Unless you’ve been stranded for the past few weeks, you’re well aware of our distrust of the recent geopolitical rise of , as to his suspicious demise given such a historic custom.
Nevertheless: the moment of the war of the RUS against the UKR to be coincident with an increasingly visible inflation stagflation—served to increase “awareness” of gold: a wokey word, to be sure, but worth its weight in gold in this case.
And specific to our missive’s headline, gold surged last week to 2079 – just 10 points off its all-time high of 2089 (07 Aug 2020) – then summarily dipped to 1961 to settle Friday’s week at 1992.
The high-to-low plunge of -117 points was gold’s worst intra-week choke (by points) since the one that ended on June 18 of last year; as a percentage (-5.7%), it was in the 14th percentile of gold’s worst up-and-down weeks this century; (and for those of you scoring at home where you trade gold in points rather than percentage, the post-bop drop was the tenth worst point loss since the one that ended June 21 2013 during a passage of the gold era that we prefer to forget).
Still by comparative price geopolitical fading, this time round gold “so far” is much firmer (thanks stagflation) than when RUS seized the Crimean Peninsula from the UKR in 2014; again, we’re updating these two gold price tracks as a percentage:
Gold: Russia/Ukraine – 2014 vs 2022
But even if we are of the opinion “firmer” also we must recognize “brittle”. For now, there is a glimmer of hope for a RUS/UKR resolution, the price of gold is dropping like a stone: just last Wednesday, aware of the diplomacy in the air, intra- day fell by more than 2% twice in two mutually exclusive three-hour periods. So our gold, even if stagflation-boosted—is firmly brittle, or brittle firm, depending on your choice of term.
In addition, we ask ourselves: what would be the price of gold today if the RUS/UKR incursion do not occurred? Recall that throughout 2021 gold has traded back and forth from 1780 always. But so far in 2022, the price has increased by +13.6% and is currently +12.4%; moreover, the maximum increase of so far is +17.7% and it is currently +15.1%. So, no complaints there, even though both precious metals are essentially trading at half their currency depreciation valuations. But if “awareness” builds further, our projected 2022 maximum of 2,254 may still be reached.
Still, Gold’s “bop ‘n drop” stands out at the rightmost weekly bar, as we’ll show here a year ago to date. The price for the next week to reverse the current trend parabolic long parabolic blue dotted short is -129 points below 1992 to 1863: given the weekly the trading range” is now 63 points, descending so extremely (into this vacuum) in at least two weeks, but…
Gold Weekly Bars and Parabolic Trends
Indeed, speaking of “extreme” – and as fundamentally undervalued as gold remains – one cannot ignore the highs to which the price has climbed relative to its smooth valuation line (due to the way the price moves relative to changes in the other four primary markets which include BEGOS, i.e. bond, , gold and ). The following chart from the website plots gold’s closing price for one year to date relative to its smooth line, from which too much deviation causes a return to it; the difference between the two lines, which emphasizes such an extreme, is the oscillator in the lower panel, currently suggesting that in 1992, gold is currently still 100 points “high”. Again, this is a purely flexible reading specific to how gold trades against its four BEGOS peers, disregarding fundamental undervaluation:
That noted, from the “We Love Symmetry! Dept.” here is the comparison of the percentage change in the price of gold over the last 21 trading days (one month) against that of the S&P 500. This is almost perfection for a negative mirror correlation:
Gold versus S&P
Economically, it was not a good week with the coming stagflation. February saw retail rise another +0.8%: such recent levels had not been seen since just before the financial crisis from 2008. And although they were eliminated, the following measures were all worse from one month to the next: the , and the . Stagflation + Invasion = S&P unhappy:
That said, the S&P Moneyflow is not scary and the index itself is oversold in the short term; so if it rebounds and the negative correlation with gold holds, watch the yellow metal to work even lower.
Meanwhile, the European Central Bank, having postulated that it would not raise rates in 2022, is now preparing to do so, with President Lagarde pointing to inflationary pressures resulting from the RUS/UKR war. ‘Of course StateSide where we’ve just been, not drilling for oil combined with the RUS import ban means no more driving unless you get an electric vehicle. (“Do you have coal? »)
What we have here are at least momentary price increases for gold and silver. Looking to their daily bars from three months ago to date for the yellow metal on the left and for white metal on the rightthe two panels are quite identical as well as their “Baby Blues” patterns reflecting the trend consistency. And usually when these blue dots “cross the ceiling”, the uptrend has been solidifybut can turn brittle as profit taking ensues, particularly if “The M Word” crowd raises its manipulative head short side:
In terms of their 10-day market profiles, gold (bottom left) and silver (bottom right) are fairly centered there with overhead resistance and underlying trade support, as indicated:
All this brings us briefly to:
The pile of gold
Depreciation of the value of gold per dollar (from our opening “dashboard”): 4053
All time gold Intra-Day High: 2089 (August 07, 2020)
2022 Peak: 2079 (March 08)
Directional range of 10 sessions: up to 2079 (from 1892) = +187 points or +9.9%
All time gold Closing High: 2075 (August 06, 2020)
Commercial resistance: 2021 / 2053
Gold Currently: 1992, (expected daily trading range [“EDTR”]: 48 dots)
Commercial assistance: 1991 / 1965 / 1931 / 1910
10 Session “Volume Weighted” Average Price Magnet: 1974
The gateway to 2000: 1900+
The weekly parabolic price to return short: 1863
The 300-day moving average: 1809 and rising
The Last Frontier: 1800-1900
The northern front: 1800-1750
2022 low: 1779 (January 28)
On maneuvers: 1750-1579
The Ground: 1579-1466
The Basement: Sub-1466
The support shelf: 1454-1434
The Double-Top 1360: 1369 in April 2018 preceded by 1362 in September 2017
Neverland: The Crying 1290s
The Box: 1280-1240
Here are three quick sentences to conclude:
■ On Wednesday March 16, the Federal Open Market Committee will vote unanimously its Bank’s Funds Rate – and indeed also its Discount Rate – for the first time since December 19, 2018. But given the current geopolitical crisis, we plan to title this week’s missive as “Is the Fed about to balk?” Just a thought.
■ This comes from the laughable “Where did they go? Department.”: according to Bloomy“Morgan Stanley and Citi strategists see a storm building on stocks”. Just sweep around them, they’ll catch up to you; evidently by our “live” S&P Price/Earnings of 33.6x – 50% above the historical average – earnings just aren’t there to support the current price.
■ We read that the price of has gained +227% in less than three weeks, indeed reaching 100k$/tonne on the London Metals Exchange. So look under those old couch cushions and you too might find a ton of nickels. I’m just saying.
‘Course, a ton of gold ($70 million) will get you further down the road to stagflation!