Dec 08 Gold Rushes Higher, Fresh Uptrends Transpire Demeadville

The Gold Update by Mark Mead Baillie --- 264th Edition --- San Francisco --- 06 December 2014 (published each Saturday)

“Gold Rushes Higher, Fresh Uptrends Transpire”

With a week under its belt since the "Swiss Miss", we've presently two initial impressions as regards Gold's current price of 1193. The first, quite obviously, is its ever-evident estrangement on the above scoreboard in the face of debasement. The second is its not succumbing to the warped will of Switzerland's bürgerschaft, (which, for you WestPalmBeachers down there, is not a fast food drive-thru lane), the country's once sensibly-shrewd citizenry that threw Gold down the toboggan chute.

Indeed: after the Swiss "NEIN" vote for their central bank to maintain a 20% Gold-asset base, etc., was known last Sunday, but prior to the market's opening that afternoon (15:00 Pacific Time), a close Swiss-related "family" member rang up as to Gold's perhaps getting walloped in the offing. I calmly suggested that the knee-jerkers would almost certainly send it bollocking down at the open, but come session's end on Monday, 'twould likely be higher than Friday's pre-vote close. When asked why that would happen, I simply said that, by the polls, the vote's result was already priced into Gold and moreover, that when 'tisso obvious which way a market is going to go, 'twill "unexpectedly" do the opposite.

And so off Gold went, gapping down from the prior Friday's 1167 settle to open Sunday at 1159 and then swiftly head further South to as low as 1142; but by the time the dust had settled last Monday at 1212, Gold had reached as high as 1221, a 79-point upswing. 'Twas not only the largest such intra-day points up-move since 16 April 2013, but the fourth largest since Gold's All-Time High, (1923 on 06 September 2011). And if your name is Claire Voyant, buying just one li'l ole Gold contract at the day's low and selling at the high earned you $7,900. (Too bad you didn't buy 1,000 contracts). Oh, but wait: you say you bought Silver instead? The single contract swing profit there was $13,275 (from 14.155 to 16.810). Dinner's on you baby.

"Well, mmb, you did write last week that given these are precious metals markets, they can rise just as swiftly, if not more so, than they've fallen..."

Nice of you to point that out Squire, but the bottom line is, here at 1193, we've a very long row to hoe toward reaching pricing sanity at 2000+. Remember our axiom: change is an illusion whereas price is thetruth. Still, that strong intra-day upswing does beg the question, albeit for the ad nauseath time: is Goldfinally "sold-out" here?

Switzerland's rejecting a return to some fractional form of Gold standard certainly gave the Trading/Investing/Manipulating bearish powers-that-be the quintessential opportunity to crush price once and for all: why, the Swiss have comprehensively turned their back on Gold! 'Twas the chance to drive it into oblique obscurity, render it worthless, or at best make a weak cousin to Molybdenum (59¢/oz.), perhaps even drive the price sub-zero! But no: the nattering nabobs of Gold negativism couldn't even push it down to test the year's low at 1131. Have they who drive price begun to think twice?

One thing's for certain as we go to the weekly bars, Gold's power pop was more than satisfactory to flip the parabolic trend back to Long, the rightmost bar in the chart representative of price this past week having eclipsed the level of the red dots to record a new blue dot. So from here, the first higher goal is to trade up into the mid-1200s, and then to focus on moving above that 1240-1280 resistance band as bordered by the purple lines. 'Course, as you can see center-right of the chart, the last flip to blue was a flop -- fortunately an exception to our technical expectation that shan't this time 'round be repeated:

Also flipping to Long, which it'd almost done a week ago, is Gold's daily Price Oscillator study, the bars in the below graphic having turned to green. To be sure, the prior three occurrences of going green have sported mediocre follow-though rather than material up movement. Something more on the order of the green course charted last spring would place Gold into the 1300s and really start reeling in those who'd abandoned ship en route. When then gathering for high tea, one would appear terribly common to have missed the re-ascension of Gold: "Charles never actually sold his, you know...":

Quite. We might also point out that Sister Silver's daily Price Oscillator stance went positive as well this past week, such that the associated Market Rhythm target points to a price of at least 17.155. The white metal's settle yesterday (Friday) was 16.285.

