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But since gold is never really meant to stray too far from the 1780s, let alone silver is allowed to do anything material but decline, both precious metals have made gains. immaterial weeklies. Gold stood yesterday (Friday) at 1799, + 0.9% net for the week, and silver at 22.36, + 0.7% net.
Indeed a net snoozer of a week:
- Even though the Swiss franc has seen its linear regression trend (on a 21-day basis) turn more towards the positive …
- Even though the bond price hit a two-week high …
- Even though the S&P’s MoneyFlow for the week is valuing the index 120 points lower than it is …
- Even (more broadly) that the US money supply since March 2020 has increased by an average of $ 1 trillion every 93 trading days …
- Even as the Federal Reserve has once again alerted the world that it is preparing to raise rates; (they cannot be outmatched by the Bank of England which just did, even if the European Central Bank remains reckless): we actually think the Fed is ending the tapering and pulling the trigger in its policy statement January 26… “Sorry guys, but we had to do this or your stick of butter will cost ten dollars.” »BOOM!
And on the latter, as you well know, you regular readers, the FedFunds rate hike has been very positive for precious metals from 2004 to 2006 and overall positive for gold from 2015 to 2018.
Yes, even though we have all of these historically very positive events for gold, precious metals are weak to continue to lay.
“Well mmb, the dollar refuses to die …”
Duly noted there, Squire. As we said, market dislocations are “all the rage” these days. The fundamentals have been flushed down the toilet, but at least we have quantitative and technical analysis to help us. Because again we’re kidding – even though the market correlations have gotten wacky – prices are never wrong, their ebbs and flows are always in play, which we hope leads the trader in the right direction: “Do not dare to think, otherwise you” I will sink! (This of course courtesy of “The Trend is Your Friend Dept.”).
Either way, these are extraordinarily difficult trading days! Did you know that the S&P 500’s expected daily trading range (SLID) is currently 67 points? The average annual trading range of the S&P from 1993 to 1995 was 47 points per year with an average annual percentage of plotting of 11%: this year, the S&P draws a range that is on average above 5% per month! Again analogous to a dying serpent.
And yet, precious metals remain a disappointment (except for “The M crowd of words). Remember ‘Gold Forecast High Goes Bye-Bye’ wrote on October 02 canceling our 2401 price forecast for this year: ‘… The most likely scenario would be that gold would only slide towards the end of the year. ‘year, trading in the fourth quarter between 1668 and 1849… â€We hoped we’d been wrong about that, but with just two weeks to go in 2021, that’s exactly what happened.
Indeed, you can see it “happening” (or better said “not happening”) here at Gold’s weekly bars for a year now. A reminder indeed, whether last week or last year, the current long parabolic trend (blue dots) completely devoid of rising prices:
And as an extra holiday treat (barely) here is our similar (rarely released) chart for Silver, unable to maintain its short-lived parabolic long trend, in fact now Short (red dots). On the contrary, a real tarnished treat, it must be said, it does not look too festive:
But as Neil Young sang in 1970, “Don’t let this get you down…†because we have a technical glimmer of hope for gold until the end of the year; (‘of course, the fundamental hope for gold springs eternal). This following chart displays gold by day from the middle of the year to date. In the lower panel of the graph is a favored technical study of the trading community, the MACD (“Moving Average Convergence Divergenceâ€) bite. It is interesting to note that the MACD has just confirmed a shift to the positive. And while the pullback may not be perfect for the future, it is a useful predictor in forming a reasonable near-term target for gold, as follows.
This is the 13th positive MACD cross for gold since March 26, 2020. The “average maximum†price tracking of the previous 12 positive crosses is +87 points over an average signal duration of 27 trading days (essentially within five weeks).
