Five days this week, five new all time highs in the Gold price. The Gold price in US Dollar terms, of course. Granted that some of the daily moves were almost non-existent. Granted also that the major move - up $US 22.50 - was done on Monday, November 16. But it now seems that whatever happens to the US Dollar and whatever "spin" comes out of the Fed or the Treasury or the White House or anywhere else, Gold just keeps on going - up.
But the REALLY interesting development this week was as follows:
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Gold's last close below $US 1000 was on September 29. It broke above its March 2008 spot closing highs decisively on October 5. And since Gold first closed above the $US 1100 level on November 9, it has only had one "down" day. Gold has been setting all time highs for most of the past six weeks in $US terms.
Gold is not yet setting all time highs against any of the other currencies in the table above. It is getting close in Euro terms, but it is not there yet. The really interesting thing about this table is the performance of Gold in terms of the Australian Dollar this week. The Aussie Dollar is one of the most favoured currencies at the other end of the US Dollar carry trade. It has soared against the US Dollar since last March. As a result, the Aussie Dollar Gold price has been lagging badly - until this week.
Now, let's look a little bit further back. Here is the record since Gold decisively settled above all its previous highs in $US terms on October 5:
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As you can see, Gold's move up against top three currencies on this table are pretty similar. All the noise in the financial world over the periode has been about the inexorable fall of the US Dollar, yet Gold's percentage rise in US Dollar terms since October 5 is only marginally more than its rise against the Euro and Yen. Gold's rise in Aussie Dollar terms is markedly lower. But again, the interesting thing is that more than nearly two-thirds of the rise in the Aussie Dollar Gold price since October 5 has come in the past week. Over the five weeks between October 5 and November 13, Gold rose $A 44.40. Over the WEEK between November 13 - 20, it rose $A 58.50
There have been many claims that Gold's bull market is "suspect" because Gold is "only" rising in US Dollar terms and/or because Gold is only setting new all time highs in US Dollar terms. The first claim is patently false, as the table above shows. The second claim is true - to this point - but developments over the past week show that it might not be true much longer.
The US Dollar did NOT fall this week, it rose. Over the week, the trade weighted US Dollar index (USDX) was up 0.40 percent.
And, finally, the yields on short-term Treasury debt paper are about as low as it is possible for them to get. On November 19, the yield on three-month Treasury bills fell to 0.005 percent before closing for the day at 0.01 percent. The close on November 20 was also 0.01 percent. And on November 19, the yield on two-year Treasury debt paper hit 0.71 percent. That is a mere 0.01 percent above its all time low, hit on January 20, 2009 - just over a month after the Fed lowered its Funds rate to 0.00 percent.
Treasury yields - especially at the short end - have nowhere to go but UP. There is absolutely no risk premium of any nature built into these yields. Please remember that Gold's "blow off" in 1979-1980 came at a time when US Treasury yields were SOARING as huge premiums were heaped on the US government to compensate investors for the very real RISK of holding them. We have seen absolutely NOTHING of that nature in this Gold bull market. Not yet, we haven't.
(Chart appears here in original analysis)
A new low was hit on the chart when spot future Gold closed in New York at $US 705 on November 13 last year. This pushed the chart two "Xs" below the $US 715 support level established in late October and equalled early in November. Then came the first big turnaround - and upturn on the chart - of November 14. The region between $US 700-720 firmed as SOLID support for Gold. That support "zone" was emphatically confirmed as Gold rose by just over $US 110 between November 13 and November 28 last year.
On February 20, as you know, Gold made it all the way back to the $US 1000 level. But it did NOT break through the $US 1000 barrier. Until this week, what had been traced out on this chart is the right shoulder of a gigantic "reverse" head and shoulders formation. But on September 16, spot future Gold CLOSED at $US 1020.20. That breaks decisively above the $US 1000 "double top" on this chart and revalidates the entire bull market - from the bottom. Late in September, had the downturn on the chart, only to see Gold burst above its September 16 high to put the final re-validation on the entire $US bull market in early October. And this week, Gold has risen to just short of $US 1150.
In February 2009, spot future Gold closed above the $US 1000 level for the second time. While the close did not quite equal that of March 2008 in $US terms, it set new all time highs in terms of many other currencies - the Yen being an exception. That was because of the recovery of the US Dollar which had taken place since March 2008.
On September 11, 2009, spot future Gold closed above the $US 1000 level for the third time. It has remained above the $US 1000 level continually since the end of September.
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Gold priced in Japanese Yen has joined $US Gold in the plus column since February 20. And now, the Euro is getting close. The most "extreme" example remains the Aussie Dollar Gold price. at current (November 20, 2009) exchange rates, it would take a Gold price of $US 1428.60 for the Aussie Gold price to equal the all time high it set on February 20, 2009.