Gold Set to Reclaim 1900, then 2000
As for Gold still being beneath the descending red dots of parabolic Short trend, should price pop atop 1900 as our opening analysis suggests, such trend ought in turn flip back to Long, allowing Gold to then challenge the RUS/UKR war spike that reached 2079 this past 08 March, and ideally the All-Time High of 2089 (07 August 2020). ‘Tis not that far from here.
Nothing like a move in the right direction, eh? Yet reattaining the 1900s — let alone those prior highs — pales in comparison to Gold’s present-day debasement valuation (per the opening Scoreboard) of 4024. That true valuation is well more than twice today’s 1875 market price. Further by that yardstick, Gold is long overdue to double! To wit, let’s count by days as follows:
- from the final trading day of the second millennium (31 December 2000 for those of you who know how to count) when Gold was 274, it took 1,260 trading days (5.0 trading years) to double to 546 (09 January 2006);
- following that came a further 962 trading days (3.8 trading years) for Gold to again double to 1096 (04 November 2009);
- but since then: Gold’s highest trade has been 2089 (07 August 2020) meaning price has not yet re-doubled (from 1096 to 2192) even with this to-date passage of 3,173 trading days (12.6 trading years). However, the U.S. M2 money supply since that very same 04 November 2009 has increased toward threefold from $8.5 trillion to $21.7 trillion today. Gold’s non-participation in tandem is apoplectically beyond absurdity!
And yet, the market (1875 today vs. 4024 valuation) is never wrong, albeit, more and more we read or hear of Gold’s market price being stifled by the “M Word” crowd. Some analysts apparently have dug sufficiently into the COMEX time-and-sales data such as to ferret out mathematical proof of “M“. (No, we don’t like mentioning the “Word” itself).
But when entities of comparatively vast Gold holdings and/or sufficiently margined accounts engage in trading a market which is almost otherwise unowned, “M” can be put into play if so desired. Is one’s Gold getting a bit high in price, perhaps such that one may have to make physical delivery? Heaven forbid! Just sell a few hundred contracts at-the-market such as to swiftly suppress price.
Then slowly buy the position back one contract at a time so as not to move price back up. “It’s so easy, a troglodyte can get it right!” Perhaps some did. Regardless, let’s get Gold’s price moving further up and to the right!
Meanwhile, here’s something that’s worked right with respect to the stock market. For those of you who track the website’s S&P MoneyFlow page, its broader time frames (one month and one quarter) of late had been leading the Index such as to suggest a drop of some 300 points. For just recently the S&P had been careening ’round the 4200 level; yesterday it settled at 3900: “Uh-oh, it’s magic”–[The Cars, ’84].
Now the near-term MoneyFlow time frame (one week) senses we’ll see the S&P strain for a bit of a bounce. However within the context of our musing a week ago that the S&P’s “relief rally” had run its course, it seems apparent the anticipated run down to the 3600-3200 critical support zone has resumed.
‘Course far more fundamentally, if this is The Run to get the S&P back to proper value as trued up with earnings — especially in a rising interest rate environment — then 3600-3200 obviously is peanuts. (But one support shelf at a time, right?)
Still, with Q2 Earnings Season commencing in some five weeks’ time — and given consideration of the Economic Barometer having declined right through Q2 to this point — analysts’ S&P calls for levels like 2900 are not out of the question as the traditional “summer rally” this time ’round looks anything but. Remember: our “live” S&P price/earnings ratio is at present 30.3x vs.
Its lifetime mean of 22.3x; should earnings not grow, that mathematically calls for a further S&P P/E means reversion from here (3900) of -26% to “Hello!” 2900. Or to the reprise the Prescient Commentary from 17 May: “…we see no sense fundamentally to be in the stock market…” Here’s the Baro with the S&P 500 in red, the time frame being from one year ago-to-date: