In the last week of November, spot future Comex Gold poked its head above the $US 400 level twice in intraday trading but did not manage to CLOSE above $US 400. Over the first week of December, Gold has closed above $US 400 for all five trading days and has closed on December 5 at a new 2003 multi-year high of $US 406.40.
$US 400 has been cracked, but not quite yet broken. There is still a residual nervousness that this new level will hold. Remember, Gold poked its nose above the $US 300 level back in September 2001 but it took until late March 2003 before the $US 2003 level was definitely broken - it took that long for Gold to close above $US 310.
Once that happened, investors stopped "looking down" and started "looking up". The same thing will happen with $US 400, and it is a VERY good bet that it won't take as long as the $US 300 hurdle did.
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.
And here we are, more than $US 100 (or 33%) higher. We are confident that the REAL breakthrough of $US 400, which will come with a break above $US 420, will be a much bigger "sea change" than breaking through $US 300 was.
Since early November, $US 400 has been a ceiling. This week, it has become a floor. You can see that clearly on the daily bar chart. The move up above $US 405 to $US 406 on December 5 has given Gold a bit of "breathing room" to correct without going back below $Us 400
The weekly bar chart shows the steepening uptrend lines on Gold and the shallower and shorter duration corrections in recent months. The shorter-term (20 week) moving average has steepened, $US 400 Gold has finally been breached and the upward pattern is like a railroad track.
On the point and figure chart, Gold's most recent trading range in the $Us 390 has now been broken with the price shooting above the $US 400 level. The higher the price goes before we get a downturn on this chart, the more likely it is that Gold will NOT move back below the $Us 400 level. Once confidence on that score develops, Gold AND Gold stocks have A high potential to REALLY take off.
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.
"Given the steadily sinking US Dollar, combined with the steadily sinking appetite of foreign private buyers for US financial "assets", a Gold price of $US 400 plus is an absolute CERTAINTY. Next week we are back to a full week's trading on the Comex. Let's see what happens."
(The Gold Bull Market This Week - November 28)
Didn't take long, did it? Now all that needs to happen is for enough investors to become confident (if not certain) that Gold won't go back BELOW $US 400. Once that happens, LOOK OUT ABOVE.