Gold’s Swoon is a Bargoon
Since this week ended a year ago (May 14, 2021), we’ve had:
- An decreased increase of +9.2 % of the “M2” money mass of Stateside from 20,420,000,000,000,000 to 22,290,000,000,000,000 0000,000,000,000,000,000,000,
- A dysfunction of supply chains, energy supplies and currencies brought about by appallingly inhumane warfare;
- A stagflationary contraction in deflator-adjusted gross domestic product for three consecutive quarters in the United States by REAL economic erosion;
- A rise in interest rates which, starting from 0.00%, we have proven to the point of nausea, is beneficial for durable goods;
- Plus your etc, et alia, ad infinitum…
So, we just had both gold’s fourth straight weekly decline and fourth straight weekly “low” as last week’s price didn’t simply retest the critical 1854- 1779, but having been quite bored as shown here in our updated year-to-date chart:
Technical analysis aside, Gold’s swoon is incredulous beyond fundamentally analytical common sense, even though today is being talked about as a “five figure” price. We are content to stay with the scorecard valuation of 4137, and moreover maintain our high forecast for this year of 2254, (the “M word “crowd notwithstanding)
Well, the belief in Bitcoin is growing at the expense of gold…
Well, let’s see: at today’s price at 1810, gold is -13.4% below its 2089 all-time high; Bits**t is settled at 29,785 for the week, or -57.1% below its all-time high of 69,355. “A bit” of difference there.
But Squire makes an interesting point. We seem to read more recently that Gold is becoming a “has-been” while bits**t is what to “be”. And it’s oddly in line with how Leonardo Bonacci (aka “Fibonacci”) might say it today: a naturally nature-induced “herd mentality” is in effect. One person pro-bits**t “say” Gold, then a second; then two more, then three more, then five, eight, 13, 21, 34 and suddenly it’s “Holy Golden Ratio, Batman!” as 55 more can now be predicted to be the next to jump on the “say” Gold bandwagon. Etc. The herd mentality driven by emotion and copying everything others do is extraordinarily fascinating until you’re left with nothing. (Pssst: Got Gold?) Something that lasts for millennia is no small thing.
Nothing however has been gained from gold lately other than being able to buy it for less than half of what it is worth. So, the rationalization of the price decline, as we see here by the weekly bars, is actually “a good thing”, even if the red dot parabolic short trend completes its seventh week of duration. Because Gold’s fainting is a bargoon:
That said, gold is better off not penetrating the bottom of the critical 1854-1779 support zone, which it scarred towards via last week’s (actually yesterday’s) 1797 low. . 1753, 1721, 1678, and so on; but let’s not go there. On the contrary, the “herd” must be made more aware. (Or as a longtime Gold colleague put it: “The day will come when you can sell your gold: the day everyone wants it.”)
What no one really wants is an economy reeling from the ravages of stagflation which continues to rise, in turn accentuating the fall of the Economic Barometer. Again, assuming you don’t eat or consume energy, your cost of living in April rose by +0.6%, as measured by the Core Consumer Price Index : just in case you score at home – or maybe you’re sweating at home considering your honed day – trading methodology has stopped working – that’s double the increase in l inflation in March.
But wait, there’s more: the venerable “Go Blue!” from the University of Michigan. The sentiment survey’s preliminary reading for May just came in at its lowest level of those finalized since August 2011. As we’ve sometimes joked about the Conference Board’s reading of consumer confidence: The Baro is definitely not:
As for the last place you’d want to work these days, FedHead Jerome “Jumpin’ Jay” Powell got another four-year term to oversee it all, in which New York FedPrez John “It’s All Good” Williams is confident the Federal Reserve has the “right tools” to bring inflation down, while FedGov Christopher “Up The” Waller says, “We need to cool demand and try to bring inflationary pressures down.” Which for you WestPalmBeachers out there means your variable rate funding sources are going to squeeze you even further.
And speaking of the crunch, what’s supposed to be a banner year for travel is instead finding costs too high to handle and (in the words of Dow Jones Newswires) “ruining summer plans.” (One good point: here in wee MC, indoor masking requirements were just lifted yesterday, if you’re heading that way; just add €uros).
Either way, the precious metals paths obviously remain low as we see on their respective three month daily bars for gold on the left and silver on the right. The “Baby Blues” of trend consistency in both cases must return above the -80% axes to become, indicatively, the leader of the higher price levels:
And when prices inevitably rise, from the 10-day market profiles for gold (bottom left) and silver (bottom right), it clearly looks like a steep climb in the short term. (unless “Buying a Light Bulb” suddenly happens for “The Herd”):
As for where gold falls in its broadest sense, here we have:
The pile of gold
- Depreciation of the value of gold per dollar (from our opening “dashboard”): 4137
- Gold Intraday All-Time High: 2089 (07 Aug 2020)
- 2022 Peak: 2079 (March 08)
- Gold All-Time Closing High: 2075 (August 06, 2020)
- The weekly parabolic price to return long: 2027
- The gateway to 2000: 1900+
- 10 Session “Volume Weighted” Average Price Magnet: 1,859
- The 300-day moving average: 1824 and rising
- Trade resistance, (notable profile highs): 1822/1837/1863
Gold Currently: 1810, (expected daily trading range [“EDTR”]: 32 dots)
- Sales support: 1808
- The Last Frontier: 1800-1900
- The northern front: 1800-1750
- Directional range of 10 sessions: up to 1797 (from 1911) = -114 points or -6.0%
- 2022 low: 1779 (January 28)
- On maneuvers: 1750-1579
- The Ground: 1579-1466
- The Basement: Sub-1466
- The support shelf: 1454-1434
- Basecamp: 1377
- The Double-Top 1360: 1369 in April 2018 preceded by 1362 in September 2017
- Neverland: The Crying 1290s
- The Box: 1280-1240
Looking ahead to next week, 10 of the Econ Baro’s 13 incoming measures are “by consensus” expected to be worse than their previous readings. For this, we will separate for this week from these few observations:
- US Treasury Secretary Janet “Old Yeller” Yellen sees the financial system working in an orderly fashion (now stop laughing) despite the “volatility”. Orderly or not, when it comes to “volatility,” we see it continuing to stun the stock market; (check out the site’s S&P Moneyflow page: scary!). Given that the S&P high (4819 vs. 4024 today) is set for the year (see our April 23rd missive), it’s quite a ways to go for the low, our 3587-3198 band still at hand.
- Speaking of the Treasury, everyone’s favorite segment – the delicious Internal Revenue Service – has apparently (due to COVID, it is said) fallen considerably behind schedule, so deferred repayments are now paying an interest rate of 4%. It’s better than the bank, and besides, it’s perfectly fine to overpay. So don’t delay, submit your application today!
- Finally, according to the NYFed, respondents to a survey on inflation expectations are driving up prices by +3.9% within three years! (Yes, you are still laughing). Query: Shouldn’t that comma be moved slightly to the right?
Either way, don’t miss what’s right: while you’re passed out, grab the golden bargoon!