The Last Gold Bear Market:
Gold fell from $US 499 to $US 325 between December 1987 and March 1993. The extent of this fall from top to bottom was 34.87%. The duration of the bear market was 5 years and 3 months (63 months).
The Present Gold Bear Market:
Gold fell from $US 414 in February 1996 to a low of $US 253 in September 1999. The extent of this fall is 38.89%. With no bull market yet established, the present bear market is entering its sixth year ( or 61st month).
All the bear markets in Gold since the metal was uncoupled from the U.S. Dollar in 1971 have started in January or early February. The last three bull markets in Gold have started in June (1982), March (1985) and March (1993). In the first of these bear markets, the one in 1982, there was a "false rally" in March before Gold went lower, only to turn around with a rush in June 1982.
That Gold turnaround in June 1982 was the most explosive start to a Gold bull market of any since 1971. As U.S. stock market students will realise, it began about two months before the great U.S. bull market in stocks began in August 1982.
Now, here we are at the end of the first week of April 2001, almost nineteen years later. It is clear that the great bull market which began in 1982 is over. The final nail in the coffin was the Dow's fall below 10000 three weeks ago. Gold, on the other hand, fell to within $US 0.50 of its Feb. 15 2001 low when it closed at $US 255.60 on April 2, and has now clawed its way back to close on April 6 at exactly $US 260 (spot future basis). As you can see on the chart to the left, that gives us what is almost a "wide double bottom" on the P&F chart. Again, on that chart, the Gold price is back within an ever-narrowing trading range.
You can also see what has the potential to become a double bottom on the weekly bar chart to the left. Once again, there are technical signs that Gold might have found its support level, at the very least.
Now, think back to September 1999, when the "Washington Agreement" was announced and the Gold price surged upward. Remember what else surged upward? That's right, the Nasdaq. Gold fell away in the face of the great high tech bubble, which has now been thoroughly deflated. At the latest close, the Nasdaq is down by almost 66% from the high it set in March 2000. Worse, the carnage on the Nasdaq has spread across all U.S. markets, first hitting the S&P and now hitting the Dow. Although Wall Street doesn't want to admit it, the great 19-year U.S. bull market in stocks is most certainly OVER.
What also looks like getting very near the end of its bull run is the U.S. Dollar itself. On the last day of March, the $US Index closed at 117.63, within 0.82 points of the multi-year high (118.45) it set in November 2000. Over the first six trading days of April, the $US Index has fallen away to 114.90. In short, ALL of the U.S. "paper" investment alternatives are coming under increasing pressure. That even stretches to Treasury paper. Yes, yields, especially at the short end, are still falling. But so is the Dollar, and that makes Treasury paper less attractive to non-U.S. investors.
As already stated, the last three bull markets in Gold have begun in March (or June). It is getting harder and harder to justify holding positions in U.S. stocks, bonds, or even in the U.S. currency itself. Over the first week of April, the $US Gold price has "stabilised". As we stated in our "Gold Bottoms" commentary last week: "...we are going to have to get a bear market in EVERYTHING else (including at least a downdraft on the Dollar itself) before a $US Gold bull market can firmly establish itself."
That position has almost been accomplished. Watch this space, and watch the $US Gold price.