First, please note that we have replaced the $US 1 x 3 point and figure Gold chart with a $US 2 x 3 chart this week. The $US 1 x 3 chart was getting too big for the page.
With Gold now up to $US 557, we have reached territory not seen since January 1981. To be exact, the last time that the spot Gold close was higher than it is now was on January 22, 1981 when Gold closed at $US 564.00. And for the record, the highest spot Gold close of 1981 came on January 6 when Gold closed at $US 599.20. There has only been one year when Gold was $US 600 or higher and that was 1980.
Two weeks into 2006 and Gold is up nearly $US 40.00. It is up so fast and so strong that the majority of Gold followers are looking for a correction while forgetting that there was a BIG correction (from $US 540 to about $US 490 intraday) less than a month ago in the leadup to Christmas. It's so recent you can see it on the daily bar chart here.
Please take a look at the longer-term $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. When Gold broke ABOVE this channel, it was a powerful signal that the upmove was going to accelerate. It certainly has.
Corrections there will certainly be. Where they will "cut in" we do not know. But to be looking for a "top" or a massive correction here, with Gold only now having recovered HALF of its 1980 - 2001 losses, is ridiculous. Long may the majority of Gold watchers keep doing so, though, a bull climbing a "wall of worry" is a healthy bull.
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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We had Gold up into the $US 540s on an intraday basis in mid December. The spot future CLOSING price never reached $US 530 however. Now, we are only $US $US 3.00 away from $US 560. ALL the charts here are simply going up and Up and UP.
As pointed out in our last Gold This Week (GTW) of 2005, the major fact of last year was that Gold rose substantially against a US Dollar which also rose substantially. Now that the US Dollar has begun to weaken with the start of 2006, the Gold price has greatly accelerated upwards.
Over the last week of 2005, and the first two weeks of 2006, the $US 500 level has been well and truly left behind. There are NO signs of weakness on ANY of the charts on this page. Nor is there much in the way of "resistance" points, now that Gold has smashed through the $US 550 level. We would see any corrections now, especially on the $US 2 x 3 chart, as the underpinnings for a new and steeper upchannel.
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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Yep, that's right. The spot future Gold price has now DOUBLED from its 2002 low.
The spot fuure Gold close peaked in December 2004 in the mid $US 450s and took NINE MONTHS - until mid September 2005 - to exceed those highs. The spot future Gold close peaked in December 2005 at $US 528.40. Now, less than a month later, it has smashed that 2005 high to ribbons. We do NOT expect a rerun of last year with Gold in the doldrums for the first nine months.
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.
Now, with spot future Gold nearing $US 560, it has established a new upleg 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. If the first two weeks are anything to go by, we are in for a fun time this year.