Current AUD Gold price view

My read of the gold price, specifically priced in AUD is;

while there are no extreme readings present either side of the pendulum,

the daily trend is turning bearish, albeit its embryonic, 

while the medium term upward trend is not under full steam.

This tells me that initiating long positions is merely participatory as the price is in ‘no-mans land’.

There is growing bias for lower prices in AUD priced Gold towards the A$2,420 level, which is approximately 9% lower than today’s A$2,650…..

however I’ll need to see certain support levels pierced in order to confirm any strength in a developing bearish trend.

While a move above A$2,690 begins to dilute this view.

December 16, 2022

by Rob Zdravevski

A ‘trading’ high in Gold

I think the Gold price is at a ‘trading’ high.

Gold priced in AUD needs to break above A$2,695 to make a new ‘higher high’ and extend the current upward trend.

If not, the trend loses steam and wanes.

Currently, it’s A$2,635.

Then downside risk lies around A$2,435 (+/- $50).

USD priced Gold (currently US$1,771) needs to trade above US$1,808 to increase probability of the bullish trend continuing.

If it can’t breach that ceiling, it’ll prove to be a headfake and expect a re-test of the recent US$1,617 lows.

November 15, 2022

by Rob Zdravevski

Convergence is also happening

Here is a story of convergence to the mean, not reversion.

The chart and graphics below show the Gold price (in USD) trading sideways for 2 years while the 200 week moving average has risen $300 or improved by more than 20%.

It has converged towards the oscillating price of Gold which has spent a couple years digesting and consolidating.

I’m preparing for a further 4% swoon from its current $1,706, down to around the $1,640 mark.

September 14, 2022

by Rob Zdravevski

Gold today

Gold priced in USD remains in a downtrend.
It’s currently trading at US$1,721

USD Gold would register a weekly oversold reading somewhere between $1,675 – $1,642, which is approximately a further 3% lower today than the current price.

However, my trend analysis for Gold priced in EUR and AUD shows then developing into a new but early ‘daily’ upward trend.

It is early but work watching, as today, Aussie listed gold producers had a positive trading day. Head fakes do occur and there are gaps to be filled in these stocks, so it remains poised but interesting.

September 9, 2022
by Rob Zdravevski

Now, I like Newmont

Yesterday, Newmont Mining’s (NEM:US) quarterly result was not well received by the stockmarket.

Its shares fell 13%.

I’ve been waiting for cheaper prices in Newmont Mining and has mentioned this is various writings, with the most recent post link attached.

A day later, NEM stock bounced 3.5%.

Its recent closing price is $46.14

Only 3 month ago, Newmont’s stock price was $86.

That was April 18th, 2022

Its market capitalisation was $66 billion.

On April 20th, 2022, I wrote this note, calling for Newmont’s stock price to ease.

An extract from that note was, “…….it’s plausible that Newmont uses its well priced equity to make some acquisitions or raise some capital itself.”

Today, it’s market cap is $35.4 billion

Now I’m wishing to buy the stock at $42.80. 

Furthermore, we’ve seen 35% of the total shares outstanding (502 million) turnover since that April high.

While 300 million shares or 21% of its share issuance have traded in the past 9 weeks, which 8 of those weeks posted negative returns.

When coupled with the indicators on the chart below, I’d say we are looking a picture of exhaustion and cumulative amount of volume capitulation.

July 27, 2022

by Rob Zdravevski

Newmont price to ease

In a continuation of my Alcoa post earlier today, Newmont Mining’s stock price is now dancing at ‘extremes’ not seen for some time.

The first chart below is an illustration of the various times that Newmont’s stock price has traded at high levels of percentage above its 200 weekly moving average.

Other than the shocks of the respective 1981 interest rate hikes and the 1987 stockmarket crash, Newmont Mining’s stock price doesn’t necessarily spend time up in this stratosphere.

My case is not a one-way street.

Note the highlighted ellipse in the chart surrounding 2003 and 2005.

Newmont trades at 101% above its 200 WMA in the last part of 2003, then attempts a mean reversion to then rise back to the same stock price, YET the percentage reading is ‘only’ 57%.

This is because the 200 WMA ‘rolls up’ quickly to catch up with the parabolic move seen through 2003.

The 200 WMA will move higher, while NEM stock price declines.

This is the convergence that I mention in the previous Alcoa post.

So, I’l look for Newmont’s stock to work its way back to the $64-$68 mark in the coming 9-13 months.

