Gold Docks In Its Box

Fraternize about Gold with folks here amongst Monaco's financiers and wealth managers and you'll span pretty much the same spectrum of 180° out-phase-opinions as you'll find elsewhere. A close banker buddy, and better yet a dear family friend for well over a generation says: "Well, it's dead money, isn't it." Thanks for that vote of confidence.

Fortunately there are those 'round here who instead see Gold a bit more as do many of you and I: that 'tis vastly undervalued, that when it goes, "it's really gonna go", and moreover that the stock market is a halving in waiting. Thanks for that vote of means regression. (For which the most commonly-asked one-word question being put to me is: "When?")

To be sure, as the above opening panel shows us, the "when" is as remote from the "now" as can be. Vis-à-vis this same day a year ago, Gold today finds itself -4.6% (-61 points) lower, in settling out an essentially unchanged week yesterday (Friday) at 1258. Week-after week, we've gone on ad nausea about Gold's "1240-1280 resistance zone" to the point we ought script a key for the computer to write that phrase with a single stroke.

The good news for the present is Gold's not having fallen out of that zone, price trading this past week as low as 1242 in finding support there. 'Course, the prior week, Gold only barely breached the upside 1280 boundary before again falling back. Perhaps we ought forget "support" and "resistance" and simply go with the "1240-1280 box"; indeed should you linearly regress Gold's price track for the past three months and project that rate into the future, 10 years from today we'll still find price careening about in the "1240-1280 box".

"That's hardly reassuring, mmb..."

Ah, Squire, taking a break from the private gaming tables, I see. (The lad's enchanted with there being but one zero slot on the roulette wheel rather than the more familiar two ... the player's improved odds albeit mitigated by the requisite entry fee to gain access to said tables). Similarly mitigating any directional clarity of its own is Gold, lacking of late toward tipping its hand assuredly for a move in either direction, the ongoing monotony of being box-bound continuing as we below see in the weekly bars. We've just had the fifth consecutive week of a net price change of less than 15 points:

That said, anything but monotonous is the ever-enduring divergence between the rising S&P 500 and declining Economic Barometer. In a year with the S&P averaging an all-time high every week (or 23 times in 120 trading days-to-date), one ought expect the Baro to be booming. The bunch over at the Federal Open Market Committee seem to so think. Too bad most folks doesn't truly crunch the numbers. We do:

As for the crunch on the precious metals during these recent weeks, 'tis comprehensively confirmed by their falling "Baby Blues", the dots which denote the consistency of day-to-day 21-day linear regression trend. Here we see for both Gold on the left and Silver on the right the textbook topping and rolling over of the blue dots from above their respective +80% horizontal levels as having been good guidance during this price fall, just as they'd been during the prior rise from mid-chart some six weeks ago:

Next in drilling down into the 10-day Market Profiles, we have for Gold (left) resistors at 1269 and 1279, with supporters at 1257 and 1247. Similarly for Sister Silver (right), resistance shows at 16.75, 16.95 and 17.20, with support at 16.65:

We'll thus sum it up for this week with the stack:

The Gold Stack
Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 2693
Gold’s All-Time High: 1923 (06 September 2011) 
The Gateway to 2000: 1900+
Gold’s All-Time Closing High: 1900 (22 August 2011)
The Final Frontier: 1800-1900 
The Northern Front: 1750-1800
On Maneuvers: 1579-1750
The Floor: 1466-1579
Le Sous-sol: Sub-1466
Base Camp: 1377
2017's High: 1298 (06 June)
Neverland: The Whiny 1290s
Trading Resistance: 1269 / 1279
The 300-Day Moving Average: 1261 and rising
10-Session “volume-weighted” average price magnet: 1259
Gold Currently: 1258, (expected daily trading range ["EDTR"]: 12 points)
Trading Support: 1257 / 1247
10-Session directional range: down to 1242 (from 1284) = -42 points or -3%
"The Box": 1240-1280
The Weekly Parabolic Price to flip Short: 1218
2017's Low: 1147 (03 January)

