In our Gold Bottom study this week, we look at the highly significant technical turnaround on the $US Gold price. In our $A/$US Gold comparison study, we look at a genuine Gold BULL MARKET! Yes, it's all heady stuff, but you must remember, we FOCUS on Gold, and we've been doing it for a long time. Most investors, and people in general, don't. What if they started to?
"Yes, we know it's predictable. Yes, we know it's wearing. Yes, we know that once again, it seems to have "worked". But we are not at all sure that it is going to go on working for very much longer."
(Gold Last Week - March 2)
What was "predictable"? The fact that after Gold had its previous $US 10 upspike in late February, anyone who was anyone in the "Gold analyst" trade got himself a TV or press gig to tell everyone that Gold was about to collapse yet again.
Thing is, it didn't. $US Gold came back from $US 268 to $US 260 (spot future basis) by last Tuesday (March 5), but it has now spiked all the way up to $US 271.50. Some collapse!
This is all very well, but there are more problems afoot. Japanese Treasurer Miyazawa has just apologised for saying that Japan is on the verge of fiscal collapse. Apparently, Mr Miyazawa meant to say that Japan will have a hard time reforming its fiscal situation. In Japanese, there may be a difference. In English, it's hard to spot.
On U.S. markets, the beginning of this week was taken up with all the old time bull market gurus (no names here, but one of them was a lady whose initials are AJC) jumping back in front of the cameras to tell the investing world that NOW is the time to start buying again. That was fine, up until March 9, when the Dow fell 2%, the S&P 500 2.5%, and the Nasdaq 5.4%. OOPS!
On March 14, the Bank of England holds yet another of its 25 Tonne Gold auctions. Rumours are rife that this will be the LAST of the "25 Tonne" auctions. Future auctions there may well be, but the quantity of Gold on offer is going to start decreasing.
Finally, the spectre of an economic slowdown, or a recession, or even a "stagflation", is wearing on investors everywhere. Suffice it to say that there are a lot of investors out there, inside and outside the U.S., who are hurting badly. They have lost a lot of money on paper, they are worried about their jobs, and the want to get their money back. They can't find a way to do it on the markets. All the people whose advice made them rich - on paper - seem to have lost the plot. Where do they turn to next?
The term "bubble" is a useful one in financial analysis, referring as it does to any market which has seen prices blown up to disproportionate levels. But, in this context, what is the opposite of a "bubble"? We don't know of a convenient word to use, but if one wants to describe the present $US Gold "price", that is what we are seeing. How about an "elbbub"? Kinda catchy - don't you think?
Like anything else, a Gold "elbbub" doesn't become a Gold "bubble" overnight. It has to go through a process known as bottom formation first. $US Gold looks very likely to be well on the way to doing that. And after the "bottom formation" there is another phenomenon widely known as a "bull market" before a "bubble" can appear.
The chart of $US Gold is above. Here are the charts of Gold in the other currencies we cover. Pay particular attention to Gold in Aussie Dollars - and in Japanese Yen.
Here is Gold in the other currencies which we cover
Gold in Yen
Gold in Euros
Gold in D-Marks
Gold in Aussie Dollars
The $A Gold chart shows a 24 Karat BULL MARKET. The Yen Gold chart (and don't forget, Japan is officially on the verge of "fiscal collapse), shows a definite UPTREND. Gold in Europe (D-Mark and Euro) has definitely turned around this week.
Put all this together, and couple it with TWO $US 10 price spikes in Gold in less than a month, and you have a very promising situation indeed.
"The $US Gold price has suddenly awakened. We don't think it is going to be possible to put it back to sleep again."
(Gold Last Week - March 2)
Last week, we didn't think Gold would go back to sleep. This week, we are as sure of it as it is possible to be. Amongst the investing public, old habits die hard and the habit of socking all one's money into the stock markets and ignoring Gold is a very old one now.
It will take a $US Gold price of more than $US 300 before the public takes any notice at all. It will also take a price of more than $US 300 before a GENIUNE Gold bull market in U.S. Dollar terms can be established. Right now, Gold is just above $US 270. Might be an idea, if you haven't already, to get in early - in the physical stuff - and avoid the rush.
