The Last Gold Bear Market:
Gold fell from $US 499 to $US 325 between December 1987 and March 1993. The extent of this fall from top to bottom was 34.87%. The duration of the bear market was 5 years and 3 months (63 months).
The Present Gold Bear Market:
Gold fell from $US 414 in February 1996 to a low of $US 253 in September 1999. The extent of this fall is 38.89%. With no bull market yet established, the present bear market has lasted for exactly 5 years (60 months).
Here are the present (Feb. 9) Moving Averages - and the spot future Gold close.
$US 259.90 - the spot future close
(down $US 0.20 on the day - down $US 7.20 on the week)
$US 268.12 - the 20-week MA
$US 273.38 - the 40 week MA
This week, Gold gave up $US 3.00 more than it gained last week. That puts the spot future price (just) below the $US 260 level for the first time since September 20, 1999 - a week before the announcement of the "Washington Agreement". It means that Gold has broken below its lows of last year. Finally, it puts the chart below the trendline connecting Gold's last three lows
You can see from this chart that ever since the "Washington Agreement" price spike of Sept/Oct 1999, the spot future Gold price has been making a series of descending highs and descending lows. And each descending low has brought Gold closer to its 1999 lows. The significance of this is, of course, that unless these 1999 lows ultimately hold, Gold is going to go back to the first half of 1979, nearly 22 years ago, to find more "support points".
Unless Gold gets back above the $US 260 level in a hurry, and so back above its recent trendline, it becomes increasingly likely that the 1999 lows are going to be tested. To give a possible time frame in which this might take place, consider the duration of the last Gold bear market.
That bear market lasted from December 1987 (two months after the crash) when Gold just touched the $US 500 level until March 1993 when Gold bottomed at $US 325. The last bear market lasted 5 years and three months (63 months). This bear market is the longest one since Gold was divorced from the $US in 1971.
The present bear market began in February 1996 when Gold hit $US 414. The bottom (so far) has been $US 253 set in September 1999. Now, almost a year and a half later, Gold is only $US 7 above that level. So far, the duration of the present bear market has been exactly five years (60 months).
Does that mean that $US Gold is going to take off sometime in the next three months. Not at all. What it means is that if Gold does not reverse its present trend over the next three months, then the current Gold bear market will be the longest one since 1971.
A reversal of the current trend will need a Gold high above the previous high and a low above the previous low, something that we have not had since the "Washington Agreement" spike. In fact, we can split the current market into two phases - a bear market from 1996 to 1999 and a "bottom" from 1999 to the present.
But just as there is as yet no resolution of the Dow's bull market, there is as yet no resolution of Gold's bear market. The Dow has been in a "top" since March 1999. Gold has been in a "bottom" since September 1999. What we have been waiting ever since then is to see which will break first. The operative levels are 10000 on the Dow, and $US 300 on Gold. Right now, the Dow is 7.8% above 10000. Gold is 13.4% below $US 300. We know which is "safer", but neither is resolved yet.