Can you sense things coming to a head? This week, with markets swooping and diving all over the world and with the war of words over whether or not to attack Iraq growing by the day, Gold has been inexorably rising. On the week, paper markets gyrated all over the place. The Dow lost 236 points on the week (including a 355 point fall on September 3) while the $US Index ended up down 0.15 points (including a 1.25 point fall on September 3). Gold just kept on going up regardless. By September 6, the spot future price had closed at $US 320.40 - rising every day this week, up $US 7.60 over the week, and at its highest spot future close since June 26.
Technically, Gold has strengthened considerably. First, you can see on the (daily bar) chart above that Gold is right back to the line connecting its two previous 2002 highs. But the developments on the more strategic (long-term) charts are even more significant
First, take a look at the $US 5 x 3 point and figure chart. On September 6, this chart turned up for the first time since it reached its 2002 high in early June. This upturn is HIGHLY significant because Gold has now distributed on this chart while remaining ABOVE the $US 300 level.
Now, take a look at the monthly Gold bar chart. You can see that on this chart, Gold is once again above the downtrend line which connects Gold's all time high of $US 850 in 1980 with the 1996 high of $US 414. The 1996 high was the top of the last bull market. The downtrend line is the LAST major line of resistance on this chart. Gold broke above it when it reached the high $US 320s in June, fell back below it when Gold plummeted to just above $US 300 in July, and is now above it again. Once again on this chart, the $US 300 level has held.
These two charts have confirmed the post April 2001 $US Gold bull market. The only item left is for Gold to exceed its early June highs and breach resistance at $US 330. Gold has already challenged those levels twice this year - in early June and again in late July as U.S. stock markets were teetering on the abyss. The defining week in the northern summer was the last week in July, during which the markets staged a HUGE upsurge and Gold was hammered down almost $US 21 in a week.
But now, Labor Day is past and the northern summer is over. The stock markets have been gradually falling away from the surge they sustained at the end of July. Gold in $US terms has been gradually recovering from the "hit" it took at the end of July. Over the past two weeks, Gold's recovery has accelerated. Over the last week of August, Gold gained $US 6.10. Over the first week of September, it has gained another $US 7.60. Another week like the past two and $US Gold will be right back to its 2002 highs.
But, of course, this coming week is "9/11 week". The concentration of the powers that be in the U.S. over the coming week will not be on the markets, although any crashes in the midst of the 9/11 "commemoration" would not be convenient. No, the concentration this week will be in preparing the American people for war. To this end, the media barrage has already started, not only inside the U.S. but right around the world.
Today, I saw a very interesting documentary on Australian television. It was made by the BBC and involved a young black American lady who had lived for some years in London and who had re-visited the U.S. recently. She was shown talking to all types of "ordinary" Americans - young and old alike - about what they thought of their nation in the wake of 9/11. The answers were almost unanimous.
The young people (mostly university students) she talked to were completely unanimous. They all thought that 9/11 had not happened for no reason, and that the "reasons" that their government were giving them were not the real reason. They were also unanimous regarding their contempt (bordering on loathing in several cases) for the U.S. mass media. No one is getting the answers, they said, because the media refuses to ask any of the relevant questions.
Many other people made the identification that it was not "Americans" that were "hated", it was the American government. When asked what the "antidote" to this was, one young lady put it in a nutshell - "all we have to do is to mind our own business".
It would seem, from afar, that the temper of the American people is nowhere near as "homogenous" as their government would like it to be. Some of them have long since grown tired of being lied to. Many are tired of being treated like children. And more and more are realising that to raise doubts about the policies of their government is not "anti-American". It is, in fact, just the opposite.
What the Bush Administration and the American estabishment is risking now is a tidal wave of revulsion breaking out amongst Americans. There is no "guarantee" that such an event will happen, but it is definitely latently there. If it does not happen with an attack on Iraq, it will not go away, it will continue to build until the next adventure is announced.
In these circumstances, Gold is performing its historical function perfectly, despite all the methods which have been implemented and refined over the years to suppress it. In the preamble to this weekly commentary, we talk about the threat Gold poses to the regime of global paper currency. Gold poses an equal or greater threat to all those who go after political power - either domesically or internationally. Tyranny and paper are historical bedfellows. So are Gold and freedom. You choose.