The Price of Gold in Foreign Currencies
Where to begin with this week? Writing about the markets, in an interesting manner isn’t easy. Not much changes from week to week, or even since April, these past four months in the Dow Jones Bear’s Eye View (BEV) chart below. The Dow Jones since late April, has stubbornly remained in scoring position, above its BEV -5% line. While doing so, it has generated thirteen new BEV Zeros, or 0.00%s, which each equaling new all-time high in a BEV chart.
The Bear’s Eye View treats each of these thirteen new all-time highs the same, reduces each to only a 0.00% in a BEV chart. So, in the BEV chart below, we don’t see even a hint of how since April, the Dow Jones has advanced by 4080 points, or 9.45%, when looking at the Dow Jones as Mr Bear does below; in terms of new all-time highs, and percentage claw-backs from those new all-time highs.
So, why look at the Dow Jones as Mr Bear does, with the Bear’s Eye View? Because looking at the BEV chart for the Dow Jones above, going back to 1978, we see each bear market decline, in precise percentage terms, going back a half century. Since 1978, a growing cluster of BEV Zeros in the BEV chart above, ultimately resulted in a selloff in the Dow Jones, my proxy for the broad stock market.
Seeing the Dow Jones being clawed back by 35% from its last all-time high, signaled a very strong buy-back point in the stock market. This practical information is not seen, when studying the Dow Jones plotted in the dollars it is published in.
It has been over six years since the Dow Jones has seen a 35% claw-back in its BEV chart above. That plus, there have been many BEV Zeros generated by the Dow Jones since the March 2020 Flash Crash, producing a fine cluster of BEV Zeros in the BEV chart above. How much more time before the Dow Jones, for the fifth time since 1978, sees its next 35% claw-back in its BEV chart above?
I haven’t a clue. But studying the Bear’s Eye View chart above, this is * NOT * the time to be looking for reasons to buy and hold, anything sold to the public by the bulls now running wild and free on Wall Street. This seems to me, a time to reduce market exposure to the stock market, by selling a significant portion, or everything, and going to cash. And have the patience to wait until the next time the Dow Jones, in its BEV chart above, has its next 35% claw back.
And the Dow Jones will see another big 35% market claw-back, maybe even a larger percentage claw-back sometime in our uncertain future. Below is the BEV chart for the Dow Jones going back to 1885, a 141-year history of the Dow Jones making new all-time highs, and the negative percentage claw-backs from each of them. Big market declines, following growing clusters of BEV Zeros, are just a fact of life on Wall Street.
If you are going to play the game, know the rules. As seen below;
- market advances (growing clusters of BEV Zeros) are followed by market declines,
- market declines, are followed by market advances.
Next is the Dow Jones in daily bars below. After last week’s outstanding advance, the Dow Jones took a rest this week. That is how it goes sometimes.
Will the Dow Jones advance to 55,000, and then to 60,000? Count on it, for as long as the Dow Jones remains within scoring position in its BEV charts above. But should the Dow Jones once again drift below its BEV -5% line, trending towards is BEV -10% line, the Dow Jones closing above 60,000 becomes less and less likely.
Mark; how can you recommend exiting the market for fear of a big market decline, while still anticipating the Dow Jones going to 60,000 in the near future?
Oh, that is easy;
- when I study my BEV charts above, I’m expecting Mr Bear to claw-back a big percentage of the gains the bulls have enjoyed, following the lows of March 2020, maybe even a reprise of the Depressing 1930s’ 90% market crash,
- when studying the Dow Jones plotted in the dollars it’s published in below, I see only blue-birds, puppy dogs, and sunshine, so I’m feeling particularly bullish.
WARNING: follow the markets long enough, and you too can become confused and delusional.
Moving on to my table listing the BEV values of the major market indexes I follow, the market is once again generating new all-time highs. The week closed with five of them, and the following eleven market indexes closed the week in scoring position, with BEVs of less than -5%.
