Over the past few months, we have repeatedly made reference to the $US 300 - 510 trading range which has confined Gold ever since early 1981. Take a look at the daily Gold chart on this page. You can see that since the beginning of December Gold has been on the edge of breaking above that trading range.
Now, in the first week of 2006, IT HAS BROKEN ABOVE THAT TRADING RANGE. This week, Gold went up more than $US 13 on TWO trading days (out of four). It has smashed above its mide December 2005 bull market highs. It has consolidated ABOVE the $US 500 level. And it has now firmly established itself in the SECOND leg of what is going to prove a VERY big bull market.
The chart which best shows this establishment of a new upleg is the $US 2 X 3 point and figure chart. Please note the perfect upchannel on this chart which confined the first leg of the bull ever since its bottom in 2001. Gold has now broken ABOVE this channel, distributed above it, and now broken through to new highs. This is a VERY POWERFUL SIGNAL that Gold is poised to greatly accelerate its climb against the US Dollar and all other paper currencies.
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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A cursory glance at the daily and weekly bar charts here would lead to the impression that Gold was more or less at a "double top" region at present. But there is a big difference. In mid December, Gold reached the $US 540 level in intraday trading. Now, Gold has reached that level on a CLOSING basis.
The difference is best illustrated on the point and figure chart here, which is based on CLOSING prices. See the big downturn from Gold's first breakthrough above the $US 500 level. That was a direct result of the Japanese authorities sharply tightening the rules on their Gold futures market. As you can see on the chart, that downturn has now been reclaimed, and quite a bit more besides.
Over the last week of 2005, Gold was rising against a rising US Dollar. Over the first week of 2006, Gold has risen much faster against a falling US Dollar.
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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Gold peaked in December 2004 in the mid $US 450s and took NINE MONTHS - until mid September 2005 - to exceed those highs. Gold peaked December 2005 at $US 528.40 on a spot closing basis and now, less than a month later, has already gone on to post new highs. 2005 was a good year for Gold. The initial evidence is that 2006 will be a MUCH better one.
One last measure of the abruptness of Gold's recovery from its mid-December correction can be seen on the strategic $US 5 x 3 point and figure Gold chart. Take a look at the duration of the last two "DOWNTURNS" in the data accompanying this chart. The chart turned down on November 4, 2005 and turned up again twelve days later on November 16. It had its most recent downturn on December 16 and turned up again twelve days later on December 28. By the measure of any of the previous downturns on this chart, the most recent two have been resolved VERY QUICKLY INDEED.
And now, with spot future Gold above $US 540, it is three full "Xs" above its previous high on the $US 5 x 3 chart. This is final confirmation that Gold has consolidated above $US 500 and above its 1981-2005 $US 300-500 trading range. Technically, EVERYTHING is in place for the upwards acceleration of the Gold "price" - in terms of all paper currencies - in the year to come.