Gold’s faint is a bargon

Since this week ended a year ago (May 14, 2021), we have had:

■ A +9.2% debasic increase in StateSide “M2” money supply from US$20.42 trillion to US$22.29 trillion, largely due to COVID liquidity adjustments, with proceeds ending up on the stock market ( whoops…);

■ a dysfunction of supply chains, energy procurement and currencies born of appallingly inhumane war;

■ a stagflationary contraction in deflator-adjusted US gross domestic product for three consecutive quarters as of REAL economic erosion;

■ an increase in interest rates, which we have demonstrated starting from 0.00% to the point of vomiting is advantageous for material assets;

■ plus your etc, et alia, ad infinitum

And yet gold closed the week yesterday (Friday) at 1810 -1.8% down on that day a year ago. You can see the crossover comparatively within the red rectangle on the yearly price paths of the gold scoreboard above.

Hence, we have just had both gold’s fourth consecutive weekly pullback and fourth consecutive weekly “low” with the price not only retesting the critical 1854-1779 support zone for the past week, but bored deep within it, as shown here our updated annual chart:

Technical analysis aside, gold’s impotence is beyond fundamental analytical common sense in disbelief, even with talk of a “five figure” price today. We are content to stick with the scoreboard rating of 4137 and also maintain our high forecast for this year of 2254 (the “M Word” amount regardless)

“Well, mmb, belief in bitcoin is growing at the expense of gold…”

Let’s see: Gold is trading at 1810 today, down -13.4% from its all-time high of 2089; bits**t’s settlement for the week at 29,785 is -57.1% off its all-time high of 69,355. “Bit” difference there.

But Squire makes an interesting point. We seem to be reading a lot lately about gold becoming a “been” while bits**t is what “be-in” is. And it’s oddly consistent with how Leonardo Bonacci (aka “Fibonacci”) can formulate it today: There is a “herd system” caused by nature. A pro bits**t person becomes gold “dis” and then a second; then two more, then three more, then five, eight, 13, 21, 34 and suddenly it’s “Holy Golden Ratio, Batman!” because one can now predict that 55 more will be next to jump on the “dis” gold bandwagon. And so forth. The emotion-driven herd mentality and copying what everyone else is doing is extraordinarily fascinating until you end up with nothing. (Psst: get gold?) Something that lasts for thousands of years is not nothing.

Lately, however, there’s nothing to be gained from gold, except that you can buy it for less than half its value. Therefore, price rationalization as we see here on the weekly bars is indeed “a good thing” even as the red dotted parabolic short trend completes its seventh continuous week. For Gold’s swoon is a bargon:

All in all, it’s the best that gold not penetrating the bottom of the 1854-1779 critical support zone to which it scared the 1797 low last week (actually yesterday). Certainly further downfalls may occur for 1753, 1721, 1678 etc; but let us not go there Rather, “The Herd” must be made more deliberately. (Or as a longtime Gold colleague puts it: “There will come a day when you sell your gold: the day everyone else will want it.”)

What nobody Yes, really wants is an economy suffering from the ravages of stagflation, which continues to increase and in turn fuels the decline in the economic barometer. Assuming you don’t eat or use energy, your cost of living rose +0.6% in April as measured by the Core Consumer Price Index: just in case you score at home – or maybe Sweat Since your perfected day trading methodology at home no longer works – ie double the rise in inflation for March. But wait, there’s more: the venerable University of Michigan “Go Blue!” The preliminary readings of the sentiment poll for May just hit their lowest level since August back in 2011. As we’ve occasionally joked about reading the Conference Board on Consumer Confidence: “Are you confident?” It’s definitely not the Baro:

As for the last place you want to work these days, FedHead Jerome “Jumpin’ Jay” Powell has secured another four-year tenure overseeing everything within which New York’s FedPrez John “It’s All Good” Williams of the Federal Reserve sure has the “right tools” to bring down inflation while FedGov Christopher “Up The” Waller says: “We need to cool down demand and try to lower inflationary pressures.” Which means for you WestPalmBeachers down there, your variable rate funding sources will continue to pressure you.

And speaking of bottlenecks for what is set to be a record year for travel, instead, the costs are too high to manage and (in the words of Dow Jones Newswires) “Spoil summer plans.” (One bright spot: Here in Wee MC, indoor mask requirements were only lifted yesterday, should you be heading in that direction; just add €uros).

Anyhow, the precious metals are obviously staying down as we see above their respective three month daily bars for gold on the left and for silver to the right. The “baby blues” are trending consistency in both cases they need to roll back over the -80% axes to become indicative of higher price levels:

And if prices inevitably move higher, the 10-day market profiles for gold (bottom left) and silver (bottom right) it looks like it’s going to be an uphill climb in the short term (aside from the “buy a lightbulb” suddenly kicking off for “The Herd”):

Where gold sits in the broadest sense, here we have:

The gold pile

Depreciation in gold value per dollar (from our opening scoreboard): 4137

Gold is always intraday High: 2089 (08/07/2020)

High 2022: 2079 (08 March)

Gold is always Conclude High: 2075 (08/06/2020)

The weekly parabolic price for long: 2027

The gateway to the year 2000: 1900+

10 session “volume weighted” average price magnet: 1859

The 300-day moving average: 1824 and rising

Trade Resistance (notable profile spikes): 1822 / 1837 / 1863

Gold Current: 1810, (expected daily trading range [“EDTR”]: 32 points)

Trade Support: 1808

The Last Frontier: 1800-1900

The Northern Front: 1800-1750

10-session direction range: up to 1797 (from 1911) = -114 points or -6.0%

Low 2022: 1779 (January 28)

About Maneuvers: 1750-1579

The soil: 1579-1466

Le Sous-sol: Sub-1466

The Supporting Shelf: 1454-1434

Base camp: 1377

The 1360 Double-Top: 1369 in April ’18, followed by 1362 in September ’17

Neverland: The Weepy 1290s

The Chest: 1280-1240

Looking ahead next week, 10 of the Econ Baro’s 13 incoming metrics are “consensually” expected to be worse than their previous readings. To that end, we part with this week with these few observations:

■ US Treasury Secretary Janet “Old Yeller” Yellen sees the financial system as running in order despite (stop laughing now). “Volatility”. Neat or otherwise, in relation to “Volatility” we see it continue to beat the stock market; (take a look at the S&P Moneyflow page of the site: scary!). Given the S&P yearly high (4819 vs. 4024 today) (see our letter of April 23rd) there is still a long way to go to the bottom, our range of 3587-3198 is still within reach.

■ Speaking of the Treasury, the ever-popular segment within it – the lovely Internal Revenue Service – seems to have fallen significantly behind (due to COVID), with late refunds now being paid a 4% interest rate. That’s better than the bank, and besides, it’s perfectly fine to overpay. So don’t hesitate file today!

■ Finally, NYFed respondents to a survey on inflation expectations said they would hike prices by +3.9%. in three years! (Yes, you’re laughing again). Inquiry: Shouldn’t the comma be moved a bit to the right?

Still, don’t miss what’s right: while it faints, take the Gold Bargon!


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