The second chart compares Newmont to the Gold price (in USD).

Similar to Alcoa, it’s plausible that Newmont uses its well priced equity to make some acquisitions or raise some capital itself.

April 20, 2022

by Rob Zdravevski

Economy Health Check

I’m watching the Copper/Gold Ratio (HG/GC)

Its direction tells me about the health of the economy.

The direction of the HG/GC also helps confirm the direction of interest rates. More specifically, the U.S. government 10 year bond yield.

In the chart below, I’ve overlaid a price chart (in blue) of the S&P 500 against the HG/GC.

You can see that the general direction of both the SPX and the HG/GC follow each other.

At this moment, the HG/GC is nearing a point where it breaks either way.

We’ll need to wait and watch in the coming week or so.

In my earlier post today, I imply that interest rates may rise.

This, then suggests that the HG/GC breaks higher (meaning Copper rises and Gold declines) which translate into the S&P 500 rising further.

A ‘melt-up’ in the S&P 500 is not a perverse idea, especially against the grain of many who are calling the top, let alone a crash.

It may seem odd to think, but markets often move to where they can do the most damage…..

and going higher can damage those who have been on the sidelines or sold up recently.

Missing out can also hurt investors.

September 10, 2021

by Rob Zdravevski

The Copper/Gold Ratio says markets move higher

The chart below shows the S&P 500 (SPX) overlaid with the Copper/Gold (HG/GC) Ratio on a daily basis over the past 15 years.

The latter ratio is a good indicator of the economy’s health and sometimes a predictor of interest rate direction.

I find this chart helpful when pondering my asset allocation to equities and how much broader risk I am comfortable taking, especially at the later end of an advance, bull market or rally.

I like seeing how the SPX reacts when the HG/GC breaks above or below its trend lines.

Today’s reading of 0.002396 is calculated by dividing the Copper price of $4.32 into Gold’s $1,803.

At this moment, while the HG/GC’s is trading above its trend line (and a reading of 0.00222) it is suggesting that the S&P 500 advance remains intact……..

This seems quite perverse to many, as pundits reiterate their calls of an overvalued, ‘bubble-esque’ equities market.

In some recent posts I challenge the norm and perhaps the consensus call for a notable decline.

The S&P 500 can continue trading at the historical higher end of its historical stretch above its 200 Week Moving Average, just like the late 1990’s.

and the way the S&P 500 relates to the U.S. 10 year bond yield or more pointedly, the spread between the 10 year and 2 year yield is another important indicator to watch.

Investing is a highly nuanced past time or business.

Often markets move to where they can do the most damage….and going up can cause as much damage as going down, in circumstances such as ‘missing out’ or underperforming other fund managers if you’ve been holding a lot of cash.

P/E ratios are not the only thing to look at.

One scenario of a 0.00222 reading is Copper falling to $4.10 and Gold rising to $1,850. Just something to play around with.

July 12, 2021

by Rob Zdravevski

Health Check – the Copper/Gold Ratio

The watching the direction (not necessarily its value) of the Copper/Gold Ratio helps me reading the health of the economy.

And it has been healthy….

It’s particularly correlated with the direction of the U.S. Government 10 Year Bond Yield. More on that in the next post.

The chart below shows us the 6 moments when the Copper/Gold Ratio has registered an Overbought reading over the past 20 years.

Such occurrences correlate to and increase the probability of lower prices in the S&P 500 Index or at the very least see it trade sideways for the coming months. This also coincides with my thesis in my recent newsletter.

What this chart tells you is that probability does not suggest ‘going long’ or making any meaningful capital deployment into equities at this juncture.

May 2, 2021

by Rob Zdravevski

The contrarian in me is looking at Gold

Do you remember last August when Gold ‘bugs’ were wetting themselves, as Gold broke above US$2,000 ?

Do you recall the price targets of $3,000 and higher being unleashed?

I’m pleased that I was bearish Gold and avoided that trap.

Today, it seems that no one wants Gold. It’s unloved, oversold and 16% below that August low.

We’ve seen (USD) Gold test and hold a 78% fibonacci retracement of the rally from March 2020.

It’s ‘double bottom’ at US$1,678 has held (for now and important to watch).

For now, it’s in a range of US$1,690 and US$1,790.

I’m accumulating and cognisant to watch it hold that support level.

April 5, 2021

by Rob Zdravevski

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