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Precious Metals Update: Gold 'n Silver 'n CPI...Oh My!

By Mark Mead BaillieCommoditiesNov 15, 2021 12:12AM ET
Precious Metals Update: Gold 'n Silver 'n CPI...Oh My!
By Mark Mead Baillie   |  Nov 15, 2021 12:12AM ET
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Gold Scoreboard
Gold Scoreboard

Let's start with October's Consumer Price Index (CPI) as reported by the U.S. Bureau of Labor Statistics: its excitedly-disseminated reading was +0.9% (which annualized is a whopping +10.8%). "Oh, 'tis the worst in 30 years!", they say. "Oh, 'tis the worst in 40 years!", some say. We say: "C'est très exagéré."

Why? Because Labor has established this level—or higher—three times prior during the 24 years of our maintaining the Economic Barometer: for September 2005 'twas +1.2%; for June 2008 'twas +1.1%; and recently for this past June 'twas (as is now) a like +0.9%. Here's that history:

CPI - 1998 To Date
CPI - 1998 To Date

Such exaggerative reporting of this October's +0.9% CPI growth arguably does have merit, for 'tis a very concerning rate of inflation. However as Grandpa Hugh would encourage today's news desks : "Get it first, but FIRST, get it RIGHT!" as opposed to the current-day media mantra of "Fake it FIRST, but fake it as FACT!"

'Course there are other sources that find far greater inflation; however in sticking with Labor's "official" measure, glaringly missing from the subsequent reportage is that—following those three prior inflationary pops—came cooling over at least the few ensuing months. 'Tis per the rightmost column of "next" three-month CPI average growth in the below table:

Prior Inflation Pops
Prior Inflation Pops

Again, ours is not to belittle the seriousness of October's +0.9% CPI rise; rather 'tis to simply show it in the context of historical fact. Please notify a media outlet near you.

Seriousness, indeed. For of further practical import (on the assumption that neither do you eat, nor use petroleum-based products), October's Core CPI growth of +0.6% has already been realized four times just in the prior 15 months. Critical concern there, and justifiably so given the price of Oil has risen from 39.82 at mid-year 2020 to 83.22 at October 2021's settle (+109%). For from the "That's Scary Dept." the cumulative rise in the full CPI across that same 16-month-to-date stint is only +7.3% ... solely by that metric, folks have been gettin' off easy despite higher petrol prices!

Fortunately, Gold and Silver may be FINALLY gettin' off their respective butts via their inflation mitigative role. Which obviously points to their having so much farther up to go. Per our opening Gold Scoreboard, price settled out the week on Friday at 1868, its second-best single-week performance thus far this year on both a points (+47.7) and percentage (+2.6%) basis. Thus comparatively, 'tis a fine leap forward for Gold.

However as you ad nausea already know, even in accounting for its supply increase, Gold by StateSide M2 currency debasement "ought" today be 3986. As well is the ever-annoying fact of Gold first hitting the present 1868 level a decade ago on 19 August 2011 when the money supply was just 44% of what 'tis today, ($9.457 trillion vs. $21.343 trillion). "Got Gold?" And as for Sweet Sister Silver, 'twas her third best weekly performance year-to-date, albeit settling Friday at 25.41 is a price first achieved 11 years ago on 04 November 2010. "Got Silver?" (Oh and from the "Gold Plays No Currency Favorites Dept." the Dollar recorded its fifth best up week of the year. "Got Bucks?" We'd rather Swiss Francs).

Moreover, from our always revered "The Trend is Your Friend Dept." as we saw a week ago, Gold's parabolic trend—after an intolerably lengthy stint as Short with little net price decline—did flip to Long. And as is the rule rather than the exception, price this past week continued higher. Which begs your question:

"How much does price rise when this happens, mmb?"

Bang on cue there, Squire. And the answer is: across the 43 prior Long weekly parabolic trends since 2001, the median increase in the price of Gold is +8.3%. Thus by that number, from Gold's trend flip price back at 1820, an +8.3% increase this time 'round would bring us to 1971. Modest perhaps by valuation expectations, but a start.

Too, some of you may recall this sentence from our 02 October missive wherein we nixed our year's forecast high of 2401: "...The more likely scenario shall well be Gold just sloshing around into year-end, trading during Q4 between 1668-1849..." Fab to already be wrong there! For here are the weekly bars and parabolic trends from this time a year ago-to-date:

Gold Weekly Bars & Parabolic Trends
Gold Weekly Bars & Parabolic Trends

Now in the midst of all this inflation trepidation came Dow Jones Newswires this past week with "The Economic Rebound From Covid-19 Was Easy. Now Comes the Hard Part." Makes sense given everything having been shutdown last year. But: how bona fide actually is "Rebound"? Let's look at corporate earnings, (now yer not gonna get this anywhere else, so pay attention): with but a week to run in Q3 Earnings Season, most of the S&P 500 constituents that report within this calendar timeframe have so done, and with fairly admirable results: 80% bettered their bottom lines, (or as we said a week ago "better have bettered" given the economic shutdown of last year). Yet here's the dirty little secret: many mid-tier and smaller companies have also reported, by our count 1,368 of 'em. And of that bunch, we found just 56% of them did better. That is a Big Red Flag given mid-to-small businesses drive the American economy. We doubt your money manager knows that number.

In addition to the past week's inflation reports, lost in the shuffle were the Econ Baro metrics showing September's Wholesale Inventories as backing up, whilst November's University of Michigan Sentiment Survey fell to a 10-year low, the 66.8 level not seen since November 2011. 'Course the S&P loving bad news, its Index roared upward to finish the week at 4683, a mere 36 points below its all-time high. Together with the Baro, here's the year-over year picture:

Economic Barometer
Economic Barometer

Now to some impressive precious metals' technicals via our two-panel graphic of Gold's daily bars from three months ago-to-date on the left and those for Silver on the right. "Impressive" as when the falling baby blue dots of trend consistency reverse course back up without having dropped to mid-chart, the buyers are clearly in charge:

Gold/Silver Dots
Gold/Silver Dots

As for the 10-day Market Profiles for Gold (below left) and Silver (below right), life is good at the top:

Gold/Silver Profiles
Gold/Silver Profiles

Good as well is Gold's buoyant positioning within its stack:

The Gold Stack

  • Gold's Value per Dollar Debasement, (from our opening "Scoreboard"): 3986
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • 2021's High: 1963 (06 January)
  • The Gateway to 2000: 1900+
  • 10-Session directional range: up to 1871 (from 1759) = +112 points or +6.4%
  • Trading Resistance: none per the Profile
  • Gold Currently: 1868, (expected daily trading range ["EDTR"]: 25 points)
  • Trading Support: Profile notables are 1864 / 1827 / 1793
  • The 300-Day Moving Average: 1822 and falling
  • 10-Session “volume-weighted” average price magnet: 1816
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • On Maneuvers: 1750-1579
  • The Weekly Parabolic Price to flip Short: 1686
  • 2021's Low: 1673 (08 March)
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr '18 preceded by 1362 in Sep '17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Next week brings 14 metrics into the Econ Baro; consensus expectations look for it to turn higher. To be sure, turning higher have been Gold and Silver as inflation their prices stir; and yet their levels now 10 years on are the same as they were; thus their doubling from here can well be a blur!


Precious Metals Update: Gold 'n Silver 'n CPI...Oh My!

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Precious Metals Update: Gold 'n Silver 'n CPI...Oh My!

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Zinzi Siswana
Zinzi Siswana Nov 15, 2021 12:31AM ET
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