Last week, Gold had reached new bull market highs against almost every major currency in the world - except the US Dollar. This week, that little anomaly had been well and truly expunged with Gold soaring $US 16.80 to its highest spot close since January 1988 on November 17 before a slight ($US 0.60) pull back to end the week.
On October 11, Gold reached $US 477 before correcting. After slumping all the way down to $US 460, the spot future price has gone to smash through that October high by almost $US 10 in only five weeks. This is the shortest-lived correction yet in the $US gold bull market.
The striking point about the setting of this new upleg on the Gold bull market is that it has been done without any help whatsoever from a weaker US Dollar. This week, $US Gold gained almost $US 17 while the $US index hardly moved at all.
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. Which of the three would you have preferred to own since March 2002?
Please note that over the period covered by the table, the $US Gold price is nearly triple the $US fall on a trade weighted ($US index) basis.
On the daily chart, the $US 16.90 of two weeks ago has been reversed by a rise of a massive $US 28.30 since November 4. The fall up to November 4 pushed Gold well below both its 10 and 20-day moving averages, the rise since then has had the price soaring back above both and the shorter-term average crossing back above its longer-term counterpart.
On the weekly Gold chart, you can see that Gold's two month trading range between roughly $US 460 - 477 has been smashed this week with Gold climbing close to $US 490 on an intraday basis on November 18. Gold is "all systems go" on this chart, the only "caveat" being its proximity to the big psychological $US 500 level.
On the point and figure chart, a new uptrend line has been formed anchored in Gold's sub $US 460 lows of two weeks ago. With Gold now above $US 485, the uptrend on this chart has steepened dramatically. And the support points have risen dramatically too.
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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Please note that in percentage terms, the rise in the $US Gold price is more than TRIPLE the fall in the $US index.
As we have been saying since last November, a year ago now, the chart to watch continues to be the $US 5 x 3 point and figure chart. The uptrend line was FIRST established on this chart when Gold broke above the $US 440 level in November 2004. In doing so, the Gold price rose to three clear "X"s above its previous (February - April 2004) highs. That established the uptrend line
After that, Gold reached $US 456 in early December 2004. That bull market high lasted a little over nine months. Then, by October 11, a new bull market spot future Gold closing high was established when Gold went above $US 475. That re-confirmed the uptrend line on the chart.
On November 4, Gold closed at $US 457.90. That turned the $US 5 x 3 chart down. Please note where the downturn occurred - right on the line connecting the 1983 and 1987 bull market highs.
Two weeks later, the chart has turned up again and has gone on to stand two clear "X"s above its previous high. The previous downturn on the $US 5 x 3 chart took place on July 5, 2005. It took about six weeks, until August 11, 2005, to turn it up again. This "round trip" has been done in eight trading days.
The thing to continue to stress is that the strategic Gold bull market as shown on the $US 5 x 3 chart is perfectly intact with an uptrend line which has been confirmed and RE-CONFIRMED since December last year. AS LONG AS THIS UPTREND LINE IS INTACT - $US GOLD IS IN A BULL MARKET.