Oil’s Drop Is Steep…But Gold Goes To Sleep
Oil’s Drop Is Steep…But Gold Goes To Sleep by Mark Mead Baillie for Gold-Eagle
At this time of the year when all hell supposedly breaks loose across the spectrum of the BEGOS Markets (Bond / Euro / Gold / Oil / S&P) — and therein Oil has been contributing its part, -12.7% through just these first eight trading days of September — the balance of the bunch have thus far been relatively docile, Gold itself having flat out gone to sleep.
“But aren’t stocks way down too, mmb?”
The word “way” is relative, Squire. Oh, there’s the media hype that ’tis all going wrong. To be sure, from the S&P’s recent all-time intra-day high of 3588 (02 September) to yesterday’s (Friday’s) intra-day low of 3310 is a demise of -7.7% across those seven days. The word “relative” being key there when compared to seven-day percentage declines of triple that amountback in March as economies were switched off; thus ’tis really not that daunting at present. Rather, the word “daunting” can describe the course of the stock market should the “live” price/earnings ratio of the S&P 500 ever work its way from today’s 56.8x back to more normal levels in the 20s; (unless “normal” is no more, or until earnings triple without stock prices rising).
Indeed, Oil has taken quite the plunge in September. Ramped-up reactions to COVID have in turn furthered demand concerns leading to shipment price slashing, supply curb easings and inventory backups, all of which put Oil on its slippery slope. ‘Course, back in April when Oil found itself -178% (yes, do the math) — when we ought have been paid to “buy” petrol — that quintessentially was daunting. And let’s face it: the one-two punch of invoked controls due to COVID plus StateSide energy independence just ain’t Oil friendly.
But be it Black Gold getting sold, a li’l old-fashioned currencies volatility, stock market plops and upside interest rate creep, our yellow metal itself is at present asleep. Gold just spanned its narrowest weekly trading range — if one can cite 64 points as being “narrow” — of the last eight, prior to which Gold had been comparably scrunched in battling week-in and week-out toward taking The Northern Front (1750-1800). Obviously it so did en route to topping 2000 on 31 July, in turn achieving the All-Time High of 2089 a week hence on 07 August. But for the seven weeks prior to this past one, Gold’s average weekly trading range had been a robust 110 points; (its entire trading range for last year was 299 points).
Further, for all the fanfare and ballyhoo herein portrayed a week ago — emphasizing Gold’s positive seasonality from StateSide Labor Day to Thanksgiving during this century’s first decade, such seasonality stint having turned negative in this second decade — our expectations for this past week of “Game On!” volatility were instead met with “Lights Off!” lethargy. Neither did Sister Silver skirt the sleepiness which suffused the precious metals’ week: she too was subdued in recording her narrowest week (1.77 points) of the last eight, like Gold, less that half her prior seven-week average trading range of 3.84 points.
Putting it into a picture, here are the percentage tracks for the primary BEGOS bunch from one month ago-to-date (last 21 trading days), the vertical red line dividing August’s Dog Days from early September’s “Game On!” days (or otherwise, daze):