Is Gold Getting The Moneyflow?
Mark Mead Baillie | Jan 13, 2014 01:46AM ET
Nine trading days into the new year Gold is truly getting a bid as we commence straightaway with this chart of daily price bars since August of last year. The key measure to observe is the rising blue moneyflow line in the lower portion of the graphic, indicative of dough flowing without much hesitancy into Gold:
Indeed the enthusiasm of such monetary inflow warrants the following...
Pop Quiz! Prior to Friday, when was the last time Gold completed a trading day at the session's highest price?
"On 13 August of last year, mmb, and then after that it was almost a hundred points higher in just two weeks!"
Very quick off the mark there, Squire, yes that is correct. Let's then see how good you really are:
Extra Credit! Prior to yesterday, when was the last time Gold completed a trading week at its highest price?
"Is that a trick question, mmb?"
Not a trick question, Squire, but perhaps a tougher one to readily ferret out, for yesterday was only the third occasion in the last ten years that Gold finished a trading week on the high price. The other two prior dates were fairly close together: 31 December 2010 followed by 08 April 2011 -- then in turn with Gold achieving its All-Time High price (1923) on 06 September later that year.
Not that we're predicting history to precisely repeat itself, but following 52 weeks of frustration throughout 2013, 'tis encouraging to see Gold having at least started 2014 according to Hoyle. However, this first full trading week of the year hardly garnered any Gold notice from the punditry-at-large, their being aligned step-by-step with the FinMedia in assuring "the peeps" that the stock market and economy are poised respectively for still higher levels and growth.
Indeed Gold's trading range for this past week was a quiet 36 points, certainly below its "expected" weekly trading range of 52 points. Moreover, its change for the week was nothing about which to write home, gaining just a mere 11 points:
Still, the substance lies in the moneyflow. And should the aforementioned closing high price history play out to even a minimal extent, the above chart's declining parabolic red dots' Short trend is about to end. Gold's weighted-average daily trading range is presently 21 points, the weekly measure now 50 points -- and the distance from 1249 to flip the parabolic trend to Long at 1276 is 27 points. Encouraging, non? But wait: there's more...
Get The News You Want
Unbeknownst to the mainstream lemmings as they race ever further toward the plank's edge, for those of you out there truly paying attentive deference to Gold, you saw its past week as being nothing short of brilliant.
To wit: let's bring up two week-over-week graphics, the first of which is animated to emphasize Gold's progression vis-à-vis its market magnet for the past five days. As herein penned one week ago: "...I wouldn't panic out there should Gold commence the new week with a bit of a dip, for [as to] price (thin line) versus magnet (thick line), a natural snap-back thereto may be in order before resuming higher still, and ideally then with the magnet line itself in upside, rather than downside, tow..." It played out perfectly as you can see unfold below, the magnet itself turning higher being a beautiful thing. The number in the upper box is the level of the magnet; the number in the lower box is price's distance from the magnet:
Next, this second week-over-week graphic is a dual panel of Gold's evolving market profile. Again from last week's missive: "...we see that the picture is very positive. In fact, this is the most positively-disposed profile in recent memory..." Mama, look at me now, the most dominant support level having up-shifted from 1203 a week ago to now sit at 1226:
Onward to Gold's 21-day linear regression trend, the slope of the diagonal line having just turned positive and the "Baby Blues" finally exiting sub-zero% territory, (from where they've resided since 11 November), heralding the end of this measure of downtrend:
'Course, to be in the midst of a fully-established consistent 21-day uptrend, we wish to see the Baby Blues north of +80%, a level they've not enjoyed since late August when Gold was in the 1400s. To be sure, there's a terrific amount of overhead work to be done, but one does get the sense that Gold may finally be transitioning from consolidation to ascension, especially given that moneyflow strength. And as tempting as 'twould sophomorically be to pronounce Gold's 2014 low (1203) as already being in place for the entire year, what judiciously keeps my feet upon terra firma is how terribly under-priced Gold remains with respect to all that monetarily accommodative faux dough being churned out 'round the globe.
For I am extremely sensitive to the fact that those who drove Gold into deep despair by their massive market sells last year can just as easily induce the same price velocity to the upside. If we look back to the summer of 2011, admitting then that Gold was getting ahead of itself, it nonetheless gained 445 points in just 10 weeks. And unlike the other markets that comprise our BEGOS complex (Bond/Euro/Gold/Oil/S&P), Gold is the only one upon which the GLOBEX trading platform does not impose price limits: that is to say, just as quickly as we saw Gold get garrotted last year, so can we see it greatly gain going forward. It requires positive sentiment and the early hint of that is reflected in the moneyflow study shown at the outset.
Speaking of BEGOS, look what just happened: the yellow metal has crossed above the smooth, pearly valuation line that suggests a price for Gold based upon its movements relative to those of the other four markets. Veteran readers know the trader's rule of thumb there: "Buy!" for price moves more swiftly than does the smooth line itself:
Next from our Market Rhythms database, here are Gold's daily bars from a year ago-to-date, displayed as red upon the MACD (moving average convergence divergence) study's crossing negatively, and green as is the current case upon having crossed positively. In eight of the last ten crossings, price has then followed through by at least 27 points in the like direction. Note as well the suggestion therein of Gold's having put in a "double-bottom", oft considered a technical positive:
In any event, here in the young year we've Gold already up 3.6%; such two-week growth pace extrapolated to year's end yields a level of 3042. Bit of a stretch that, but as noted last week, 'twould be a terrific achievement if Gold by mid-year could rise across the 1466 threshold from the sous-sol (basement) at least up into what we term as "The Floor" (1466-1579).
Further, to so rise in the context of what year-to-date has been Dollar strength would be even more remarkable. The Greenback did of course get whacked upon yesterday's release of the weak payroll growth report for December, the poor data in turn hammering yields as the "never-day-die" Bond sported its largest daily gain since 18 September. But again this friendly reminder: as we saw over the first half of 2010, Gold can rise just fine thank you very much even when weakness in the €uro and ¥en serve to drive the Dollar Index higher, (albeit its getting creamed yesterday):
As we are wont to say, Gold plays no currency favourites. Symbolism (fiat follies) can only will out for so long over substance (Gold). And now given that tepid-at-best StateSide jobs picture, (added to which will be Macy's cutting some 2,500 employees), 'twill be interesting to note the next twist of the "taper" when the FOMC meets in three-weeks' time with Old Yeller as the Fed's new Head Teller.
Then there's the EuroZone. 'Tis been ever so curious to regularly read these days of economic revival Across-The-Pond. All seems on the right path, and yet the spectre of deflation is lurking such that the Bank of England is maintaining its ultra-loose monetary policy (Gold cha-ching), whilst the European Central Bank is maintaining that should inflation levels remain too low, 'twill respond aggressively as just stated Super Mario with "further decisive action" (Gold cha-ching).
Finally to which, have you noticed the politically-correct transformation of referring from the EuroZone's so-called "PIIGS" instead to the "Periphery" countries? That's cute. Except for reading this past week of Spain's Princess Cristina being court-bound amid tax evasion and money laundering allegations involving hubby Inaki. I'll stick with "PIIGS".
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.