Last week, Gold took off against ALL major world currencies. This week, Gold has built on those gains and is now approaching significant highs against the two main currencies in the world, the US Dollar and the Euro. For the significance of this, see our main Gold commentary.
Gold has now been going up significantly against ALL major world currencies for two weeks. It's gains for 2004 are still less than the US Dollar's gains (as measured by the $US index) but it is catching up fast. Right now, we are only one good day's gain ($US 4.60) below Gold's 2004 highs set in early January. Exceed this high, and the impetus for an accelerated upmove greatly increases.
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.
The notable recent change in the table above is that the Dow is now back BELOW its level of March 27, 2002, when the $US Gold price finally broke above $US 300 to stay.
On the daily bar chart, you can see that Gold has surged this week with two $US 5.00 moves on March 22 and again on March 26 with the rest of the week going sideways. You can also see the new "railroad track" with the shorter-term (10 day) moving average (MA) comfortably above the longer-term (20 day) MA and the "spread" between the two increasing. Finally, of course, Gold is getting very close to its January highs.
On the weekly bar chart, Gold trespassed below its steepest uptrend line when it fell below $US 390 on an intraday basis on March 3. Since then, it followed the trendline upwards for the first two weeks of March and then broke upwards over the last two weeks. In short, the trendline has held. The only "hold" remaining on this chart is, of course, the $US 428.00 2004 (intraday) high set on January 9. Gold's intraday high on March 26 was $US 424.00
The point and figure chart is interesting - and VERY encouraging. Note that Gold has climbed back above the steepest of its uptrend lines on this chart, then corrected right back to that line, and then turned and gone higher. On this chart (based on CLOSING prices), the last resistance is at the 2004 high and that stands at $US 426. A close of $US 429 or higher (spot closing basis) would signal the END of the correction and the start of the next upleg on the $US Gold bull.
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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On this page, the focus is on the $US Gold price. We must remind our American readers, however, that there are many more people in the world who do not buy Gold - especially physical Gold - in terms of US Dollars, but in terms of their own local currencies. The impetus that Gold needed was a rise in terms of these currencies too, and it is now getting that impetus.
In most of the "developed" nations, interest rates remain at or near historic lows. This is most pronounced in the US, which has boasted the world's weakest major currency over the past two plus years, and in Japan, which is the nation which has thrown more than 30 TRILLION Yen at the currency markets in an attempt to keep the Yen down against the Dollar since the beginning of 2003.
In a bizarre twist, Japan and the US, the two nations which have been INFLATING (by creating new currency out of thin air) to the greatest degree are the two nations with the world's lowest official interest rates. This is an economic anomaly of grotesque proportions, a historic aberration which will ultimately rebound on the perpetrators. Japan, as witness their recent threats to stop their currency intervention, are seeing the end of this road already. When interest rates do start to rise in these two nations, it will not be because of a perceived increase in "economic growth", it will be because of a REAL increase of the perceived risk involved in holding the currency itself. That is what happened in the late 1970s. That is what is looming now.
The signals abound, not least those being given out by Gold - and Silver. Both are now rising in terms of all major currencies, with Silver having led the way. The only thing we need to watch for now on this page is when Gold breaks above its January 9 highs. Once again, they are $US 428.00 on an intraday basis and $US 426.80 on a spot future closing basis.