"There is one feature common to all three charts on this page. They all show what is called an "inverted" head and shoulders pattern. On a normal head and shoulders, the head is above the shoulders. On an inverted pattern, the head is below the shoulders. A normal "head and shoulders" is usually resolved to the downside. And "inverted" head and shoulders is usually resolved to the upside."
(The Gold Bull Market This Week - November 7)
This inverted head and shoulders pattern has certainly been resolved to the upside. The spot future Gold close of $US 398.00 on November 14 is the highest since April 8, 1996. The upmoves are getting bigger and the corrections are getting smaller both in depth and in duration. All that remains now is a close of $US 400 or more.
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.
It is a reasonable bet that Gold breaking above $US 400 will usher in another such "sea change", especially with the HUGE bull run that world stock markets have had since March this year and the outbreak of the Iraq "war". On top of that, there is the fact that the $US index closed on November 14 at 91.60, only 0.09 points above its 2003 low.
With Gold having hit a new spot future closing high this week, all these charts now have new highs and slightly steeper uptrend lines on them. On the daily bar chart, the Gold price has broken out of its range beetween the two moving averages decisively. And MOST encouragingly, the short term (ten-day) moving average has NOT dipped below the longer-term (20-day) moving average as it did during the previous correction in early October.
The weekly bar chart is in "blue sky" territory at multi-year highs and now with three gradually steepening uptrend lines to support it. The most recent line provides support right around the $US 380 level, where Gold spent two weeks correcting before its assault on $US 400 this week.
On the point and figure chart, Gold is now back in the upper half of its uptrend and has clearly decisively broken above previous highs. Here, the reverse head and shoulders is the most obvious and the break to the upside is a CLASSIC.
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.
The next potential "sticking point" for Gold is, of course, $US 400. Gold crashed right through $US 390 and accelerated, and on an intraday basis, it stopped just 60 cents short of $US 400 on November 14. Looking at the $US 1 x 3 point and figure chart, you can see that the top of the channel is well ABOVE the $US 400 level.
Time will tell, of course, but in the meantime, the breakout to $US 398 has revalidated Gold's bull market yet again. Technically, this is the start of another upleg. This leg may stall or even correct at $US 400, but it's as good a market bet as there has been for a LONG time that it's not going to STOP at $US 400. Stay tuned.