Things are getting more dangerous for the "Gold managers". They are getting a bit too "predictable".
(The Gold Bull Market - October 27, 2006)
As you can see on the weekly chart below, it has been a very good week for Gold. Ever since the decision by the FOMC to leave US interest rates alone on October 25, Gold has gone straight up. At its spot future close of $US 629.20 on November 3, the metal has reached its highest level since September 6.
Even more encouraging (or ominous, depending on your viewpoint), Gold is way up this week against a US Dollar which has actually risen slightly on the $US index USDX) - see the table below. Clearly, there is global anticipation of increased political uncertainty, to say the least, regardless of the outcome of next Tuesday's US mid-term elections.
The possible "major bottom in Gold" which we reported here a month ago and confirmed three weeks ago has definitely taken place as confirmed on all charts.
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:
|
For the first time in nearly two months, Gold's gain on this table is again (comfortably) above 100 percent.
On the daily chart, the shorter-term 10-day Moving Average (MA) moved above its longer-term 20-day counterpart last week with the price moving above both. That was the "buy signal". This week, the Gold price has of course regained the $US 600 and moved well above it by week's end. It is now "all systems go" on the daily chart
On the weekly chart, you can easily see the "wide" double bottom at the early June - early October lows just above the $US 560 level. This week, the Gold price has jumped will above both the 10 and 20 week moving averagest on the chart. The one caveat is thatthe shorter-term (10 week) moving average (MA) still remains below the longer-term 20 week MA. Final confirmation will come when this configuration is reversed.
Three weeks ago, the WIDE double bottom at the $US 562 level was confirmed on the point and figure chart. The danger of the second "bottom" in this formation is that it set up the possibility of a "head and shoulders" formation on the chart. This has now been negated by Gold's big upmove this week. As you can see, the Gold price has also risen above the trendline (the dotted red line) drawn through the previous highs.
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:
|
As always, we refer you to the strategic $US 5 x 3 point and figure Gold chart for an overview on the situation.
Last week, we got a downturn followed by an upturn in the same week on this chart. This week, Gold has gone straight up, blasting though the $US 600 barrier and accelerating upwards.
As we said here last week - when Gold starts "gyrating" on a $US 5 x 3 point and figure chart, you can figure that it is getting unusually "volatile". What Gold has going for it at present is the grotesque "propping up exercise" being done on the stock markets, the ever weakening fundamentals for the US Dollar, and the simple fact that Gold has made major bull market runs in every November/January period since the start of the present bull market.
Now that Gold is back well above $US 600, the likelihood increases that we are in for another repeat of that November/January run up this time. The difference is that Gold is still a long way (nearly $US 100) below the bull market highs it set back in May this year. If it does beat these highs, and Gold has set new bull market highs every December since the bull began, it has got a lot of rising to do in the next two months.