Gold Is So Cheap At This Juncture

We have to admit it. With respect to last week's piece "Gold's Near-Term Brush With The 1600s," we were a bit dubious about the 1600s potentially getting teased. As a broad-term gold bull, writing negatively about price is hardly pleasant. But we're guided by what the numbers are, and by what occurs when said numbers are what they are.

Thus, upon gold's weekly parabolic trend a week ago, flipping from Long to Short, we assessed the numbers, wringing from them what we could forecast, and wrote that gold (then 1783) faced getting sold sub-1700. And for this past week, settling on Friday at 1733 -- the net decline of -2.8% being gold's worst weekly loss in three months -- price traded down within 15 points (at 1714.9) of the 1600s.

Again, to write and be right can be annoying, especially per the following graph of gold's weekly bars from a year ago-to-date wherein said parabolic Short trend has only just started, as indicated by the red dots furthest to the right:

Gold's technical saving grace, however, is the delineated 1789-1672 structural support zone. Gold's fundamental saving grace is the debasement valuation of 3698. Similarly, 1733 -- should we be correct about Gold reaching 2401 in 2021 -- means a gain of 39% remains as a possibility from here this year.

And per currencies' bizarre printing pace, valuation can hardly be "priced in." The first time gold reached 1733 (nearly 10 years ago on Aug. 9, 2011) the U.S. Money Supply as measured by M2 was $9.5 trillion and the gold supply was 175 thousand metric tons. Since then, M2 has more than doubled, but the supply of gold is only 14% higher.

Gold is so cheap at this juncture that it is almost a gift; currency debasement proves it so. Just as the S&P 500 is so fatally beyond expensive that it resembles a trap ready to snap; the lack of earnings proves it so.

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