We’re just asking… After all, by all the measures historically proven – whether fundamental or technical – none of them matter more, let alone are useful as a guide.
And just in case you score at home, the “20% same day sell limit” means the S&P 500 can drop some 900 points (and “The Dow” some 7,000 points) in a single session. Additionally: if (that is, when) we get a 50% correction, from current earnings, the S&P will still be overvalued. Do the math.
Yet the “herd mentality” maintains that the post-COVID economy is “Go-Go-Go!” But as you regular readers already know.
We read last week that “… American companies are investing money in equipment and technology…” -[DJNewswires]. In addition, US President Biden has just welcomed the 46% growth in the wage bill in June.
“But what didn’t his staff tell him, mmb …”
Well Squire, let’s just say they didn’t say the unemployment rate rose, or the ADP measure of jobs fell 22%, or the Chicago Purchasing Managers Index went from 75 to 66 (its worst drop since “hello” April a year ago), nor that May’s construction spending didn’t really go down. “Go ahead, Brother Joe! “
- The International Monetary Fund itself is jumping on the bandwagon to have the Federal Reserve forced to hike rates by the end of next year;
- The Congressional Budget Office is targeting the federal deficit at $ 3 trillion this year (it was $ 1,000 billion just two years ago);
- 130 countries have now “signed” the establishment of a global minimum tax on companies;
- Taxes must also increase on personal income and capital gains;
- And the icing on the FinMedia cake that spreads the envy of class? Those who benefit the most during COVID are “the rich”.
Ready for (more) civil unrest? Ready for stagflation? Ready for the biggest global financial wreck in history? Do you have gold?
As for gold going short (which is not really a surprise from our recent missives), according to the following chart of weekly price bars from a year ago to date, the parabolic trend rocked so much according to the rightmost cool red dot:
So what is going on? And what about our high forecast for this year 2401? Whether it’s a small reaction to Basel III, the dollar having a bullish frenzy, or bits ** t always masquerading as a currency, common sense interest in gold remains low. Nonetheless, we anticipate that this new Short trend will be short lived.
Yet here in the middle of the year with gold settling yesterday (Friday) at 1788, can the price still reach 2401 by the end of the year? These previous price increases of 34.3% occurred within six months from 1976, 1978, 1979, 1980, 1982, 2005, 2007 and 2011. It can go quickly. (Also remember our premise that “Shorting gold is a bad idea”, especially according to our market profiles presented later in this missive).
Also since the start of the year, gold and bonds are now in the basement of the BEGOS markets as we examine their rankings at mid-year (plus two trading days). And isn’t it curious to see how the “economically motivated” components (Oil, Copper and S&P) currently sit at the top of the podium – but as we have just seen – with the declining Econ Baro?
The dollar is even more curious: as measured by its index, it is currently at 92.250. This is the same level as three years ago, on May 14, 2018, when the American money supply (“M2”) was 32% lower than it is today! (Check … check … check …)
As for the respective linear regression trends of the BEGOS markets over the last 21 trading days (one month), here we are going to go around the raven with the whole group, including their blue points of trend consistency, everything during which the bond actually obtains an offer, (index index, nudge nudge, elbow elbow …):
Specific to precious metals stocks, prices are not that far from where they were a year ago, the exception being the exchange traded fund (SIL) Global X Silver Miners + 19%; (remember a year ago at this time the gold / silver ratio was 97.9x vs. 67.2x more historically online today). For the rest of the group we have Franco-Nevada (FNV) + 8%, Newmont (NEM) + 4%, Gold itself “unch”, Pan American Silver (PAAS) -1%, Agnico Eagle Mines (AEM) – 2%, and the VanEck Vectors Gold Miners (GDX) exchange-traded fund -5%:
As for short-term prices, here we have our two-panel display of 10-day market profiles for gold on the left and silver on the right. As inferred earlier, although gold’s weekly parabolic trend has just shifted to Short, its profile appears to be supporting prices from 1783 to 1775. Likewise, Sister Silver looks secure above 26.00 :
Finally, here is the structure of gold by monthly bars from 2010 to date. With gold taking hold of gold inside the northern front, the past few months can be interpreted as price consolidation ahead of this common sense buy; (encourage your sovereign bank to join the program):
We started with the S&P; let’s end with the same thing. Its insane rise to insanity finds a great colleague here joking with us about the “S&P 5000 by the end of the year!” Obviously, we don’t believe in a mind. BUT: By linearly regressing the COVID closing low level of the S&P from 2237 on March 23, 2020 until today (4352), then extrapolating this trend, the powerful index would settle on January 10, 2022 at 5001. (And this – given the current unfavorable income level – would put the P / E ratio at 65.9x). We can’t ask enough: Got Gold ???
… m …