We repeat here what we have been saying for the two weeks, while spot future Gold was working its way above its previous bull market high set back in April this year: "The final signal of the second major leg in $US Gold's post 2001 bull market awaits a spot future close of $US 440 or higher." We're getting closer. On November 12, after hitting an intraday high of $US 439.50, spot future Gold closed at a new bull market high of $US 438.30, up $US 2.90 on the day.
It is clear that Mr Bush's "mandate" for the next four years has added greatly to the nervousness afflicting the major US overseas creditors. Rumours proliferate daily regarding the selling of US Dollars and US debt instruments by China, India, and even Japan. The US Dollar itself continues to lose ground on the foreign exchange markets, falling to a new bear market low of 83.71 on the $US index on November 12. Thus far, the closest that Wall Street will come to recognising the inexorable fall of the Dollar are fatuous statements to the effect that the Bush Administration's adherence to the "strong Dollar policy" might not be a steadfast as it once was.
For the third week in a row, Gold's rise against the US Dollar has all but mirrored the US Dollar's fall against the other major currencies. Gold has hardly moved this week in terms of the Euro, the Yen, and the Commodity currencies ($A, $C, South African Rand etc.). We are still waiting for Gold to start rising against ALL currencies, as it did in both late 2003 and late 2002.
With the spot future Gold price close now more than $US 10.00 above its April 2004 highs ($US 438.30 now - $US 427.80 then), there is now little doubt that the next leg on the Gold bull market has commenced. We await only a spot future close above $US 440 (the significance of which we explained last week) and the commencement of a Gold upmove against all currencies to cement this leg of the Gold bull market in place.
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:
|
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.
On the daily chart, the "railroad track" remains intact with the two (10 and 20 day) moving averages moving smoothly up below the Gold price. Naturally, Gold is at the highest level shown on this chart - which only goes back to early August. Gold spent the last two weeks of the election campaign trying to breach $US 430 and was knocked all the way down to just above the $US 420 level on the day of the election. Less than two weeks later, Gold is challenging $Us 440.
The weekly Gold chart illustrates the power of the moving average (MA) crossover signal. The crossover - shorter-term (20 week) MA crossing back above longer-term (40 week) MA - took place a month ago. Two weeks, the Gold price set new 2004 highs, breaking above the spot future closing highs set back in April. This week, Gold has moved up to challenge the $US 440 level
Last week, Gold smashed through the double top set on the point and figure chart by the $US 7.00 plus fall on November 2, the day of the election. This week, the point and figure chart has climbed to levels last seen in 1988, in the process firming the new steeper uptrend line (the green line) seen on the chart. On this "tactical" ($US 1 x 3) chart, the new upleg is firmly established.
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:
|
As we said here last week: "To really gauge the LONG TERM potential for this $US bull market, we need to refer to our strategic $US 5 x 3 point and figure chart. Last week, Gold eliminated the possibility of a "triple top" at the $US 425 level by closing above $US 430. This week, Gold has gone on to close above $US 435. We await only a close above $US 440 now as "... the final confirmation of the (dashed) uptrend line on the chart, and the signal a rock solid LONG TERM $US Gold bull market."
Once $US 440 is breached, the upward momentum in terms of $US Gold should increase. And if it does increase, Gold should start to move up against ALL currencies, thereby mirroring its action in late 2003 and 2002.