Yep, $US spot future Gold has now closed in the $US 380s on thirteen out of the last fourteen days and has closed above $US 380 for the last three Fridays in a row. The highest close in that sequence was $US 388.90 on October 24. The highest intraday level in the sequence was $US 394 and the lowest was $US 376.50. Looks like a $US 380 - 390 trading range to us.
Trading ranges - for Gold in $US terms - have been all the rage for years, of course. Gold was trapped in amber between $US 380-400 in 1994-96. Then there was the crash dive in 1997. There was the famous range between $US 250 and $US 300 - Gold spent four and a half years (between November 1977 and March 2002) in that one. And then there was the range between $US 300 and 330. Gold was trapped there from March to November 2002. Since then, there has been the attack on the $US 380 level in February 2003 and the two attacks on $US 390 in September and October 2003. The second attack on $US 390 has been taking place for the past three solid weeks.
As you can see by the data above, Gold in $US terms has been in some type of trading range for the great majority of the past decade. Now, almost ten years after Gold began its extraordinary trading range in 1994-96 (see above), the metal is right back in the middle of it - bouncing around just under the $US 400 level.
The highest point for Gold in the last decade on a spot future closing basis was the $US 414 close of February 2, 1996. The lowest point was the $US 252 close of August 25, 1999. Spot future Gold almost duplicated that when it closed at $US 255 on February 15, 2001 and again on April 2, 2001. Right now, on November 7, 2003, spot future Gold stands at $US 383.40. That is very near the top of its range over the past ten years, Gold having regained 81% of its the ground it lost between early 1996 and 1999-2001.
$US 390 is proving a tough nut to crack. Gold actually first took a run at it way back in February 2003. On February 5, 2003, the day after Gold hit a 2003 high close of $US 379.00 in New York, it spiked above the $US 390 level in Asian intraday trading. That was nine months ago, and Gold still hasn't cracked that $US 390 level. In fact, on a spot future COMEX closing basis, it has yet to reach the $US 390 level.
For a graphic illustration of WHY the $US 390/400 level is proving so tough to crack take a look at the strategic $US 5 x 3 point and figure chart:
The fact that Gold is now distributing ABOVE the LAST downtrend line on this chart cannot be over emphasised. As long as the line held, a technical case could still be made that Gold had not yet broken out of its bear market. That case is fraying badly around the edges now that Gold has established a firm trading range ABOVE the line. A breakout ABOVE this trading range, which would be confirmed on this chart with any spot future close of $US 400 or higher, would eliminate ANY remaining doubt that Gold has embarked on a long BULL market. Don't forget, this downtrend line is nearly twenty-four years old.
Gold completed its great "double bottom" in the mid $US 250s in February/April 2001. It was back to $US 288 by mid May 2001. It didn't close above $US 290 until mid September 2001. It didn't close above $US 300 until February 2002. And it didn't definitively break through the $US 300 level by trading above $US 310 until late April 2002. $US 300 was a VERY tough nut to crack. $US 400 is proving just as tough, Gold has been trying ever since February.
But Gold's break back above $US 300 in 2002 did not challenge the MAJOR downtrend line, it merely broke through a ceiling which Gold had not been able to crack (except for short-term spikes) since late 1997. A Gold break above $US 400 would do more than threaten the MAJOR downtrend line, it would demolish it.
It would demolish a lot of other things too. It would demolish the Fed's preposterous claim that inflation may be "too low". It would demolish any tattered remnants of the Treasury's equally preposterous "strong Dollar policy". It would demolish the rest of the world's confidence in their reserve currency. It would demolish the US economy by putting inexorable upward pressure on US interest rates. It would demolish the drive for Empire by the Bush Administration. Oh, yes, and it would also demolish any pretense about a US economic "recovery".
The situation is simple. On their own, the US financial and political powers that be cannot stop Gold. They are entirely dependent on the rest of the world to finance their trade and current account deficits and largely dependent on the rest of the world to finance (by buying - not SELLING - Treasury debt) their exploding government deficits. The rest of the world can short circuit the US economy and the US Dollar any time they choose, but they know that their own economies will suffer grievously in the backlash. Then know too that they cannot go on supporting US trade, current account, and government deficits, and the longer they try, the bigger the bust when it can no longer be done.
Gold has been on the verge of breaking loose in $US terms ever since it surged towards $US 390 in mid September. It is still on the verge. Please realise that the financial powers that be fully realise the consequences of a $US Gold breakout. The sellers of Gold are in the same position as the foreign buyers of $US debt. They are damned if they do, and damned if they don't.
On a risk/reward basis, Gold is now where the Dow was in late 1982, threatening to break out of a "doldrums" stretching back nearly two decades. In ANY financial market, the BIG rewards are a consequence of two things - following a primary trend and HAVING PATIENCE. Just wait - and watch for $US 400.
