Gold's Mega-Move Days Have Turned Bullish
Mark Mead Baillie | Dec 28, 2014 11:57PM ET
In bidding adieu (or if you prefer, a not-so-Golden good riddance) to 2014, 'tis said that those who've "manipulated" the price of Gold lower shall be the same entities which shall "manipulate" it back up. To the extent that the price of Gold is or is not "manipulated", (as long as we can engage fairly and equitably in a like trading platform and have enough size ourselves to shove price about manually and/or algorithmically), we've got some very heartening news to share in closing out what has not so much been a down year for the yellow metal, (as 'tis on target to finish just either side of the 1205 "break-even "level), but instead a year that has been perpetually annoying. With only three trading days remaining in 2014, 'tis at this juncture incidental as to whether Gold nets out an up or down year: for far more material either way is the above scoreboard's telling us just how alarmingly low price is relative to the growth in our money supply these last 30 years.
However, here's the heartening bit: be they "manipulators" and/or legitimate trading forces sufficiently capitalized to hoover away hundreds of bids or offers in an electronic heartbeat, we've ferreted out data which is indicative of them having changed their tune from selling/shorting Gold to now buying it, or if you'd prefer, that the upside "manipulative" rumblings are at last underway. To the naked eye, such activity is sufficiently stealth so as not to notice it: but to a measurable degree, we've sussed it out, or at the very least, found evidence of Gold's price now being protectively supported. And as odd, indeed sparse or incomplete as the following chart may at first glance appear, 'tis showing us the market moving powers that be are shifting back into buy mode:
"Uh, mmb, like Ricky said, Lucy you got some 'splainin' to do..."
Absolutely, Squire. What you're looking at above are Gold's intra-day price movements for the 250 trading days now in the books for 2014: except visibly there are only six bars across the entirety of the chart. Why? Because we've eliminated every day which traced a trading range of less than 40 points between its session's high and low so as to only cite Gold's "mega-move" days. And more importantly, here's the best part: the colour of those six robust bars describes the directional thrust of those mega-moves: Red for down-thrust, and Gold for up-thrust.
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To be sure, 'twould be beyond the extremes of arrogance to believe that which we pen influences market direction; we likely more oft are considered a contrary indicator. But with respect to the above chart and its cluster of three up mega-moves just in these last two months, they curiously occurred with our introducing The Gold Update Scoreboard which now opens these weekly missives. Coincidence?
"Absolutely, mmb."
Squire's brutal honesty notwithstanding, let us press on to the graphic of Gold's weekly bars, wherein we see the parabolic trend having survived its fourth week to the LongSide, as indicated by the ascending blue dots. The descending dashed trendline across the chart belies just how near Gold is to actually closing out 2014 as a "break-even" year, 2013 settling at 1204.8 and now yesterday (Friday) at 1196.1, again with but three remaining trading days in the balance. Further note that despite the absence of a rare "mega-day" this past week, price still scampered up to close near its bar's high:
Of course, Sister Silver, below in her own weekly bars chart, shan't be closing out 2014 anywhere near her 2013 settling price of 19.425, for in finishing the week yesterday at 16.085, the descending dashed trendline truly tells her tale of woe:
Don't take it too hard, Sis. You may be -17% year-to-date, but so identically is Cousin Copper, whilst your distant Uncle Oil is -44%! (Next week's missive in opening 2015 will present the final "BEGOS Markets Standings" for 2014).
Then there's the stock market, which in conveniently ignoring global asset price shrinkage, continues to bound merrily along, the S&P 500 setting all-time highs on a daily basis as 'tis complacently assumed 'twill do in perpetuity. We however, as you well know by now per our being seemingly forever on "crash-watch", see it quite differently. As our calculation of the S&P's price/earnings ratio closes in on 30x, (the current "live" reading being 29.4x), please excuse our implementation of even more common sense in pointing out that the S&P's MoneyFlow is hardly keeping pace with price's perennial rise. Here is their relationship regressed to an S&P-points basis over the past 63 trading days (one quarter) to date, indicative of price ascending sans volume, quite in contrary to the past week's in-depth ChiTrib piece entitled "Dow, S&P power to new records". Quite frankly, and rightly in tune with this 1977 hit by Jackson Browne, we see the S&P as "Running On Empty...":
And therefore from the stock market's standpoint as having participated in this December to Remember we're fully anticipating that 'twill be a capitulative January to Forget. And as goes January... Besides, let's face it: when you've the S&P trading at double the support of its earnings base, and the price of Gold valued at half its natural level given Dollar debasement alone, something soon will give, and I suspect for the markets 'twill be massive.
As for the chest-pounding "Dollar strength" crowd out there -- and yes the beloved Greenback's Index now for the first time since April 2006 is just above 90 (90.315) -- the Buck is currently up 3% from Gold's closing low day of the year (1140 on 05 November), whilst the yellow metal itself is nevertheless up 5% from same:
Still, StateSide we've the percentage of adults in their prime working years with full-time jobs near the lowest levels ever recorded, (per the Bureau of Labor Statistics as far back as 1986). In the Middle East, veteran Saudi Arabian Oil minister Ali "fake it on the give-and-go" al-Naimi stated that Oil's price is irrelevant to output decisions, the Saudi Finance Ministry then pledging to curb wages and sally forth with investments next year toward lessening the blow of the halved price of petroleum. Meanwhile over in Japan, for the first time with records having been collected since 1955, their savings rate has turned negative as the populous draw on their nest-eggs, despite inflation just having slipped to a 14-month low. Westward across the sea from there, China's industrial profits for November just fell by the largest amount in two years. And not to be outdone by such economically foundationless follies, Greece’s Parliament still has yet to elect a new President, which were the anti-austerity opposition to instead become empowered, could again bury Hellenic paper. All-in-all, a fairly good year-ending basket of Gold positives, non?
Which in turn gives us hope that 2015 shall be far better for Gold than this Year of Annoyance. With just the three trading days left, we close out 2014 with this final two-panel technical graphic. On the left we've Gold's daily bars for the past three months with the ever-attendant "Baby Blues" depicting 21-day linear regression trend consistency, which admittedly is waning, (and for those of you who read the daily Prescient Commentary, you've likely noted an open signal for Gold to trade down to 1164.1 per its daily Price Oscillator study having gone negative). On the right is Gold's 10-day Market Profile showing price just a point below trading resistance at 1197, with underlying, less participative support at 1178.
This ensuing holiday-shortened, boundless football bowls week is not without some key incoming economic data, including December's Chicago PMI reading on New Year's Eve and then in turn on Friday, the first trading day of 2015, the ISM Index. In the interim, please be safe out there: we want all of our great and valued readers riding along with us in the Great Gold Machine of 2015!
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