This looks really good for the bulls. Dow Jones at 60,000? Ya, sure. Why not? I have no answer to why not. But I’m out of this market, and that is how it is going to be, until I see a big claw-back on the Dow Jones’ BEV charts above!
In this week’s performance table above, most of the indexes were up for the week. The XAU, gold, and silver remained at the bottom of the table, but they advanced from last week. I’m still expecting big things from the old monetary metals, and their miners before Christmas this year.
Over at King World News, Nomi Prins predicts the BIS will make silver a Tier 1 Asset, sending silver price skyrocketing to $180.
Knowing T-bond yields have been rising since August 2020, believing the BIS will be forced to remonetize silver, is a great call for Ms. Prins, one I believe is very likely.
A significant portion of the financial world’s Tier 1 financial assets are currently US Treasury debt, or high-quality, interest-bearing debt. Assets that deflate in valuation, when interest rates and bond yields rise. Since August 2020, chart below, valuations for T-bonds, have been deflating, as bond yields have been trending ever higher. In the chart below, yields for the US Treasury’s 20 & 30 year bonds are now over 5%. This is huge! How much longer before the current yield for the 10yr T-bond is over 5%, and the 30yr T-bond’s yield rise above 6%?
Deflating Tier 1 assets (US Treasury Debt) isn’t good for the global banking system. Deflation is something the BIS is supposed to be safeguarding against. In recent history, the BIS has allowed gold to become a Tier 1 asset. Should they now also allow silver, another historic monetary metal, to become a Tier 1 asset is logical, as gold and silver are assets whose valuations are expected to inflate, as bond valuations continue to deflate, as bond yields increase.
Rising bond yields are also damning. In 1971, the BIS cheered when the US Treasury decoupled the dollar from its $35 gold peg. They made it clear gold was no longer a monetary asset for the global banking system. Today, after decades of unceasing monetary inflation, dollar inflation, unchecked by a peg to gold or silver, the BIS was forced to remonetized gold by making it a Tier 1 asset. And now, Ms. Prins is predicting the BIS will soon also remonetize silver too. What is the matter? Is the BIS beginning to see a problem with the dollar, no longer pegged to gold?
The XAU below is looking good. After correcting below its BEV -35% line, just thirteen days ago, this week it almost closed above its BEV -20% line. Forget the Dow Jones, the gold and silver mining stocks now rebounding from a 35% correction, are where I want to be.
Above, since 1983, until August of last year, the XAU could not trade above 230. Then from last August, to March 2nd of this year, the XAU surged to 469, in only six months. That was quite the surge, one that needed a correction. It appears the correction has now completed, and the XAU is advancing once again, but where to? XAU at something over 1,000? I’m thinking it.
When thinking of gold, people usually think of its price it in terms of American dollars. That is understandable, as gold trades internationally in dollars. But when gold is traded domestically, say in Europe or Asia, the transactions are in the currencies of the nation where the gold is being traded. It’s interesting seeing the price of gold different currencies, so I constructed the tables below for two dates;
- 27 December 1999,
- 10 August 2026,
to better see how gold has appreciated, in different currencies, since it began its bull market many years ago.
I derived these gold prices using the foreign currency, weekly closing data I’ve maintained over the years, along with the weekly closing price of gold I also maintain.
Converting US gold prices to another currency is simple. As an example, I showed how I converted US gold prices to Australian gold prices in the table below. If the conversion rate between the US dollar, and the Australian dollar is 1.417, then multiply the US gold price by 1.417 to see what an ounce of gold goes for Down-Under.
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I sorted the data in the table below by the Factor Change Column. Gold in US dollars is #13 in the table. Those countries that have seen gold appreciate less in terms of their currencies, than gold has in US dollars, are found above #13. Those countries that have seen gold appreciate more in terms of their currencies are found below #13.
Keep in mind, this table is displaying prices for the same ounce of gold. Any variations in the price of gold from one currency to another, is due only to currency exchange rates. Currency exchange rates depend on various factors. The major factor is if a country is inflating its currency at a faster, or slower rate, than the rate of inflation of the US dollar, as managed by the idiots at the FOMC.
