Gold is back under control - you can see it right there on the charts. The "damage" was done on Tuesday, June 10 when the Comex spot future swan-dived $US 9.60 to close at $US 352.20. Not so coincidentally, there were two other events which took place on June 10. A story was published in Shukan Gendai, a leading Japanese news weekly, about a Japanese government plan to tax Japanese savings. And in the US, Treasury yields plummeted after reports came out about dodgy "accounting practices" at Freddie Mac.
Here was Japan contemplating the "ultimate" measure to fight deflation while, in the US, one of the major "moppers up" of US financial liquidity was reported to be tarnished. Scared money had to go somewhere. It couldn't be allowed to go into Gold. Paper gold plummeted on the comex in what was officially reported as being "profit taking". The scared money stampeded into Treasuries. And it kept on going into Treasuries for the rest of the week.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
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Yes, the $US index hit yet another 2003 low this week at 92.30 on June 13. On the table above, the percentage loss on the $US index is now far bigger than the percentage gain on $US Gold. Gold is now in a "safe" trading range between $US 350 - 360.
On the daily chart, Gold has dropped below both its moving averages and the shorter-term (10 day) moving average (MA) has dropped back below long term (20 day) MA. As you can see, Gold has found support just above the $US 350 level.
On the weekly bar chart, Gold has now dipped back towards its shorter-term (20 week) MA. It is back at the middle of its up channel on the longer-term weekly chart. On the point and figure chart, you can see that Gold has once again dropped towards the bottom of its upchannel, breaking below its three-week $US 360-70 trading range.
Here's another perspective - a comparison between Gold's 2002 low and its present price and the $US index 2002 high and its present "price". All data is on CLOSING levels:
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You will find charts of the $US index and Gold here for comparison.
By now, it is fairly obvious to everyone that the Fed WILL cut rates when the FOMC meets on June 24-25. There were even rumours circulating this week that the Fed wouldn't wait for the scheduled meeting. The schemes are now getting hare-brained in the extreme. Japan is seriously talking about taxing savers in a last ditch attempt to get them to stop saving and START SPENDING. The Fed has all but guaranteed "perpetual" negative interest rates, and nominal rates at all time lows.
The desperation is almost palpable. Money in the US is flooding into Treasury debt while Gold is falling right alongside the US Dollar. The real estate bubble has been threatened with the troubles surfacing at Freddie Mac and Fannie Mae, but the bond bubble is growing exponentially.
All bubbles burst, and the longer they take to burst, the more damage results from their bursting. This Gold bull market got going with the bursting of the $US bubble at the beginning of 2002. The timing of its next leg upwards is now clear, it will come with the bursting of the bond bubble, and it is likely to be a lulu.