On February 4, 2003, spot future Comex Gold closed at $US 379.00, a level which remained the 2003 high for a little over seven months. On September 9, spot future Comex Gold closed above $US 380 for the first time this year. By October 3, it had corrected back down to $US 369. On November 12, spot future Comex Gold closed above $US 390. It has not dipped back below $US 390 since on a spot future closing basis.
Finally, on Monday, December 1, 2003, spot future Comex Gold closed above the $US 400 level, the first time it had done that since April 11, 1996. Right through this week, the spot future price has remained above $US 400 on a closing basis. And on Friday, December 5, spot future Comex Gold closed at a new 2003 high of $US 406.40 - its highest spot future close since February 21, 1996.
So, Gold is consolidating ABOVE $US 400 and, at its December 5 close of $US 406.40, is $US 7.60 below its February 1996 close of $US 414.00 which was the top of its previous bull market. With all of this, however, the increasing Gold price this year is largely doing nothing more than reflecting the fall of the US Dollar this year. This week, Gold was up 2.36% in $US terms. It was up 0.71% in Aussie Dollar terms, 0.79% in Yen terms, and 1.03% in Euro terms. To put things further in perspective, Gold has just set a multi year high in $US terms. In terms of Aussie Dollars, Gold is still $87.70 or 13.70% below its February 2003 $A 640 high. In global terms, Gold is still languishing below 2003 highs. In $US terms, it is at its highest level for almost seven years.
That's great if you are an American. Gold has more than insulated all American holders from the fall of their currency, the US Dollar, over the past two years. It's even better if you are not an American. Gold is up but still WELL below its 2003 highs in most major non-$US currencies, making it a bargain buy.
Now, with Gold having spent a week above $US 400 and now having poked its nose above $US 405, take a look at these two charts:
$US 2 x 3 Point and Figure chart - based on CLOSING Comex spot future prices
(Chart appears in original commentary)
This chart stretches back to the top of Gold's previous bull market as indicated by the $US 414 closing high set in February 1996. This is a BEAUTIFUL up-channel with two steepening uptrend lines. The latest upmove (column of "Xs") is now 4 Xs higher than the previous upmove (3 or more indicates a likely acceleration of the move). The present price on this chart is still closer to the bottom of the upchannel than it is to the top, indicating the potential for the price to accelerate upwards. Finally, the ONLY remaining resistance level on this chart is the February 1996 $US 414 high. Any close of 3 "Xs" or more above that - any close of $US 420 or higher, would leave Gold a clear shot at levels of $US 500 or higher. And for the significance of THAT level, we go to ...
$US 5 x 3 Point and Figure chart - based on CLOSING Comex spot future prices
(Chart appears in original commentary)
We regard this as the most important Gold chart at our website. It shows the Gold action all the way back to late 1981, including the $US 296 low in June 1982 which was the bottom of the post 1980 bear market. It also shows (the thick red line) the downtrend anchored in Gold's all time high of $US 850 (spot future Comex closing basis) set in January 1980.
Gold has distributed ABOVE this downtrend line and now, with the breaching of the $US 400 level, has left it behind. As this is THE downtrend line, its breaching is the LAST proof necessary that $US Gold is in a long-term BULL market.
Between 1980 and 1996, Gold had three bull markets. The first topped at $US 510 in February 1983. The second topped at $US 500 in December 1987. The third topped at $US 414 in February 1996. Gold has now almost regained its February 1996 high. You can see on this chart that once Gold surpasses $US 414, there is very little remaining resistance below $US 500. If you haven't got any Gold yet, or regard your Gold holding as insufficient, be warned.
The most important message on BOTH these charts is the potential magnitude of the current Gold bull market and the rock solidity of the uptrend which Gold has been in for nearly three years now. This cannot be stressed too highly. AS LONG AS THESE UPTRENDS REMAIN INTACT, GOLD IS CERTAIN TO GO HIGHER. This is a matter of simple geometry. The trend is UP - to remain in it, Gold MUST go HIGHER.
You can elminate any stress which may have accompanied your observation of Gold simply by keeping an eye on these two charts. As long as the trend is intact, you can sleep like a baby. As long as the trend is intact, there is nowhere to go but UP. And given the fact that Gold has been trading between $US 250 and $US 500 for more than two DECADES (that's quite a "bottom"), this uptrend has the potential to remain intact for a VERY long time to come.