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Gold Update: Precious Metal Remains Relatively Sober Into October

By Mark Mead BaillieCommoditiesOct 05, 2020 01:14AM ET
www.investing.com/analysis/the-gold-update-gold-remaining-relatively-sober-into-october-200539830
Gold Update: Precious Metal Remains Relatively Sober Into October
By Mark Mead Baillie   |  Oct 05, 2020 01:14AM ET
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Gold Scoreboard
Gold Scoreboard

True to form this decade, again Gold's September-November seasonal stint stinks.

With Gold settling out the week yesterday (Friday) at 1904, this tenth and final year of the century's second decade as measured from StateSide Labor Day (07 September) finds Gold at present -1.9%. Hardly that about which to worry; but come Thanksgiving Day (26 November), should price still be below the Labor Day level of 1941, 'twill be the eighth such losing seasonal stint this decade.

'Course, that's eight long and volatile trading weeks from now, our sense at this writing being for higher Gold come Turkey Day in the USA. Yes, price of late is trending negatively by near and medium-term measures, but the broader trend obviously remains up ... well UP!

Still, this seasonal stint's stubbornness is stark. Even POTUS' case of COVID has hardly (at least so far) materially moved the Gold needle. Perhaps 'tis par for the course in Gold's mind that world leaders through their travels and interactions invariably encounter a bout of COVID. (Just ask Boris, Jair, Charlie, Mikhail, or even my pal Al ... it comes with the job). And as proven prophylactic and therapeutic cocktails abound, Gold seemingly shrugs it shoulders to instead stay focused on currency debasement, which by the above Scoreboard values the yellow metal today at 3580. That's the ultimate uptrend, right there!

Moreover, the precious metals' present seasonal negativity is chump change compared to their broader year-to-date performances. And it being month-end, plus two trading days into October, here are the 2020 BEGOS Market Standings, the precious metals remaining well out in front with Sister Silver still the Shining Superstar:

BEGOS Markets
BEGOS Markets

'Course when we last viewed the Standings back on 29 August, Silver by that date was +54.2% and Gold was +29.8%, the negative seasonality since then thus evident. But we ain't gonna argue a wit with 2020's overall performance.

As to the year-over-year performance for Gold and the cream of the precious metals equities crop, the least percentage gain (given the equities' inherent leverage characteristic) is for Gold itself +26%. (How's that bank money market yield of sub-1% workin' out for ya?) In further ascension we've then Agnico Eagle Mines (NYSE:AEM) +40%, the VanEck Vectors Gold Miners exchange-traded fund (NYSE:GDX) +42%, the Global X Silver Miners exchange-traded fund (NYSE:SIL) and Franco-Nevada (NYSE:FNV) both +48%, Newmont (NYSE:NEM) +63%, and Pan American Silver (NASDAQ:PAAS) +91%. The near-term seasonal negativity is obvious, but the overall performance from this time a year ago is magnificent:

Gold Gdx Nem Aem Fnv Sil Paas Chart
Gold Gdx Nem Aem Fnv Sil Paas Chart

Year-over-year for Gold in this next graphic case by its weekly bars finds the current parabolic Short trend now six weeks in duration per the declining red dots. We've again denoted the 1830 "foothold" level, a support price that we may deem relevant until the parabolic trend returns to Long, which in the new week would require a whopper of a rise to at lease 2061; (should you be scoring at home, Gold's expected weekly trading range has narrowed a bit to 83 points and the daily to 31 points):

Gold Weekly Bars And Parabolic Trends
Gold Weekly Bars And Parabolic Trends

However: 'tis by the robust, rising diagonal trendline across the above chart that we designate Gold's broad trend as UP! The declining red dots put the medium-term trend as negative. And despite Gold's +2.1% performance for this past week, the near-term trend, too, remains negative as next seen by the descending grey trendline below in Gold's panel as we go 'round the horn for all eight components which comprise the BEGOS Markets. Here are their respective daily bars as charted from 21-trading days ago (one month); the baby blue dots represent the consistency of each market's present trend:

Begos Dots
Begos Dots

Meanwhile on the net incoming strength of 20 metrics this past week—one of the busiest on record—the Economic Barometer got quickly back into gear. For September, the Conference Board's measure of Consumer Confidence rose above 100 for the first time since the shutting down of the economy back in March, and ADP's Employment reading increased by 56% over that for August. September's Unemployment Rate dropped below 8% also for the first time since March. The Chicago Purchasing Managers Index reading of 62.4x was the highest since that for February, and the 8.8% increase in August's Pending Home Sales nearly tripled the 3.2% consensus expectation. The week's nasty negative was the August decline in Personal Income of -2.7%, a metric that throughout COVID has been exceedingly volatile. But pull it all together into an understandable, summarized blue line and here's the Baro, the earnings-defying S&P 500 being the red line:

Economic Barometer
Economic Barometer

In the midst of the week's data barrage came Federal Reverse Bank of New York President John "It's All Good" Williams seeing some three years for the StateSide economy to regain full strength and employment, whereas the above Baro has had things blasting off since having bottomed in June. (Feel free to start a "Pack the Fed" campaign toward adding the Econ Baro as a Fed Governor). Nonetheless, from the "Charles Dickens Dept." came Federal Reverse Bank of Cleveland President "Jump Back" Loretta Mester's seeing the economic improvement as "A Tale of Two Cities" with services notably in the hospitality and travel sectors seriously lagging. (Perhaps monetary and fiscal stimuli ought be ditched and replaced with an issuance of personal jets. "Buy Bombardier today!" they'll say. Just a thought...)

To the precious metals' 10-day Market Profiles we go, that for Gold on the left and for Silver on the right. Note that both metals are presently priced near the center of their respective ranges, which takes some edge off the negativity. But until prices bust up and away from those large mid-Profile congestion clumps, at bay stays positivity. Trading supporters and resistors are as labeled:

Gold Silver Profiles
Gold Silver Profiles

Thus with September in the fold and plus two days of October as told, here we've Gold by its monthly bars across the past nine years, the overall structure's key areas as defined. In one sense, "You've come a long way, baby!" And yet, there is so much justifiable upside left in the balance:

Gold Structure
Gold Structure

A valued reader wrote in this past week that, just as Gold sold off following its 2011 All-Time High, so we may be again seeing same since this most recent All-Time High. To be sure, there is some similarity. 40 trading days following Gold's All-Time High at 1923 in 2011, price settled 10.8% lower (at 1716); it now being 40 trading days following Gold's All-Time High at 2089, price today at 1904 is 8.9% lower. Similar downside percentages indeed across those two like periods. Other similarities include Gold's demise following its 2008 All-Time-High, and certainly so price's fallout after 1980's All-Time High.

BUT: we really do sense 'tis different this time, given the startling state of the 3Ds incorporating rampant Debasing of faux dough, issuance of cheap Debt, and abounding of Derivatives so exotic as to include those crypto-toxic. And most importantly: awareness of the Gold Story is up: all that remains is for price itself to go up ... really UP!

Gold Update: Precious Metal Remains Relatively Sober Into October
 

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Gold Update: Precious Metal Remains Relatively Sober Into October

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Geoff McKay
Geoff McKay Oct 05, 2020 12:04PM ET
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