Let's next pair up our precious metals below in this two-panel graphic. Both panels show the daily bars spanning the past three months along with their "Baby Blues" that depict the consistency of the ever-evolving 21-day linear regression trend. Clearly, the same case can be made for both metals, especially per their respective bars of last Monday (fifth in from the right). On the left for Gold, 'tis now twice, indeed thrice, been shown that trading sub-1150 is just too doggone low, per the red pointy fingers. On the right for Silver, 'tis the same analysis that trading sub-16, let alone sub-15, is just too doggone low, in her case dastardly so! Note the resolute, shorts-busting upside resilience in both cases: BANG!

Given the above graphic, methinks 'twill take one heckova concocted, dare I say conspiratorially, trumped-up myth to rationalize lower lows, (although we've a real doozie as you'll see at the foot of this missive). Nevertheless, let us reiterate one of our favourite time-honoured quotes, especially as we're in the thick of the StateSide football season: were the late great Green Bay Packers head coach Vince Lombardi to look up at our scoreboard, he'd yell "What da hell's goin' on out dere?!?!?" Well, take heart, Coach: by our graphics, the Gold Game looks to be turning around.

Indeed what's going on here is Gold's having out-performed the other primary BEGOS components month-over-month, the percentage performance of those five markets which comprise that acronym as next shown. And how arduously challenging it must be for some to grasp that Gold could be the period's the top performer given both the €uro -- and certainly so the ¥en -- succumbing to so-called "Dollar strength". Why even the S&P is higher too ... but then again, it never goes down. (And blame the chart's "compressed" appearance on Oil's recoil):

Yes, 'tis once again evidence that Gold plays no currencies favourites, (as 'twas detailed back in our 25 October piece entitled "Gold & Debunking Dollar Strength"). Today we've the EuroZone's economy sliding back toward recession, their most recent Purchasing Managers’ Survey achieving its lowest level in 16 months, with a further bond buying binge expected to be announced in January as part of the European Community Bank's €1 trillion Quantitative Easing strategy. Meanwhile Moody's has further reduced any yen for the ¥en in having just downgraded Japan's credit rating. And yet through it all, even including the Swiss Miss, Gold's defying to take further downside bait.

Still in the broader picture as noted earlier, the yellow metal's resilient post-Swiss Miss power pop pales in comparison to the reality of price's lowly position as we turn to our layered Structure chart, wherein we see Gold, per that great 1978 Van Halen hit, all but "Runnin' with the devil...":

Toward closing, let's pair up the 10-day Market Profiles for both Gold (left) and Sister Silver (right), followed by three quick quips on the way out, (including the doozie as promised). Again, the horizontal profile bars represent contact volume per price point for the last 10 trading days and the white bar in both panels yesterday's settle; from the trader's perspective, the longer the bars, the more expected their supportive or resistive qualities:

And we thus end it with these:

1) Here's the Kerfuffle of the Week: Jens Weidmann, who heads Germany's Bundesbank, seems dead-set against the ECB's imitating US-style money printing, such position of the Präsident said to be holding up the EuroZone's central bank from taking more aggressive QE action. The ECB indeed put forth that it“remains unanimous in its commitment to using additional unconventional instruments". At least the Germans are hedging by repatriating their Gold, (assuming 'tis still out there somewhere).

2) Here's the Headline of Week: "French economy resilient but stagnant". Ok...

3) Here's the Doozie of the Week: On the off chance that you missed this one, it really does take the cake. There's a Dutch-born chap in New York who works for Citigroup as their Global Chief Economist by the name of Willem Buiter. He's quite bright, and assumedly so given his high-level stance at Citi, albeit he's on record now as likening Gold to Bitcoin. (I'm hearing your collective "Oh, C'mon Man!" as you read this). Still, Mr. Buiter is not denying that Gold can't climb to $5,000/oz., as it could be in a bubble for another 6,000 years. For after all, as he was so quoted in a FinMedia piece: Gold is a "fiat commodity currency, just as the U.S. dollar, the euro, the pound sterling … are fiat paper currencies and as Bitcoin is a flat virtual currency". I'll tell ya Folks, never has it dawned on me throughout all my years of analysis that the supply of Gold is unlimited. Who knew?