The Gold price remains fairly "volatile", at least by the standards of most of the bull market so far. This week spot future Gold was down by $US 5.10 on Friday but up $US 8.60 on the week. There is no correction yet evident on any of these charts, although increasing hordes are still waiting (and hoping) for one.
In the month of January, the spot future closing price for $US Gold increased by precisely 10 percent. This is more than half of its ANNUAL increase in 2005. Thus far in the year, Gold is going up faster than the Nasdaq did in the banner last year of the great US stock bull market - 1999. Nobody was looking for a correction in the Nasdaq in 1999. Almost everyone is looking for a correction in Gold in 2006, with the year only a month old. That fact, all by itself, is a good indicator of the "health" of the present Gold bull market as compared with the US stock bull market in 1999.
The concern has, nonetheless, a rational base. Rising paper asset markets are NOT considered as evidence of "inflation", although they most certainly are just that. They are welcomed by both the money manipulators and the governments which feed on them. A rising Gold price IS considered as evidence of "inflation" and worse, it represents a clear and present danger to the "money" which is being inflated - in this case the $US and all the other "moneys" which depend on the US Dollar as the global reserve currency.
The concern is, of course, that the governments/Central Banks are poised to pounce and decimate the Gold price and are waiting for the right opportunity to do so. There is no argument over the fact that they would LIKE to decimate the Gold price. There is increasing questions over their ability to do so, no matter how much they would like to.
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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This week, Gold rose $US 8.60 or 1.54% in the face of a 0.55 point or 0.62% rise in the $US index.
On the daily chart, the intraday low has been bouncing off the shorter-term (10 day) moving average for almost the entire year so far, but has not yet penetrated significantly below it. Interestingly, volume fell quite substantially this week despite the price climbing more than it did in the previous week.
After a break last week, the weekly chart has resumed the series of weekly ascending highs and ascending lows which has been the constant feature of the chart ever since the correction in mid December last year.
The $US 2 x 3 point and figure chart didn't even turn down with the $US 5 fall on February 3. It will take a spot future close of $Us 566 or lower to do that. This chart is steep, the reason being that Gold is now $US 100 higher than it was less than three months ago on November 8, 2005.
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 has now advanced well over 100% since its 2002 lows. It is now over $US 100 higher than it was when the $US index hit its lows just above the 80.00 level at the end of 2004.
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. 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. We certainly haven't had that in January.
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 having exceeded the $US 570 level, it has established a new upleg on the $US 5 x 3 chart. Gold's consolidation above $US 500 and above its 1981-2005 $US 300-500 trading range only took place at the END of last year.