This week, Gold was hit again, falling $US 7.70 to $US 306.00 on August 19 to once again approach the vital $US 300 level. There was little "fanfare" about this hit - attributed as usual to U.S. "banks and funds. In fact, few outside the Gold market itself even noticed it.
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 August 23 at $US 329.60.
The figure above has been hovering around the $US 330 level - the top of Gold's recent trading range, for about two months now. You will note the HUGE discrepancy between $US weakness and $US Gold "strength" since Gold broke above $US 300 in late March. Even with that discrepancy, you will also note the HUGELY superior performance of Gold compared to the Dollar or the Dow since that date. Imagine the situation if Gold HAD mirrored U.S. Dollar (and stock market) weakness since March.
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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"These percentage moves, upwards on Gold and downwards on the U.S. Dollar index, are coming closer and closer together. We are approaching a situation where they mirror each other."
(Gold Bull Market Commentary - August 16)
As you can see, the two figures mentioned have almost converged. Gold has gained 10.16% from its 2002 low while the $US index has lost 10.33% from its 2002 high.
This week, the daily daily bar chart shows that the $US 7.70 Gold "hit" on August 19 has forced the price back below both its 10 and 20 day moving averages. On the weekly bar chart, Gold is once again in "no mans land" between the moving averages. The most interesting chart is the point and figure chart. Here, you can see that Gold has once again retreated to just below the top of its post April 2001 upchannel. Incidentally, please note that the uptrend lines on both the weekly bar chart and the point and figure chart are at or about the $US 295 level.
And finally, here's one final perspective, comparing Gold's 2002 high set on June 4 with its level today.
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Since Gold hit its 2002 high on June 4, it has now fallen more than twice as much in percentage terms as has the $US index over the same period. If the action on spot future $US Gold had "mirrored" the action on the $US index since June 4, then Gold would be 3.03% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 337.70.
Again, this price is well over the vital $US 330 resistance level. As Ayn Rand said a long time ago: "Never bother to examine a folly. Ask yourself only what it accomplishes.". The "folly" in question is, of course, the Gold "holding down" operation. What has it accomplished? Gold is WELL below $US 330, isn't it?