Those countries having the price of gold appreciate in terms of their currency, something less than the price of gold in US dollars (#1 to #12), have inflated their currencies at a rate of something less than the idiots at the FOMC have done with the US dollar.
Those countries who have seen the price of gold appreciate in their currency more than the price of gold in US dollars (#14 to #37), have inflated their currencies at a rate of something more, sometimes much more than the idiots at the FOMC have done with the US dollar.
So, the management of currencies by countries from #1 to #12, have been more responsible than the management of the dollar by the FOMC. The management of currencies by countries from #14 to #37, have been less responsible than the management of the dollar by the FOMC. These currencies trading today, with their exchange rates allowed to “float” from day to day, and hour to hour, no longer pegged to a precious metals standard, ultimately will result in the ruin of the global economy.
That is just my opinion, an opinion that would result in a failing grade at a college economics class. But I’m not alone in having that opinion.
These views on central banking, and its management of a national currency are almost two hundred years old. But Warren Buffett’s father, Howard Buffett, shared them following WWII.
Looking at how the dollar has lost purchasing power since the end of WWII, I do believe Congressman Buffett saw the future, as Nomi Prins does today.
Moving on to gold’s BEV chart, like the XAU, I believe the correction following gold’s January’s last all-time high, bottomed a month ago, and is now roaring back toward its next all-time high in its BEV chart below. How much longer before we see gold above its BEV -15% line ($4,658)?
I’d like thinking gold would be there by the close of next week. It could do it, but that wouldn’t be prudent on my part anticipating that, to then predict that in writing. I’m keeping in mind, gold’s anticipated advance from the lows seen below, will most likely be the same as its decline from last January to July; in fits and starts, up one day, then down the next, but trending upward in time, to new all-time highs.
So, it’s best if I just call gold’s advance as it progresses in its BEV chart below, market commentary such as; gold closed above its BEV -20% line twice this week, on Monday and Wednesday. I expect even better in the weeks and months to come.
In silver’s BEV chart above, it too appears to have bottomed, that its six-month correction, from January to July, is now best seen in the market’s rear-view mirror. The next step for silver to advance to, is its BEV -40% line ($71.07). That is only $6.31 (9.75%) from this week’s close. It could do that by next Friday. Will it? That is something we’ll have to wait to see, but most likely not.
Gold in is step sum table below, is finally seeing a surplus of advancing days, as seen in its now positive 15-count. On Monday, gold’s 15-count increased to a +7, making gold an overbought market. But markets don’t like being over bought.
So, I’m expecting an increase in declining days, to bring down gold’s 15-count. That doesn’t mean the price of gold must decline, along with an increase in declining days.
The Dow Jones this week saw four of its five trading days, decline. Only Thursday was an advancing day. But for all that selling, the Dow Jones BEV value closed the week with a BEV of -1.13%, only 1.13% below its last all-time high, seen on August 5th. That was a lot of work for the bears, work they didn’t get paid for.
Dow Jones closing above 60,000 by Christmas? A 60K Dow Jones is only 11.6% away from this week’s close. So, I’m still game for that, and will be until the Dow Jones daily volatility’s, 200D M/A begins to rise up to 1.00%. Rising daily volatility is * NEVER * good for the stock market.
At the close of this week, daily volatility for the Dow Jones decreased to 0.63%, down from 0.65% last week. If you are bullish, you have to like that. And I am short-term bullish on the stock market. Dow Jones to 60,000 by Christmas? If it can keep its daily volatility at the low levels we’ve seen since 2022 in the chart below; seeing the Dow Jones close above 60,000 by Christmas could very well happen.
But should the Dow Jones begin seeing daily moves of +/-2%, or more, from their previous day’s closing, Dow Jones 2% days that will move its 200D M/A towards the red 1.00% line above, all bullish bets for the stock market from this guy are off the table.
Mark J. Lundeen
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