Well After All That, Gold And Co. Are Pretty Much Unchanged

November 15, 2020
Market Analyst & Author

What? Apparently there was a major StateSide election just nine trading days ago? Are we sure about this? Did someone tell the world's most important markets? If one did not know, surely one would not think so. To wit the primary BEGOS Markets. Here we go:

Bond: present price 172^04; so 'twas as well 16 trading days ago;
Euro: present price 1.1845; so 'twas as well 16 trading days ago;
Gold: present price 1888; so 'twas as well 22 trading days ago;
Oil: present price 40.12; so 'twas as well 16 trading days ago;
S&P: present record high price 3585; yet 'twas nearly so 24 trading days ago.

All that election folderol and yet our major markets are as if they'd nowhere to go.

Further back still, in tracking the BEGOS Markets from the 2020 Autumnal Equinox-to-date, the net change through these past 39 trading days (save for the unidirectional S&P 500) also is pretty much "unch". Here are the percentage tracks of the Big Five so far this fall season; the red vertical line marks the Stateside election day of 03 November:

Thus to all those going on about "excessive market moves" since the election, we again affirm -- as does the above chart -- that change is an illusion whereas price is the truth, which is little net changed (again save for the never-goes-down S&P) across nearly two months.

"But the election hasn't been settled yet, mmb..."

Technically 'tis true, Squire. The Presidency is to be "certified" on 14 December followed by the state of the Senate on 05 January: the latter combined with the usual new year volatility can then well propel prices to places they are not now. Ain't that the truth. And specific to having Gold, regards of who wins what, one does not want to be without, as the United States, indeed the world, seek to monetarily print and fiscally tax their way back to post-COVID prosperity. Pass the vaccine needles tray and have a nice day.

Meanwhile in turning to Gold's weekly bars, we see the continuing state of consolidation rather than selling, the descending red dots of parabolic Short trend now 12 weeks in duration. Indeed for you truly technical types out there, this past week's bar "engulfed" the entirety of the prior seven weeks: that has only occurred one other time this millennium, in fact this year for the week ending 13 March when COVID kicked into gear, Gold then abruptly dropping into the 1400s before beginning the drive to its All-Time High of 2089 come 07 August. 'Tis a record which we sense shan't stand for long. Nonetheless for price's present parabolic Short trend to become Long, the distance from yesterday's (Friday's) settle at 1888 to the flip price for the ensuing week at 2012 is 124 points: given Gold's expected weekly trading range is 80 points, 'tis a bit of a stretch; (the expected daily trading range is now 35 points). All-in-all, here's the ever so bullish graphic:

As for the Economic Barometer, its week was meek with just seven metrics for which to account; there are more than double that next week. Still of note, there was no retail inflation in October, but the Trade Deficit doubled from its year ago level: "Buy China!" And the first post-election Sentiment read from the "Go Blue!" University of Michigan was quite a downer from 81.8 just two weeks earlier to 77.0: for the past 123 readings (going back some five years), this initial November change ranks seventh-worst. No surprise there given COVID's coming on and (courtesy of Dow Jones Newswires): "Joe Biden has pledged to raise taxes on business and regulate it more."

Sad sentiment indeed. Remember Doris Day: "Gonna take a sentimental journey"from back in '45 as post-war "The Dow" went from 152 to 191, a +25.6% gain? Yet now going forward with bottom lines to loom lower, does "The Dow" next revert from 30,000 to 20,000, i.e. -33%? As for those 435 S&P 500 constituents having reported for Q3, only 49% bettered their earnings from a year ago. Thus is it any wonder our "live" price/earnings ratio is a stratospheric 44.0x? No. Here's the Baro, with the earnings-vapid S&P at its all-time closing high in tow:

To Gold's recent ride -- which net-net in reality as noted finds price where 'twas two weeks ago and six weeks ago and seven weeks ago -- we below show on the left price's daily bars from three months ago-to-date along with the aimless baby blue dots of linear regression trend consistency, of which at present there is none. And on the right in what has become a very congested picture is Gold's 10-day Market Profile, the more volume-dominant price points as labeled. We mentioned a week ago that "...the yellow metal appears safe in the 1900s...". But since then with this past week's pullback to as low as 1848, despite the broader-based bullish picture, we're still sensitive to the 1830 level being key for Gold to hold:

Both Silver's drill and picture are the same, which we deem as positive in that she's adorned in her precious metal pinstripes rather than her industrial metal jacket. We still see Silver as the better potential percentage performer going forward. Gold's run from here at 1888 to our Scoreboard valuation of 3599 would be a gain of +91%; Silver's doubling from here at 24.76 to 49.52 would still just fall short of her All-Time High of 49.82 (25 April 2011). Indeed upon Gold reaching 3599, were the Gold/Silver ratio (at present 76.3x) be at its millennium-to-date average of 66.2x, Silver would be priced at 54.37, an increase from today of +120%. Just some fun with the numbers, but the leverage still leans toward being with our dear Sister Silver:

Toward a few closing notes, here is...

The Gold Stack

Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 3599
Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
2020's High: 2089 (07 August 2020)
Gold’s All-Time Closing High: 2075 (06 August 2020)
The Weekly Parabolic Price to flip Long: 2012
The Gateway to 2000: 1900+
10-Session “volume-weighted” average price magnet: 1900
Trading Resistance: the more dominant ones from the Profile 1891 / 1908 / 1949
Gold Currently: 1888, (expected daily trading range ["EDTR"]: 35 points)
Trading Support: the more dominant ones from the Profile 1878 / 1862
10-Session directional range: down to 1848 (from 1966) = -118 points or -6.0%
The Final Frontier: 1800-1900
The Northern Front: 1800-1750
On Maneuvers: 1750-1579
The 300-Day Moving Average: 1695 and rising
The Floor: 1579-1466
Le Sous-sol: Sub-1466
The Support Shelf : 1454-1434
2020's Low: 1451 (16 March)
Base Camp: 1377
The 1360s Double-Top: 1369 in Apr '18 preceded by 1362 in Sep '17
Neverland: The Whiny 1290s
The Box: 1280-1240

To wrap:

■ Judy "Gold Standard" Shelton in just a week's time could receive confirmation from the Senate to place her on the Federal Reserve Board of Governors for a four-year stint. Surely this can only be perceived to be at worst a Gold-neutral and ... with a li'l old fashioned debasing showcasing ... a Gold-positive.

■ Did your wealth benefit from the Department of Justice's seizure of Silk Road bits**t ? Week-over-week saw the faux invisible cryptocrap soar from 14165 to as high as 16585. And yet as you know, it can vanish in an electronic nanosecond: "But I swear it was just there!" Prove it.

■ Finally, this past week from a seasoned, long-time markets colleague, the quote that defines a hard-earned successful career: "I'm making my trading plans based on my charts, not on TV." That is Hall of Fame verbiage for our "Trade the News, Lose Yer Shoes Dept." Here Here, my long-time friend!

And 'tis as applicable as ever to Gold!

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.

The purity of gold is measured in carat weight.

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