"This week, GOLD HIT A NEW 2003 HIGH, the spot future price closing at $US 381.80 on September 9. But Gold couldn't hold that high, closing for the week at $US 375.90 - ten cents above its close of two weeks ago - thanks to a $US 3.90 fall on Friday, September 12."
(The Gold Bull Market - September 12)
That's what we said here last week. This week, the "correction" managed to get down to a spot future close of $US 373.60 on Sept. 16, but then came the rebound. By Friday, Sept 19, Gold had gotten ALL of it back, plus an extra ten cents. The spot future Gold price close on Friday was a new 2003 (multi-year) high of $US 381.90 - up $US 5.20 on the day and ten cents above its September 9 close.
When spot future Gold broke through the $US 380 for the first time in 2003 on September 9, the $US index closed at 96.43, down 0.77 on the day. On September 19 when Gold closed ten cents above its September 9 close, the $US index closed at 95.34, down 0.97 on the day. Thus far in its assault on new 2003 highs, Gold has been rising only against the $US and currencies still linked (officially or unofficially) with the $US. It has a long way to go to reach 2003 highs in terms of other major world currencies. If $US Gold continues to rise next week, it will be setting new 2003 records in terms of $US - but not in terms of Euros, Yen, $A, $C etc. etc..
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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If you doubt that Gold's breaking back above the $US 300 barrier to stay in March 2002 was a "sea change" for world markets, a glance at the percentages in this table should settle the matter beyond all reasonable doubt.
On the daily bar chart, the Gold price came back down to its longer-term (20 day) moving average (MA) on September 16 and has now regained all its post September 9 losses. This is Gold's second attempt in less than two weeks to decisively break through its February 2003 high of $US 379.00.
On the weekly bar chart, this week's trading has been ABOVE the dotted red line connecting the February and May 2003 highs ror the third week in a row. As you can see, the intraday highs last week and this week were identical. The big difference is that this week, Gold closed near the TOP of its weekly trading range. Last week, it closed near the bottom. The longer-term chart shows that the series of lower highs and higher lows set since the February 2003 has been broken. Gold has now penetrated just ABOVE the TOP of its post December 2001 uptrend for the second time.
The definitive picture, however, is given by the point and figure chart. Either we will get a double top or we won't. To produce a double top on this chart, spot future Gold is going to have to close BELOW $US 378 without getting any higher than its present $US 381 level. On the upside, if spot future Gold closes at $US 384 or higher, we will have a breakaway gap instead of a double top - and that would be a VERY strong advance indicator for a challenge of $US 400, or higher.
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.
Now, let's put this Gold bull market in perspective. It took about 3 1/2 years (February 1996 to August 1999) for Gold to fall by 39.1% from $US 414 to $US 252. In the 1980s, it took the Dow just over two months (mid August - mid October) to fall 36.1% from 2722 to 1738. Four years after that 1999 low, Gold has risen from $US 252 to $US 381 - that's a rise of 51.2%. Four years after the Dow's October 1987 low, the index had risen by 72%. By the top of its rise in January 2000, the Dow was up 575% from its October 1987 low.
In the first of its bull markets in the 1970s, Gold climbed from $US 35 to $US 195 - a rise of 457%. Don't forget, in that first bull market, Gold was rising from a fixed price which had been in place nearly 40 years, since 1934. In the second of its 1970s bull markets, Gold climbed from $US 102 to $US 850 - a rise of 733%. The latter stages of Gold's bull market of the late 1970s is rightly regarded as a bubble, as are the latter stages of the great US stock market bull at the end of the twentieth century.
In terms of a GENUINE long-term bull market, especially in an asset as potentially volatile as Gold, a rise of 50% (see above) is VERY small. Put in terms of the two great Gold bulls of the 1970s. a 50% rise would see Gold go from $US 35 to $US 52.50 or from $US 102 to $US 153. Check out how high Gold got in each of those bull markets - see above. If we are in the early stages of a major Gold Bull market - and EVERYTHING points to that conclusion - then we are just getting started at present levels.
Gold's February 2003 high of $US 379 remains a big hurdle, and it has not been decisively cleared yet. Look for a close of $US 384 or higher for the tactical $US 1 x 3 point and figure chart and a close of $US 390 plus for the strategic $US 5 x 3 point and figure chart. Above that, there's the psychological $US 400 level. And above that? Well, stay tuned.