So, the Gold price has awakened again. On Monday, July 15, the spot future price rose $US 4.00 to $US 319.90. Then on Friday, July 19 came the major awakening when the spot future price surged $US 6.80 to $US 323.90. That's the highest spot future Gold close since the $US 324.60 on June 7 - three days after the 2002 high (so far) close of $US 327.80 on June 4.
On July 19, the Dow fell 390 points and finally breached its post 9/11 lows. The $US index fell to a new 2002 low of 104.42. This was too much for the Comex. Gold shot up as soon as the New York market opened, reaching an intraday high of $US 326.00 on the spot future contract before closing at $US 323.90.
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 on March 27:
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If Gold's gain had exactly mirrored the loss on the $US index since March 27, Gold would have closed on July 19 at $US 339.04.
Look at the percentage losses on the Dollar and on the Dow (the losses on the other major U.S. market indices are even worse) since Gold cracked $US 300. You can see what an effort it has been to hold Gold's gain to the extent it has been held. As Dollar-denominated paper investments continue to fall, and as more and more investors shun the markets for these investments, the pressure under the $US Gold price will grow inexorably.
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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As you can see, Gold is still further above its 2002 low in percentage terms than the $US index is below its 2002 high. Thanks to the $US 8.00 rise in Gold this week, the gap has widened a bit.
The $US started its "free fall" in late March, just as Gold was breaking above $US 300. It took Gold seven weeks to get from $US 300 to $US 312, and then two weeks to get to $US 330. In the six weeks since then, Gold has retreated back to just above the $US 310 level and stayed there, despite the accelerating fall of the Dollar.
But over the past two weeks, another free fall has been added to the Dollar free fall. U.S. stock markets, and specifically the Dow, have slumped dramatically. Over the past two weeks, the Dow has lost 14.5%, and on Friday July 19, the index closed BELOW its September 21, 2001 low for the first time. We have CONFIRMED (and deep) bear markets on both the Dollar and U.S. stocks. Something had to give, and this week, it has. Gold has re-awakened.
You can see the result on the charts. One more day like Friday, July 19 will boost Gold to a new 2002 high above $US 330. On the daily bar chart, the short-term (10 day) moving average (MA) has crossed ABOVE the longer-term (20 day) MA. On the weekly bar chart, the short-term (20 week) MA provided solid support and now Gold is back challenging its early June highs. And on the Point and Figure chart, Gold stopped falling right at its first support point and has now got (almost) all the falls back. On all three charts - any close ABOVE $US 330 will be the signal for the NEXT leg of Gold's Bull market.
And finally, here's one final perspective, comparing Gold's 2002 high set on June 4 with its level today.
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Two weeks ago, Gold's percentage fall in this table was GREATER than the percentage fall of the $US index since June 4. That "discrepancy" has now been almost eliminated. But Gold is still BELOW where it was against the $US on June 4, not above. If the action on spot future $US Gold had "mirrored" the action on the $US index since June 4, then Gold would be 6.06% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 347.66.
Given the abysmal performance of the U.S. Dollar and U.S. stocks over the past six weeks, $US 347.66 would have been a comparatively conservative Gold performance. Of course, it would have left NO doubt in anyone's mind about a BULL market in Gold, and it would have provided a POWERFUL incentive to shift a bit of capital from currency/stock/bond investments to Gold. That's why it has NOT happened - yet.
But on July 19, the "Powers That Be" lost control of all THREE major markets - the Dollar, stocks, AND GOLD. This should be a very useful warning, especially for non $US investors. If you want to get Gold (or get MORE Gold) below $US 330, all the signs say that your time is running out. Once Gold exceeds $US 330, it is VERY likely to go much higher very quickly.