"As already stated, the break above $US 400 is not yet decisive, but a challenge of the previous bull market top of $US 414 is far more likely over the rest of this year than another test of $US 400."
(The Gold Bull Market - December 19)
There you have it. The spot future close of $US 414.80 on December 29 is actually ten cents above the $US 414.70 spot future close of February 2, 1996 which marked the top of the previous bull market. That one started from $US 325. This one began from a little above $US 250.
Actually, there have only been four trading days since our last report in the US. The Comex precious metals markets were closed on December 25 and 26. And now, with one and a half trading days (December 30-31) trading days left in 2003, Gold is on the verge of ascending to levels not seen in more than a decade.
Given the abuse of what passes for money all over the world during that past decade, many would say (with some justification): "It's about time!". So it is. US government debt has more than doubled since 1990, and the derivatives avalanche which is poised to overwhelm the financial system was just getting started back then. However, 1990 marked the start of the second "decade of the stock market" (the first one was the 1980s) and Gold couldn't compete against the lure of Wall Street.
The lure of Wall Street is still there. The Dow is up more than 25% this year, but Gold is competing very well indeed, thank you. Once Gold consolidates ABOVE its previous bull market high, it is set to accelerate. And if, as is quite likely, that acceleration coincedes with a faltering of the stock market, it is likely to be very fast indeed.
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.
For the first time since Gold's decisive break of $US 300 back in March 2002, the figure for the Dow is actually a "plus" figure. Take a look at the gain of Gold over the exact same period and it's pretty easy to see which has been the superior investment vehicle.
On the daily bar chart, you can see the spurt upwards to equal the 1996 bull market high after the Christmas break. The two moving averages have been on an upwards railroad track ever since the short-term (10 day) average crossed back above the long-term (20 day) one back in late October.
On the weekly bar chart, the two almost identical intra day highs and spot future closing levels set over the weeks of December 8 - 12 and 15 - 19 have now been breached. You can also see on this chart that as Gold has approached and then reached its 1996 highs the weekly volatility has gone down - the weekly bars have become progressively smaller as the "spread" between the weekly high/low has contracted. Gold is battling with its LAST technical resistance level, the 1996 bull market top of $US 414.
On the point and figure chart, distribution ABOVE $US 400 followed by a high break indicates pretty decisively that the $US 400 support level has held. We now have a breakaway gap on this chart, which is often an indicator of an acceleration in the near future."
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.
We now have one and a half trading days for Gold to attempt to decisively smash through its 1996 bull market high - it would take a close of $US 420 or higher for this to be accomplished. If we don't get that this year, watch for it early next year.
A HAPPY NEW YEAR! - to all of you reading this page. Our next update will come on our regular schedule on Friday, January 2, 2004.