"We have received a number of emails over the past week castigating us for not giving a definitive BULL MARKET call for Gold. It is NOT yet a difinitive Bull market. ALL technical features on the charts point to the conclusion that it soon will be, but until Gold is firmly established ABOVE $US 300, it is still a "bull market it waiting".
(Gold Bottom Commentary Last Week - February 15)
As you undoubtedly know, and to the great chagrin of Goldbugs everywhere, Gold is NOT "firmly established above $US 300". The damage was done on February 19, the day that Comex Gold resumed trading after the long Presidents Day weekend in the U.S.. On that day, spot future Gold fell $US 5.20 to close at $US 293.20. It closed at EXACTLY that level at the end of the week.
The "culprit" was a Central Banker (what a surprise!), Mr Welteke of the Bundesbank and the European Central Bank. A statement of his, taken out of context, was quoted. We have more to say on this episode in our main Gold commentary this week.
But this is not the page to talk about the machinations of Central Bankers. On this page, we talk about the technical situation for Gold. And the technical situation for Gold is still nicely intact - take a look at the charts.
On the daily bar chart, Gold has dipped below its shorter-term (10 day) moving average and is tracking its longer-term (20 day) MA. On the weekly bar chart and the point and figure chart, what we have is a correction in an uptrend. All technical indicators are still perfectly intact.
Now, here is a point you may not have considered. When Gold reached a close of $US 303.50 two weeks ago on February 8, it was the third sojourn above the $US 300 level since Gold began its bottom formation with the $US 252.50 lows of August 1999. Gold soared through $US 300 in September/October 1999 and again in February 2000. During both those "spikes", the $US 300 level didn't even slow Gold down, it sliced straight through them each time.
So far, this time, it's different. Yes, we know, that's a terrible thing to say about Gold (or anything else), but it's true. This time, Gold has poked its nose above $US 300 in U.S. trading, stalled for a week, and then retreated back towards $US 290 - on the back of a nebulous comment about "Gold selling" by a top European Central Banker.
"If they can't", (get Gold above $US 300 before the U.S. starts trading on Feb. 19) "then Gold may languish at or below $US 300 for another week or even month. But as we said here last week, the present uptrend is perfectly intact on any Comex spot future Gold close of $US 278 or higher. And all we need for a difinitive bull market is consolidation above $US 300."
(Gold Bottom Commentary Last Week - February 15)
In this context, it is notable that the last TWO major Gold bull markets (1985-87 and 1993-96) both began in March. Seasonally, mid March to mid May is often a very good period for both Gold and Gold stocks.
March 2002 starts on Friday. On March 5, the Bank of England holds its LAST 20 Tonne Gold auction. Sometime during March, if not before, the U.S. Congress is going to have to raise the Treasury's "debt ceiling". And the end of March is the end of the Japanese financial year, and the end of "deposit insurance" (above $US 75,000) for Japanese bank depositors. That's quite a lineup.
Meanwhile, Gold is perfectly intact technically and still hovering within easy striking distance of $US 300. A bull market for Gold in $US terms has not yet been confirmed, but $US Gold has been in an uptrend for ten months now and the returns have beaten almost any other type of "investment" over that period. Gold stocks have, of course, done even better. Remember, the trend is your friend, and have patience. See you next week.