Quite an amazing week. It all started on Monday when the Iraqis pulled a "fast one" on President Bush and announced that they would admit UN arms inspectors with "no complications". On the markets, the knee jerk reaction was a surge on stock markets and a swan dive on Gold (and oil) prices - and on Gold stocks too. That lasted mere hours. The Bush Administration made it clear that they had no intention of being baulked of their Middle East war. Stocks slumped again and Gold regained all its losses inside a day's trading.
By Sept. 18, spot future Gold had regained the $US 320 level. It closed the week at $US 322.20. - up $US 5.20. The $US Index closed the week almost unchanged. Its close on Sept. 13 was 108.06. It closed on Sept. 20 at 108.10
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 September 20 at $US 329.70.
Look at the performance of Gold compared to the performance of the $US or the Dow (or the S&P 500 or the Nasdaq) since Gold breached $US 300 back in March. As you can see, there is absolutely no contest. As an investment, and more importantly in present circumstances as a preserver of capital, Gold has trashed paper investments this year. Despite the fact that Gold is still lower than it was three months ago, its annual performance continues to far outstrip those of "paper" investments.
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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On the daily bar chart, Gold is now comfortably above both its 10 and 20 day moving averages. On the weekly bar chart, Gold has been moving up ever since it touched its longer-term (40 week) moving average in late July. It is now comfortably above both averages. And on the point and figure chart, Gold has rebounded from the TOP of its post April 2001 upchannel for the second time and is now slowly working its way through the "get out even" holders who bought the metal back in May/June when Gold hit its 2002 highs.
And finally, here's one final perspective, comparing Gold's 2002 high closing level set on June 4 with its level today.
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Once again, Gold is firming. It has lost less in percentage terms since its June 4 2002 high hthan 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 2.75% ABOVE its June 4 level of $US 327.80. That would put Gold at $US 336.80.
Two weeks ago, on September 6, spot future Gold closed at $US 320.40. This week, on September 20, spot future Gold closed at $US 322.20. Once again, Gold is within 2% of its 2002 highs. The correction is now nearly four months old. This is truly a "battle royal". Stay tuned.