"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."
(The Gold Bull Market - July 19)
WHOA! The end of the month can be a murderous time, especially when Wall Street and the money centre banks are staring down the barrel of horrible month-end reports, fragmenting derivatives positions, and prospective margin calls. The "solution" has been a rampant capital repatriation by U.S. investment houses and "funds" of all descriptions. One of the victims of this "repatriation" has been Gold (and Gold stocks of course), which has been converted with a vengeance back into good old Greenbacks. Gold this week has fallen $US 20.60 or 6.36%
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 26 at $US 332.75.
Instead, Gold has almost returned to the level it was on March 27. For the record, spot future Gold's $US 303.30 close on July 26 was the lowest since it closed at $US 303.00 on April 22. Spot future Gold's last close BELOW $US 300 was on April 16 when it closed at $US 298.80. Compare Gold's performance with that of the $US or the Dow since it broke $US 300, however, and you can see that it is still vastly better.
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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Gold's rise from its 2002 low is now lagging the fall of the U.S. Dollar from its 2002 high substantially in percentage terms, not surprising given the massive fall in Gold over the week.
Looking at the charts, you can see the market action in detail on the Daily bar chart. Don't forget, both the Dollar and world stock markets have been collapsing throughout this period. On the weekly bar chart, Gold has settled about half way between its 20 and 40 week moving average. The 2002 uptrend line is broken. The uptrend line from the beginning of the bull in April 2001 is still intact and is presently about $US 292. On the point and figure chart (remember, this one is on CLOSING prices), Gold has retreated back just inside its post April 2001 upchannel. Here too, the post April 2001 uptrend line is just above the $US 290 level. Thus, apart from the obvious $US 300 support, $US 290 becomes a VERY important support point for $US Gold.
And finally, here's one final perspective, comparing Gold's 2002 high set on June 4 with its level today.
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Three weeks ago, Gold's percentage fall in this table was GREATER than the percentage fall of the $US index since June 4. This week, the discrepancy is far greater. Gold has fallen almost twice as far as the U.S. Dollar in percentage terms since it hit its 2002 high (so far) on June 4. If the action on spot future $US Gold had "mirrored" the action on the $US index since June 4, then Gold would be 3.84% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 340.38.
One week ago, on July 19, the "Powers That Be" lost control of all THREE major markets - the Dollar, stocks, AND GOLD. On Monday, July 22, the $US bounced higher on capital repatriation and Gold stalled. On Tuesday, July 23, the $US soared (up 1.95 on the $US index) and Gold slumped $US 10.90. On Wednesday, July 24, U.S. stock markets staged a MASSIVE rebound as the repatriated capital was put to work. The intraday swing on the Dow was over 700 points.
What you are seeing on these Gold charts, and with the gigantic swings on the currency and stock markets, is the result of a massive and desperate capital repatriation by U.S. investment houses and banks. By definition, this can only be done once. The month-end has been prettied up for July. But what about August - September - October - etc.?
Technically, Gold has taken a hit, but the uptrend is still intact. It is just as intact as the downtrends in the U.S. Dollar, in U.S. stocks, and in U.S. corporate bonds. To "rein in" Gold over this past week has taken a level of desperation - and government bluster - the like of which I have not witnessed since Gold's "formative" years in the early 1970s. Back then, the U.S. was the world's top creditor nation with a comparatively minuscule government debt of about $US 400 Billion.
Now, they are the world's greatest DEBTOR nation, with government debts of $US 6,100 Billion plus (and growing at a $US 400 Billion plus per year pace). The entire U.S. financial edifice, including their ability to "control" Gold, is standing on quicksand.