"It took almost exactly two years - from March 2002 to March 2004 - for Gold to rise from $US 300 to $US 400. It took another twenty-one months - from March 2004 to December 2005 - for Gold to rise from $US 400 to $US 500. Now, on April 14, 2006, less than four months after the last spot future Gold close below $US 500 ($US 493 on December 22, 2005), here we are at $US 600."
The Gold Bull Market - April 14, 2006
A week later, the $US 600 level has been smashed to ribbons. On April 21, "here we are" at $US 632, despite a $12.80 sell off (and a mammoth $2.00 Silver sell off) the previous day. In ONE WEEK,Gold has risen almost one-third of the way to the $US 700 level. Compare that with the time frames discussed above. Only once since Gold's peak year of 1980 have the markets seen prices as volatile on the upside as they are now. That was a brief period in the second half of 1982 when Gold was rebounding from the bear market which followed the $US 850 high it set in January 1980.
$US Gold prices above present ones have only been seen in 1980 - when $US Gold set its all time high.
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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As you can see, Gold is now well over DOUBLE the level it reached when it broke above $US 300 a little over four years ago. It's rise is now four times the US Dollar's fall over the same period in percentage terms.
On the daily chart, the huge price swings of April 20 sent Gold all the way back to just above its shorter-term 10-day moving average, which acted as support. You can see that the price rebounded on April 21 to make up all (but $US 0.20) the ground it lost the previous day. Most striking on this chart is the way that the Gold price crashed through the "psychological" barrier of $US 600 this week.
That final point about the daily chart is even more eloquently made on the weekly chart. Note the gap up nature of the week's trading. Note the huge $US rise on the week - despite the April 20 selloff. And not the huge increase in volatity once Gold smashed through $US 600 to the "timidity" of the previous two weeks when Gold was approaching $US 600.
The major addition to the $US 2 x 3 point and figure chart two weeks ago was a new and much steeper uptrend line anchored in the recent $US 540 lows. The steepening of an uptrend usually (there is no such thing as "always" in technical analysis) signals an acceleration of the uptrend. We have certainly seen that this week. There is a potential "double top" on this chart at present. If Gold keeps going up next week and reaches $US 638 or higher, this potential will be removed. If it turns down again at present levels to $US 626 or lower, we will have the double top.
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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You can see the abruptness of Gold's recovery from its mid-December and mid-February corrections on the strategic $US 5 x 3 point and figure Gold chart. But the most recent retreat from the $US 570 level gave us a correction with a difference. That downturn gave us a double top on the chart.
Now Gold has broken above that $US 570 double top. More, it has gone on to smash through the $US 600 level and then to break above the TOP of its uptrend on this chart. The longer Gold remains above the top of the uptrend on this chart and the higher the price goes, the greater the potential for a further increase in upside volatility.