, this market action looks very bullish to me.

I’m not a “market expert” in any sense of the term. But I’ve been watching markets for the past five decades. And I see no reason why anyone would want to monkey around with the stock market, when the real action in the markets, in the months and years to come, will be found in precious metal assets.

Gold and its step sum plots below look great; both are taking off to the upside, which is the best side for gold bulls like you and me. Do I dare say it? That between this week’s close and a new all-time high below is only $197, a sum that could easily be advanced by Christmas of this year in a good market. I dare not for fear of jinxing what we see below, so forget I said it.

Alfred below is still smiling, and I believe for good reasons. So, unless we see a return of extreme market events, I’m anticipating the Dow Jones will continue rising to higher valuations, until one day it just stops. And no one on Wall Street will ring a bell when it does.

But why would the market stop advancing one day? Just on the general understanding of what bull, and bear markets do; is that one day they start, only to be followed by another day where they stop. It may take years, and even sometimes decades between the starts and stops of these market events, but with each start comes a stop.

This is why retail investors, over the long term, as a group fail to profit when investing in the stock market. They don’t understand that a day comes where they have to sell, and not come back until Mr Bear finishes all of his work on Wall Street.

As for a specific reason for why this bull market advance may stop, there are many to choose from;

  • Rising energy prices and CPI inflation pushing bond yields and interest rates higher.

  • Deflation in the Chinese real estate bubble impacting Wall Street in a big way.

  • Supply chain dislocation in global commerce shutting down factories and retailers.

Maybe the CCP starts bombing Taiwan; lots of things could happen. And sometimes big things happen with no impact on the stock market. The Monday following Pearl Harbor, December 8th 1941, the Dow Jones was down by only $4.08, or 3.5% (table below). Note; before the 1950s, the stock market traded on Saturdays.

Why did Pearl Harbor have so little impact on the Dow Jones? Because after the depressing 1930s, (unlike today) valuations in the stock market weren’t inflated, and so not subject to deflation.

Just keep in mind the biggest problem the stock market faces in November 2021, is that its valuations have been grossly over inflated by the Federal Reserve’s Open Market Committee (FOMC). Any political or economic event that does prick their bubble, will be used by these people to cast their responsibility for the pending disaster on to others. But don’t believe it, as they, and they alone are the ones who are responsible for the pending disaster.

Look, the FOMC is already pointing the finger at the Chinese real estate sector in the article below. I’m so fed up with these people, and the mainstream media that is incapable of looking at the Federal Reserve System with a critical eye.

https://www.bignewsnetwork.com/news/271701636/us-federal-reserve-warns-of-turmoil-in-chinese-real-estate-sector

Gold in its step sum table below is beginning to look interesting. In its last two days this week, it closed within 10% of its last all-time high, as its step sum advanced ten steps in the past twenty-five trading sessions. That’s a big gain, and I think an appropriate one too, if in fact gold (and silver and the PM miners) are finally breaking free of the vice-like grip of the “policy makers.”

Gold also closed the week with a 15 count of +7, which makes gold an overbought market. Normally, I’d say gold is now due for a pullback. But I’m not too sure that is going to happen this time. I’m thinking that maybe this time gold is due for catching up with the gains I’ve had to pay for gasoline at the pump, and the vegetables and hamburger I have to buy at the supermarket.

I’m also looking at gold volatility’s 200 Day M/A. At 0.63%, it’s not particularly bullish. But considering how well gold has done with this low volatility, one wonders what it will do when it once again rises above its 1.00% line? In good time, I expect we’ll all be pleasantly surprised when we finally discover the answer to that question.

On the Dow Jones’ side of the step sum table above, this week it worked off its overbought +9 / 15 count, closing the week at a neural +5. But, I think more selling is still to come, so I’m still anticipating the 15 count for the Dow Jones will eventually go into negative territory sometime in the weeks to come.

If this happens, we’ll have to see if the Dow Jones for the first time in a year sees its daily BEV value decline to below scoring position; more than 5% from its last all-time high. If not, should the Dow Jones’ BEV in the weeks to come remain at, or above -4.99% for its BEV value, that would be very bullish, and we may actually see an attempt for Dow Jones 40,000 in the months to come.

In any event, even should the Dow Jones’ BEV go below -10%, I’m remaining bullish on the stock market until I see some bear sign on the markets, days of extreme volatility and market breadth.

Mark J. Lundeen

[email protected]

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The Incas thought gold represented the glory of their sun god and referred to the precious metal as “Tears of the Sun.”

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