On April 25, when spot future Gold rose $US 3.80 to close above the $US 308 level, we stated that the Gold uptrend which had been in place for a year - since April 2001 - had turned into a Gold BULL market. That was a month ago, and with Gold breaking the $US 320 level this week after three weeks of doing nothing, the BULL market has final confirmation.
You can see it on all three charts on this page, especially on the point and figure chart. Note that on the p&f chart Gold has now distributed above the trendline defining the top of its post April 2001 uptrend and broken higher. That does it.
You can also see on all three charts, and again especially on the p&f chart, that the uptrend is steadily steepening. Gold spent nearly two months consolidating between $US 300 and $US 310-312 and has now jumped to $US 322 in a week. The steady decline of the U.S. Dollar has finally been reflected in the $US Gold price this week. This week, Gold has headed up strongly in ALL currencies.
Now, please take a close look at the longer-term weekly bar chart. Note the fact that there were three "peaks" in the upmove before Gold finally broke decisively through $US 300. These occurred in May 2001, post 9/11 2001, and in February 2002. The two peaks in 2001 were followed by substantial corrections, during which Gold fell most of the way - but not ALL the way - back to its previous levels.
2002 has been quite different. Gold's first "peak" in February, unlike the two peaks in 2001, exceeded $US 300. After the peak, Gold did NOT suffer a substantial correction. Then, when Gold climbed above $US 300 again - on March 27 - it did not suffer ANY correction. It simply kept going up, as it is still doing, and over the past week, the climb has accelerated.
This is the breakthrough we have been waiting for ever since the uptrend began in April 2001. In our last report, on May 17, we pointed out that the last time that either of the two moving averages on the longer-term weekly bar chart was above $US 300 was the week ending on Friday, July 7, 1998. Note the present level of the shorter-term (20 week) moving average - $US 299.09. Next week (on May 31), this average will be ABOVE $US 300 - for the first time in almost four years. Everything is fast coming together.
Finally, there are the highest levels reached by Gold since it fell below $US 300 for the firist time in more than 12 years in November 1997. Those levels were set during the post "Washington Agreement" price spike in September/October 1999. Back then, spot future Gold reached a an intraday high of $US 327.50 and a closing high of $US 324. The final piece in the puzzle is any spot future Gold close of $US 330 or higher. That would put Gold at its highest point since it fell below $US 300 4 1/2 years ago and clear the decks for the bull market to commence in earnest.
This week (data to May 21) the ratios in the commitments of Traders reports is as follows: "Non commercials" (speculators) are 2.65:1 long. Longs increased by 5261 contracts with shorts decreasing by 3814 contracts. The commercials are the mirror image. They are 2.96:1 short with shorts having increased by 4206 contracts and longs decreasing by a large 7485 contracts. Seems like a plus $US 320 Gold price is too much for the commercials. They are increasing their shorting activity again.
By now, Gold (and Gold stocks) are starting to attract attention in spite of themselves. It is ironic - more on this in our main Gold commentary - that the only people who STILL don't seem to know that Gold-related investments exist are stock market investors and especially Wall Street stock market analysts. Or perhaps they prefer to keep their heads firmly buried in the sand - not the best place to look for "profit opportunities"
The rest of us, those who look at ALL markets, can feel well satisfied. Gold has had a stellar week. Yes, it will ebb and flow, like all bull markets, but the trend is too powerful now to look anywhere but UP for Gold and Gold stocks. Enjoy! - and stay tuned.