"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)
Look at the daily bar chart of spot future Gold to the left (appears in original analysis). EVERY trading day since November 12, sopt future Gold has taken a run at $US 400 and been rebuffed. There hasn't been an intraday high below $US 397.00 in that entire period. On Monday, November 17, Gold spiked down $US 12.00 in intraday trading to $US 386 and closed down $US 6.50 on the day. It got it all back the next day, when the $US index dropped 1.26 points to a new 2003 low of 90.50. Since then, as daily volumes increase, Gold has been in a tight range just below the $US 400 level.
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".
Gold broke back above $US 380 on October 21, exactly a month ago. It then traded in the $US 380s for 16 straight trading days before breaking above $US 390 to close at $US 395 on November 12. So far, Gold has spent 8 straight days trading above $US 390.
On the daily bar chart, you can clearly see the $US 400 "ceiling", unbreached so far. The shorter-term (10 day) moving average has steepened dramatically and has now almost caught up with the spot future price. You can also see the BIG increase in volumes since Gold broke above $US 390 at the bottom of the chart.
The weekly bar chart shows the steepening uptrend lines on Gold and the shallower and shorter duration corrections in recent months. On this chart too, the shorter-term (20 week) moving average has steepened.
On the point and figure chart, Gold shows its tight range since it broke above $US 390. Don't forget, this chart is based on CLOSING prices. On this chart, the important fact to stress is that the line which forms the TOP of Gold's uptrend is presently well ABOVE the $US 400 level.
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.
On Monday, November 24, December Gold options expire on the Comex. A break above $US 400 on this day would put a lot of options into the money. There will be a concerted effort to prevent that from happening and, of possible, to force the price lower.
If Gold was to break above $US 400 on November 24, this would be a HUGE signal that the brakes have finally come off. The fact that Gold WILL break through $US 400 is CERTAIN as long as the uptrend exists. When that will happen we cannot know, but we strongly suspect that the days of obtaining a troy ounce of Gold at a price below $US 400 are severely limited.