For the first three trading days of December, spot future Comex Gold hit an intraday high of $US 456.00. On Friday, December 3, spot future Gold CLOSED at that intraday high of $US 456.00 - up $US 5.60 on the day. The difference was that on December 1 and 2, the $US index basically ran on the spot. On December 3, the $US index plummeted 0.99 points to a new bear market low of 80.98 - less than one point above the bottom of its previous bear market set way back in April 1995.
The closer the $US index gets to that previous bear market low, the higher the anticipation of a rally becomes. Right now, the official line is that Gold is merely reflecting the US Dollar's weakness and that as soon as the rally comes, Gold will turn down as fast as the Dollar turns up.
No market goes straight up - or straight down. There will certainly be a $US rally at some point. There will certainly be a $US Gold correction at some point. The two events may well, but will not necessarily, coincide. The major point here is simply that Gold is in a well confirmed second leg of a long-term bull market. Right now, the $US Gold "price" could correct all the way down to $US 400 without changing the uprend in any way. We do NOT think that is likely.
The higher the anticipation of the respective $US rally/Gold correction becomes, the lower the US Dollar falls and the higher the $US Gold price rises. On December 4, the "ratchet" action was still holding. On the day, the $US index fell 1.21%. $US Gold rose 1.24%.
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. This week, Gold's rise since March 2002 has exceeded 50% for the first time.
From its April 2001 bottom, the present Gold bull market has now exceeded both the 1982-83 and 1985-87 bull markets in percentage terms. The figures are: 1982-83 - up 72.3% -- 1985-87 - up 77.3% -- 2001-04 - up 78.8% - so far.
On the daily chart, you can clearly see the three consecutive intraday highs of $US 456 - and the fact that Gold closed at that level on the Friday. Also, you can see that the huge build up of volume which peaked just before the Thanksgiving holiday has subsided, with no downward effect on the price. The two (10 and 20 day) moving averages continue to move up in a perfect "railroad track" with Gold having only briefly dipped below the 10 day average a couple of times over the past week. Look for a likely accelaration if Gold trades above that $US 456 intraday peak in the coming week.
On the weekly Gold chart, the present Gold price is further above its shorter-term (20 week) moving average than at any previous time shown on the chart. This is simply a reflection of what happened earlier in the year, when the shorter-term MA dipped below and then stayed below its longer-term (40 week) MA - the first time this had happened in the post-2001 bull market. Gold is now well entrenched in the second leg of its bull market with little major resistance on a long term basis below the $US 500 level.
On the point and figure chart, we have now had the first downturn since Gold began to move up from the $US 420 level on the day after the US elections. This downturn took place on December 2 when spot future Gold dipped $US 3.60 to $US 450.40. That was of course reversed by the $US 5.60 jump on December 3. Should Gold continue to climb from here and close at $US 457 or higher in the coming week, a VERY large breakaway gap will be formed on this chart. Such a gap is often the signal of an acceleration in the price movement.
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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The $US 440 level has been decisively breached on the $US 5 x 3 point and figure chart. That is the final and conclusive technical evidence that $US Gold is now in the second leg of its bull market. The trendline on the chart (see the link) is now a POWERFUL support for the bull.
The mainstream press, which can no longer afford to completely ignore Gold, is now trying to convince its readers that the signal for the "end" of the $US Gold bull market is a US Dollar rally, no matter how anaemic or short-lived. At the very worst, $US Gold may suffer a correction. But an end of the bull market? We don't think so. Take another look at the $US 5 x 3 Gold chart - link in previous paragraph. With Gold now closer to $US 500 than $US 400, the only feature that we still await is Gold rising in terms of ALL currencies.