In closing, just as Gold docks in its box, so too 'round here do many-a-massive yacht, some indeed bona fide private ships replete with active helipads. As ought be Gold, these vessels are steeped in terrific levels of wealth, admittedly making San Francisco's high technology nouveau-riche seem but paupers. And for most of these powered seaworthy palaces, their time here in the port is but temporary before moving on to the next Mediterranean safe harbour or channel island. For the yellow metal we therefore expect the same. 'Twill not remain docked in its box for perpetuity, for price's eventual regressing up just to the StateSide faux currency valuation mean shall produce more than a doubling in the market value of Gold!

Salut!

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Lorimer Wilson 7 years ago Contributor's comment

Hey Mark, your "box" for gold remains intact in spite of temporarily dropping out of the box this AM. Here's an update:

Gold dropped through its 200-day moving average of $1241 this Monday morning >dropping almost $11 in one swell swoop at 3:55AM

>hitting a low of $1,239.01 at 8:20AM

>before bouncing up to $1,245.81 mid-morning

>before beginning to decline once again (currently down to $1,243.59).

Let's hope it reverses course to the top of the box and beyond.

Lorimer Wilson 7 years ago Contributor's comment

Mark comments that"

>"Week-after week, we've gone on ad nausea about Gold's "1240-1280 resistance zone...

>'Course, the prior week, Gold only barely breached the upside 1280 boundary before again falling back.

"Perhaps we ought forget "support" and "resistance" and simply go with the "1240-1280 box" and leaves it at that.

For more indepth analyses of the current situation for gold check out the following 3 articles:

1. Jordan Roy-Byrne in a TalkMarkets article (www.talkmarkets.com/.../gold--gold-stocks-nearing-a-big-move) says:

>"Gold needs to break $1300 and GDX needs to retest $25 again...

>Until the Gold sector can attain those marks then the bias for the next big move...should remain to the downside. That is why we remain cautious."

2. Hubert Moolman agrees illustrating that fact in a graph in an article (www.munknee.com/gold-chart-says-a-massive-move-up-or-down-is-imminent/) that shows that:

">Gold is currently trading near a critical 6-year resistance line that the gold price has to overcome, for the continuation of the gold bull market.

>Since price has now failed more than four times at the line, there is a great chance that we could see a big drop.

>If the price is to turn around and break through the resistance line, then a great amount of energy is required to fuel such a move – and that can only come from a collapse of a big market like the general stock market, or the bond market.

>When gold breaks through the resistance line, however, we will see a gold rally like that of 1979/1980."

Moolman also maintains in the same article that "there is a peculiar fractal that suggests the current situation for gold is very similar to that of May 1979, just before the massive rise in gold" illustrating that possibility/likelihood in a long-term gold chart which is self-explanatory.

3. Sean Brodrick looks at it slightly differently but comes to the same conclusion, more or less, saying in www.munknee.com/this-could-be-the-most-important-gold-pullback-ever-to-consider-buying-into-heres-why/ that

>"if gold breaks its 200 day support (at $1,241)…THAT would be a heck of a buying opportunity.

>IF we break support...then you should buy gold and miners with both hands because that will likely mark the beginning of the next Mega Bull trend.

> The market won’t really turn bullish on gold again, however, until it pushes up through $1300."

Anyone taking issue with what Mark, Jordan, Hubert or Sean have had to say? If so, I'd like to hear from you.

Mark Mead Baillie 7 years ago Contributor's comment

Thanks so much, Lorimer, for reading my piece. With respect to the fine analyses of all these prudent Gold reviewers, at some point, something will give. Let us hope the catalyst shan't be catastrophic, but rather the reality of valuation, led by the sovereigns and wealth funds taking advantage of a stock market double what it ought be and the Gold price half what it ought be. Best to you.

Corey Gaber 7 years ago Member's comment

Good article and comments, thanks.