Just as President Nixon nixed the Gold Standard back in '71, so too are we nixing for this year our Gold forecast high of 2401. We are wrong and not even close. Period.
"But mmb, you've still got a whole quarter of the year to go with maybe a stock market crash and all kinda crazy things happening..."
Squire, your eloquently-worded support is most heartfelt. However as we are quantitatively-driven, barring the occurrence of something horribly massive, to anticipate Gold even reaching 2000 by year-end, let alone 2401, is outright out of any rational range.
Gold just commenced Q4 by settling out the week at 1761 on Friday, (after having settled Q3 on Thursday at 1758). The stretch to reach 2401 in the year's 63 remaining trading days thus requires a price increase of 36.3%.
Now has such percentage increase in the price of Gold ever happened before within a 63-day stint? Absolutely. Obviously there was the infamous run from 1979 into 1980, with a like move in 1982; but then 'twas not until 2009 that the price of Gold again increased by at least a like percentage, as all of the primary BEGOS Markets (Bond / Euro / Gold / Oil / S&P 500) catapulted upward from the depths of the Black Swan FinCrisis.
Oh to be sure, Squire, you mention the inevitable "stock market crash"; but never have those been materially beneficial for Gold. As well you note "all kinda crazy things happening", the craziest perhaps being the U.S. potentially defaulting on its debt, which "...in a fundamental sense it rather has been doing for years..." as herein penned a week ago, with Congress perpetually robbing Peter (U.S. real wealth) to pay Paul (Japan, China).
'Course, Congress and the Treasury will go to the wall to prevent a hard interest payment miss. But let's say the broader remedy is a revaluation of the Dollar by 25%, on which Gold instantly leaps by same to 2201. That still is well short of our 2401 forecast.
Yet even should there not come a stock market crash nor a Dollar revaluation, Gold's "expected quarterly trading range" as of the close of Q3 is 181 points. Should that hold muster and Gold not trade higher a wit during Q4, a low therein of 1577 is a fair minimum price—or vice versa—a high therein of 1939 is a fair maximum price, the latter nonetheless still being nowhere remotely near 2401.
The more likely scenario shall well be Gold just sloshing around into year-end, trading during Q4 between 1668-1849: there's your 181-point range. Ho-hum, eh? But there's always the "shiny object" drama of bits**t ... "Hey Mabel! It just vanished!!" ... We'll stick with the sloshing.
Thus in going to The Now and Gold's weekly bars from a year ago-to-date, our forecast high of 2401 has appropriately been red-lined, the red dots of parabolic Short trend continuing their 14-week slide. That's a lotta red, with price itself having made both "lower lows" and "lower highs" for four consecutive weeks. (For you home-scorers out there, that has occurred on a mutually-exclusive basis 14 times since the turn of the millennium). "The 14s are wild, Ladies and Gentlemen!" But hardly wild is the price of Gold:
And as you regular readers and seasoned Gold equities investors know, when Gold goes wrong, its stocks fall headlong. Here we've the percentage tracks from one year ago-to-date for Gold itself -8%, Franco-Nevada (NYSE:FNV) -10%, Newmont (NYSE:NEM) -15%, the Global X Silver Miners exchange-traded fund (NYSE:SIL) -21%, the VanEck Vectors Gold Miners exchange-traded fund (NYSE:GDX) -26%, Pan American Silver (NASDAQ:PAAS) -31%, and Agnico Eagle Mines (NYSE:AEM) -37%. 'Tis all kinda reminiscent of Faceplant shares falling -40% back in '18:
Next we've the BEGOS Markets Standings this year-to-date. And it continues to be a Bad News Bears season for the precious metals with Gold and Silver respectively down -7.4% and -14.9%. Oil's Q1-through-Q3 climb of +56.4% is that period's second-best performance this millennium, bettered only by the +58.3% performance during (again) 2009's Q1-through-Q3 Black Swan recovery. Also for the present, Dollar is still winning the currencies' Ugly Dog Contest:
Meanwhile a raising of the debt ceiling having passed through the U.S. House of Representatives has yet to pass muster with the Senate. But either way, are we facing a StateSide credit downgrade? As stated Alice: "Curiouser and curiouser..." Further, Treasury Secretary Janet "Old Yeller" Yellen says she'll have run outta dough come mid-October unless more debt gets sold. "Hey Mabel! Now my Social Security check just vanished!!"
And yet both Philly FedPrez Patrick "Hark!" Harken and NewYawk FedPrez John "It's All Good" Williams are stepping on the taper accelerator. That from the "U.S. Needs More Debt But We're Gonna Buy Less Of It Dept." Plus, not to be left out of the financing cocktail came FedGov Lael "The Brian" Brainard pro-actively seeing the economy fully recovering from the effects of COVID, but not embracing that rates need be raised ... how's that inflation workin' out for ya?
Well, let's see: the Fed's so-called favored gauge of inflation is the Core Personal Consumption Expenditures Index. Just in for August, the month-over-month increase was +0.3%, which annualized is a pace of +3.6% and thus well-above the Fed's desired +2.0% pace. By comparison, the 2020 "during COVID" total was +1.7% and the 2019 "pre-COVID" total was +1.6%. So inflation by that measure is now running at better than double that of pre-COVID times, the current +3.6% annualized rate not having been actually realized since 1991, (that's 30 years ago, for you WestPalmBeachers down there).
Meanwhile from west-to-east across the Pond, the StateSide Conference Board reported September Consumer Confidence as the weakest since March ... but in the EuroZone 'tis rising as economic activity is said to be regaining pre-COVID levels. (However, that hasn't shaken the Dollar's leading the aforementioned Ugly Dog Contest). Either way, the Economic Barometer is leaning upward:
Next let's go right 'round the horn for the entirety of the BEGOS Markets by their last 21 trading days (one month) and baby blue dots of linear regression trend consistency; or perhaps better stated, let's go down the horn as—save of course for Oil—the seven other markets' grey trendlines are all firmly negative, and being so reinforced by the declining "Baby Blues." Thus for the BEGOS Bull, this is broadly butt-ugly:
Meanwhile for the 10-day Market Profiles of Gold on the left and of Silver on the right, their respective prices at present are in thickets of support and resistance as labeled:
So with month-end plus a day in the blend, here we've Gold's Structure by the monthly bars across the past 11 years-to-date, the young rightmost October nub finding price entrapped within The Northern Front, a hard-fought battleground from as far back as a decade ago. And in this chart's sky, our Gold forecast high goes bye-bye:
To close, it appears Boston FedPrez Rosengren and Dallas FedPrez Kaplan are resignedly being closed out of the Fed for having closed out some stock positions. "Hey Wifey! My job just vanished!!" You may recall our suggesting their having so done upon reading about the extreme S&P 500 overvaluation in past editions of The Gold Update, (rather than go down with their FedMates when it inevitably all goes wrong). Ethics notwithstanding, the Federal Reserve is a private bank such that its executives ought be free to financially manage their own money, (optics also notwithstanding) ...
But don't get caught simply standing around with your real wealth vanishing and Gold upside-bound!
Cheers!