first majestic silver

Gravity Gold Defies For A Four-Week Rise

Market Analyst & Author
January 22, 2017

From the final week of 2016 through the first three of 2017, gold has strung together four consecutive winning weeks, the three for this year as charted in the above newly attached panel to the Gold Scoreboard. Therein, we can instantly see gold is better positioned now than 'twas three weeks into last year.

Yet, one might opine that four consecutive up weeks augurs for a price pullback. Albeit contextually, through the 838 weeks of this Third Millennium-to-date, Gold has recorded mutually-exclusive up streaks of five weeks (11 times), six weeks (4 times), seven weeks (4 times), eight weeks (1 time), nine weeks (1 time), and yes, twelve weeks (1 time), that latter run during 2007 from 20 August through 09 November.

Moreover, even were gold to pull back a bit through here, that's just fine: there is "room" to so do in the construct of moving higher still, for as anticipated, the parabolic trend by the weekly bars has just flipped from Short to Long per the rightmost blue dot, price settling out the week yesterday (Friday) at 1210:

To be sure, the parabolic analytic, as are all measures technical, is arbitrary subject to the mathematical parameters used to create it. And as a veteran trading colleague penned toward the end of last year, projected trading outcomes are without certainty, their success instead being based on probability, ('round which the website's Market Rhythms page is based). So with respect to last week's missive "Gold Seeking 1240 on this Up Run", and given the occasional question we receive on the duration of gold's weekly parabolic trends, we ran the following data exercise.

Since Gold's All-Time High of 1923 (06 September 2011), price's broad trend obviously has been down, (280 weeks having since passed). Therein, there've been 12 weekly parabolic Short trends, the 12th weekly parabolic Long trend just now having begun. This table is specific to Gold's prior 11 weekly parabolic Long trends, showing their duration and maximum gains en route:

Whilst the above table contains a couple of "stinkers", (i.e. dismissing certainty), the probability from such "past performance" averages and medians suggests Gold ought at least reach the underbelly of its 1240-1280 resistance zone (just 30 points, or 2.5%, above the present 1210 level) prior to the next swing of the parabolic trend back to Short.

"And cash management is everything, right mmb?"

Absolutely right, Squire, for as we oft quip, 'tis more important, indeed more difficult, than getting direction correct: befriend the trend, but with the timing, contend. (That courtesy of our "No Pain, No Gain, But Don't Be Insane Dept.")

Speaking of insane, have you noticed how narrow the stock market range has become of late? Tight as a drum, 'tis! Through this millennium's first 16 years, the average January trading range of the S&P 500 has spanned 7.6%, (i.e. between the month's low and high). Now with but seven trading days remaining in 2017's January, that range month-to-date is but a wee a 1.6%; were we at month's end, that'd be the narrowest January percentage trading range in at least 25 years! Here are the website's current "expected daily trading ranges" for both Gold on the left and the S&P ("Spoo") on the right; the time frames being from one year ago-to-date, look at the EDTR for the S&P at this time last year vs. today:

Here, too, are these two markets' percentage tracks from one month ago-to-date (21 trading days). Brings to mind that Dean Martin film from '62 entitled "Who's Got the Action?" Across this timeframe, Gold's +6.5%, but the S&P is dead money:

Not necessarily having expired, the Economic Barometer nonetheless has been banged about a bit of late, its having run out of puff perhaps impeding the S&P's ability to proceed. Look for a lackluster reading from the lagging report of Leading Indicators to be released this coming Thursday (26 January):

Still, in a Bloomberg interview a week ago with Kleinwort Hambros' Mouhammed Choukeir, the new President [has now inherited] an economy which is "strong". 'Twould appear the Chair of the Federal Reserve Bank similarly sees same, Janet Yellen noting this past Wednesday that interest rates "should" rise steadily.

But on the other side of the world, 'tis the other way 'round, where we find China's just-reported 2016 economic growth of 6.7% considered as "strong", yet its central People's Bank nevertheless pumped a weekly record amount of ¥1.13 trillion into the system ahead of 28 January's commencement of the Year of the Rooster. (Perhaps we ought notify France).

Meanwhile "over there", Germany's investor confidence is picking up steam based upon "strong" data into year-end 2016. And in United Kingdom, consumer prices in December sped up to their fastest annual pace in better than two years. (Thank you Brexit and "dollar strength").

'Course when it comes to "strong", we really need not look further than Gold as measured below left by its surging baby blue dots depicting the robust upside consistency of the 21-day linear regression trend across this most recent month of the last three; 'tis almost a race now for price to get to the aforementioned 1240 level, (hopefully aided by the new swing of the weekly parabolic trend to Long), before the "Baby Blues" turn tail sub-80% (the upper blue axis). Meanwhile below right in the 10-day Market Profile, the supporting price cluster 'round 1203 is the trading area we need to see hold:

Next, we've the same drill for Silver, the resulting panels looking similar to that for Gold. But Sister Silver's price today at 17.11 is quite lacking compared to Gold's per this "random spot check": the last time Gold actually settled specifically at 1210 was just over three years ago on 26 December 2013; that day, Silver settled at 19.78, almost $3/oz. higher (for a Gold/Silver ratio then of 61x) than 'tis today, (said ratio now up to 71x). Blame it on Copper's devious industrial metal efforts to retard Sister Silver? No doubt about it: on that same day back in 2013, the red metal's settle was 3.3875; today 'tis at 2.6155. Oh, wicked Cousin Copper!

So defying gravity, or otherwise, there's no mistaking Gold's four-week rise, the fresh weekly parabolic swing to Long supportive, we hope, of further buys at least to a 1240 prize. That's near-term. More broadly as is our wont to say, the Gold Scoreboard's 2669 level is where we "ought be" today.

To that end, a valued friend sent to us a BBC piece from this past week entitled "Does living to 100 mean we'll work forever?" Our three-word reply was plain: "Buy Gold. Period."

Therefore in closing, the red crayon, please:

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.

Nearly 40 percent of all gold ever mined was recovered from South African rocks.
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