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Gold: The Unbudgeable Bovine

By Mark Mead BaillieCommoditiesOct 07, 2018 05:08AM ET
www.investing.com/analysis/gold-the-unbudgeable-bovine-200347286
Gold: The Unbudgeable Bovine
By Mark Mead Baillie   |  Oct 07, 2018 05:08AM ET
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Gold Update Scoreboard
Gold Update Scoreboard


Greetings from the beautifully bucolic Swiss canton of Fribourg where, like Gold, the cows barely budge toward otherwise producing their gruyérienne delights.

Indeed Gold these many months has taken on the daily life of a cow: both awake with the dawn, spend most of the grazing day chewing upon their respective regurgitated cud (which in the case of Gold are its traders), and then retire into the dusk pretty much in the same unbudged state as they were the day before. Oh the cow may give a few daily gallons of milk along the way, as might Gold take a few points during its day ... at the end of which neither has really made any hay.

To wit: ever since Gold fell from the grace of the 1300s back on 14 June, price's median daily net change (regardless of direction) has been but a wee 5.5 points. Moreover, since 29 August (27 trading sessions ago), Gold has had but two days of net double-digit change. That's all, including closing out this past week with a wee three-point gain on Friday to settle at 1207 ... in the midst of which the S&P 500 suffered its worst two-day loss since 09 April. How oblivious as a safe haven has become our Golden bovine!

Nonetheless, with time being at a premium for producing this week's missive, let's quickly riffle through our salient charts, starting with the track of Gold's daily closing price since its highest some seven years back. And look at just how scrunched price has become in the rightmost part of the chart, so much so that one might have to call for a defibrillator to keep Gold going:

Gold Daily Chart
Gold Daily Chart

'Course in the midst of this, the venerable weekly Barron's just ran a piece suggesting Gold has put in its low (with but three months to go) for this year, citing global central banks stepping up their purchasing of the yellow metal (deftly so as to not materially push price higher) given their usual laundry list of financial uncertainties. That from the "Buying Without Budging Dept." albeit such push is purportedly some of the "strongest" buying in three years.

Unbudgeable as well appear Gold's weekly bars, their alacrity so limited that the blue dots of parabolic Long trend are themselves practically flat-lining rather than rising:

Weekly Gold Bars & Parabloic Trends
Weekly Gold Bars & Parabloic Trends

To be sure, Gold has become essentially unresponsive to just about everything around it, including the S&P's arguably "seasonal" fallout these past couple of days. And as we turn to the Economic Barometer which "net net" has been dropping for four months whilst the stock market has been rising, oft it seems to come down to who's measuring what. Take, for example, the September jobs creation data just reported: Automatic Data Processing came up with 238,000 vs. 168,000 in August ... but the Department of Labor Statistics found just 134,000 in September after accumulating 201,000 for August. Further for September, the Institute for Supply Management's "Services" Index increased, but its "Manufacturing" Index decreased. August's Factory Orders ballooned, but so did the Trade Deficit. How's all that uncertainty workin' out for you, eh? "Got stocks?" So scary...

Econ Baro
Econ Baro

Scary too is Gold's being so stubbornly stoic when by currency debasement alone it remains at less than half our estimated present value of 2834. And as has be the case of late, Gold's "Baby Blues" have been anything but tried and true as we see their recent inconsistency across the daily price bars (below left) from three months ago-to-date. That cited, at least in Gold's 10-day Market Profile (below right) we see some push to the upside into the long-standing thicket of resistance sub-1210.

Gold 21 Day & 10 Day Market Profile
Gold 21 Day & 10 Day Market Profile

Meanwhile, have a look at the same analytics for Sister Silver, for whom as you regular readers know has been priced sufficiently low such as to have the Gold/Silver ratio living quite a bit year-to-date in the rarefied air above 80x. But the white metal of late clearly has been outperforming Gold: from one month ago-to-date, the yellow metal is basically "unch" whilst Silver is +3.5%, her own "Baby Blues" (at left) supportive of said move and her price atop much of the recent resistance depicted in her Profile (at right):

Silver 21 Day & 10 Day Market Profile
Silver 21 Day & 10 Day Market Profile

So there 'tis as we head into a new week. Might we see Gold actually get off its bovine butt so as to break higher into the 1220s? By historical levels, that would be but boring, and yet today we'll take just about any Gold gain we can get. Indeed we pointed to the local delicacies of this fair land: but when it comes to the de facto delicacy of all things currency, let Gold be the choice on your plate!

Gold: The Unbudgeable Bovine
 
Gold: The Unbudgeable Bovine

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