There is only ONE reason left to prevent us from stating that the BEAR market in $US Gold which has lasted ever since February 1996 is now OVER. That one reason is the fact that spot future Gold has not - YET - closed ABOVE the $US 300 level.
On Friday, September 21, spot future Gold hit an intraday high of $US 296 before closing for the week at $US 291.90. As you can see on both the weekly bar chart and the point and figure chart on the left, $US Gold has now gone HIGHER in the present upmove than it did during the previous 2001 upmove back in May. Because of this, we have drawn an UPTREND line on the point and figure chart.
According to the best figures we can find, in the eight "trading days" (September 12, 13, 14, 17, 18, 19, 20, 21) since the terrorist atrocity of Sepember 11, the U.S. Fed has conducted short-term "open market operations" to the tune of almost $US 320 Billion and has let the Fed Funds rate drop to levels near 0.00%. To cut what would otherwise be a long story short, the Fed is MONETISING U.S. debt - to an appalling degree - AND IN ADVANCE!
This is virulently inflationary. It also points straight towards an expectation by the Fed that they are going to be hit by an AVALANCHE of $US denominated debt paper redemptions by foreigners, and quite possibly by Americans too. Right now, the "official" Fed Funds rate is 3.00% and the Discount rate is 2.50%. In reality, the Fed is accepting "collateral" through the Funds window at rates as low as 0.25%. If the Fed was enforcing the 3.00% Funds rate, this rampant inflation either could not have occurred, or would have been greatly curtailed.
What the Fed is doing is pumping the U.S. banking system chock full of "liquidity", not because it expects a wave of borrowing, but because it expects a wave of debt REDEMPTIONS. This is INFLATION - pure and simple
It has NOT yet been reflected in either the exchange rate of the $US or in the $US Gold price. IT WILL! There is no way to prevent it. All we await now is for a Gold price above the $US 300 level to change the name of this page to the Gold BULL MARKET. The charts show that it is a certainty. The actions of the Fed since September 11 show that it may well be explosive. Stay tuned.