Gold Loses Its Cheer Into Mid-Year
Mark Mead Baillie | Jul 02, 2017 04:43AM ET
Here in wee Monaco amongst its most famous district Monte-Carlo lies the "Carré d'Or" or "golden Square". The name is perfectly analogous to the ongoing, spoiled attitudinal state of late for gold: 'tis acting like a "square", continuing as ever to not go anywhere.
Further, as the above panel shows, gold now lies -104 points (or -7.7%) from where 'twas at mid-year in 2016, still choosing to be docked in its 1240-1280 box, wherein week-after-week little opportunity knocks. To be sure for the long-term stacker, averaging in at the same price over and over rather defeats the whole purpose.
Moreover with precisely one-half of 2017 in the bag, the precious metals have finally lost what had been their cheery month-after-month leading role within the BEGOS Markets as we see below, the chart-topping component now being the Euro! And from "The Dept. of Never Say No", coming in second is the ever-correctionless S&P 500, don't you know, our "live" price/earnings ratio therein at 34.3x ... oh say it ain't so!
So here are the current year-to-date standings, with gold 'round the center row. And query this: ought silver's performance really be so low (+4.2%), given not just gold's is almost double (+7.8%, most of which came in the year's first two months), but that copper's too is +7.9%? The average gold/silver ratio millennium-to-date is 62.4x, but presently is 74.8x. To price silver back up to that average means an increase of 19.9% (which from today's level of 16.625 would bring us to 19.930). Just sayin'...
Specific to this past week, gold settled yesterday (Friday) at 1241.
How comparatively narrow has become gold's trading range? Its "expected weekly trading range" is now 28 points: a year ago, that was just about gold's "expected daily trading range" (25 points). Squished in range and squished in its purple-bounded 1240-1280 box, here are gold's weekly bars, the parabolic Long trend now four weeks in length without a wit of upside price movement:
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Worse for those of the miners' leverage persuasion, year-over-year the leading brethren are lower, and year-to-date they're barely off the mat, if that. Here from a year ago are the percentage tracks of Franco-Nevada (TO:FNV) -5%, gold itself -7%, Newmont Mining (NYSE:NEM) -17%, the prominent exchange-traded fund of the gold miners (GDX (NYSE:GDX)) -20%, the popular exchange-traded fund of the Silver Miners (MX:SIL) (SIL) -22%, and poor ole Goldcorp (NYSE:GG) (GG) -33%. Ouch!
Continuing to say "Ouch!" as well is the still-falling Economic Barometer.
Oh to be a fly on the wall within the hallowed halls of the Federal Reserve Bank: "To raise or relax? That is the question. Perhaps to rescind?" Here's the year-over-year Baro, the S&P (red line) actually appearing to have run out of puff, (yet hardly worth the mention as it has no declension):
What is sporting declension are gold's "Baby Blues", the dots of day-to-day 21-day linear regression trend consistency continuing their fall as we see below left. Of interest here is with the blue dots crossing under -80%, (meaning the downtrend is truly intact), 'tis also the area from which price itself oft turns back up, which coincident with this being the lower end of the (as yet inescapable) 1240-1280 box suggests 'tis time to reverse back up. And the nut over which to come as seen below right in the 10-day Market Profile is the 1245 level, the most heavily-traded price these last two weeks:
Below for Sister silver, her Baby Blues (left) have shown a lack of directional consistency over the last several trading days. As earlier noted, silver is priced quite low relative to the performances of both gold and Copper, suggesting for the moment she's adorned neither in her precious metal pinstripes nor in her industrial metal jacket . ('Course this being Monaco, just about anything, or indeed practically nothing, goes). Either way, silver presently sits just below her profile resistance (right) of 16.65:
And thus to gold's monthly bars we go. You may recall from the prior month-end missive our inference that gold was rather due for a down month, the rightmost red bar for June now clearly so showing. One wonders as well given last year's strong price ascent, (albeit much of which was given back in the year's final trimester), if the gold Troops can garner the necessary energy for a similar upside performance. A return to Base Camp 1377 would be nice, but in back-to-back years to reach up there twice seems more and more like a roll of the dice:
This week brings us the Federal Open Market Committee's minutes from their 13-14 June meeting, followed by Friday's grand finale for a purported up-tick in payrolls. Should gold fall from its box, 'twill surely bring cries of the yellow metal being nothing but rocks. But at the end of the day, 'twill truly be gold which rocks!
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