Thus from the confirmation price of 1799, an average increase of 87 points would place Gold at 1886; (more conservatively, the “median max†price track on these previous 12 occurrences is +57 points, which if hit in this run would find gold at 1856). So, in the absence of remarkably recent structural resistance to overhead costs – plus Gold’s penchant for posting positive December months in four of the past five years – a race to test the peak reported on November 16, 1880 makes sense, prudent cash management, as always, taking priority:
Of course, the biggest “positive” (if you will) of the week was the aforementioned old lady of Threadneedle Street who raised her benchmark interest rate 150% from 0.10% to 0.25. %. (Dare the 1st Earl of Halifax – a certain Charles Montagu, who in 1694 devised William Paterson’s 1691 proposal to create the BOE – flip his wig). On the other side of the Channel, the ECB is seeking to reduce its “emergency†asset purchases, but is nevertheless evaluating other stimulus measures. No rate hike there. Certainly neither in China because economic consumption and the real estate market continue to weaken. “Do you have any dollars?” “
Because, as you already know well for fear of having been in a hole, the FedFolks of StateSide seek to bring the rate of the funds of their bank in the target range of 0.75% to 1.00% of here the end of next year. And as stated, we believe they’ll be moving initially on January 26, barring an over-the-top episode of “Oh my god! Omicron! “
Oh, and from “Oh By The Way Dept”. President “Jumpin ‘Joe” Biden just signed the $ 2.5 trillion debasement declaration so that TreaSec Janet “Old Yeller” Yellen can continue to pay the nation’s debts and bills for most of the year. ‘next year.
For some perspective: the US money supply from January 2, 1998 to September 9, 2005 increased by $ 2.5 trillion (a rate of $ 1 trillion per 802 trading days) during which the price of gold increased by 55%. Today (as previously reported), the money supply is growing at an average rate of $ 1 trillion for just 93 trading days, but woefully under-owned gold “just keeps crouching” ( technical term). Just in case you score at home.
Speaking of scoring, the strength of the economic barometer through November has run out of steam so far in December, as we see here:
Baro’s notable improvements from last week’s set of 15 inbound measures include capacity utilization and November building permits, among other higher housing measures; but the month’s growth in industrial production slowed considerably, as did retail sales. And while the New York State Empire index for December edged up, the Philadelphia Fed index more than halved what November’s found.
And oh yes, there was also wholesale inflation for November, with the producer price index registering an annualized rate of + 9.6%: which makes the old riddle “How many zeros can fit on a dollar bill?” Zimbabwean bank? not as funny as it used to be. But don’t worry, with the FOMC coming to assert that “… Advances in immunization and an easing of supply constraints should support continued gains in economic activity and employment as well. that a reduction in inflation … “
As for the number of increasing blue dots generated by a consistent trend, let’s turn to our double-panel chart for the daily gold bars from three months ago to date on the left and those for silver on the left. the right. The respective turns furthest to the right from the -80% axes are generally heralds of higher prices (and namely the MACD study for gold presented above). But Friday’s rejected price action initially raised some concerns: “The M Crowd of speech? The quadruple witch? Both? We display, you dose:
Next, we have the 10 day market profiles for gold (bottom left) and silver (bottom right). To be sure, from that perspective, Gold’s Infinite 1780s look auspicious, while poor Sister Silver’s painting is a cluttered display:
Let us end with three mentions of inflation:
- Dow Jones Newswires “reported” last week that a factor in determining the duration of inflation is what we think of it, which in turn will guide the Fed’s interest rate decisions; (people get paid well to write this stuff). Here’s how we feel: Whether it’s a cost surge or a demand surge or both, when the money supply grows 33% in less than two years, it’s over;
- From the same creative group also came the idea that because rising inflation effectively leads to negative real interest rates, the FOMC, by not voting (yet) to raise rates, is therefore actually boosting the economy. Yes, we understand that, but such a justification may be the greatest political thunderbolt ever;
- Speaking of which, here’s an inflation-induced explosion: We read that the rather wealthy speaker of the US House of Representatives is not in favor of a proposal to ban members of Congress from owning stocks. individuals, declaring that “We are a free market economy”: how is it for a 180 ° turn? (Maggie Thatcher, you don’t know what you’re missing out on).
But don’t miss out on getting cheap gold and silver before they inevitably blow up. Granted, they had a rather weak take-off attempt last week. But once they really take off, it will be our kind of inflation, right there!
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