"So, $US 290 has held on the downside, now we will see if $US 300 will hold on the upside."
(Gold This Week Archives - March 22)
Seven days above $US 300 - and counting. So far, so good.
Over the past year or so, we have been fielding a steady stream of emails (from subscribers and non-subscribers alike), asking endless variations of the question posed in the headline of this analysis. ARE WE THERE YET? "THERE" being, of course, a Gold BULL market.
How easy it would have been to say "YES"! After all, $US Gold has been in an uptrend since April last year. That's a year ago. Any uptrend that goes on for that long MUST be a bull market - SURELY!
If the market we follow on these pages had been any other market than the GOLD (Silver qualifies too) market, we would have long since called it a BULL market. But Gold is Gold. As we have stated repeatedly in these analyses, Gold (along with the other precious metals and basic commodities like oil) is the ONLY market which the financial PTB (Powers That Be) do NOT want to see go UP!
We are not going to go into the reasons why that is true here. If you don't know, may we suggest that you start from the beginning of our Gold Pages and read your way through them until you get back here. Or, to save time, you can just read the introduction at the top of this page. Suffice it to say for the purposes of this analysis that it IS true. That being the case, we cannot call a GOLD bull market until we are as sure as the evidence can make us that the financial PTB cannot hold the price down any longer.
Happily, we have an excellent reference point for deciding whether the PTB have allowed Gold to slip past (or break through) their guard. That reference point is $US 300 - the low that Gold reached after its retreat from its blow-off 1980 high of $US 850. Between January 1980 and June 1982, Gold retreated all the way from $US 850 to $US 300. That's where the retreat ended. Between June 1982 and November 1997, Gold never went BELOW $US 300 for more than a few days. $US 300 was the FLOOR for Gold.
And since November 1997? That's right, $US 300 has transformed from being a FLOOR to being a CEILING. Since 1997, Gold has never traded ABOVE $US 300 for more than a few days. It has never broken above $US 300 and then gone higher still. Every move over $US 300 has been stifled. As we said on this page - $US 300 is the PTB's Maginot Line
This makes things extremely easy for any analyst who will take the time to examine the nature of Gold and the modern monetary system and to examine the price history of Gold over the past 20 years. As you probably know, most analysts don't do this. They content themselves with statements along the line of: "Gold has been in a bear market for 20 years". This is, of course, utter nonsense, but then again there is more utter nonsense uttered about Gold than about almost any other aspect of the financial world.
All you need to know is the history of the $US Gold price since June 1982. $US 300 was a Gold FLOOR for more than 15 years, after which it became a Gold CEILING for 4 1/2 years. Knowing that, calling a Gold BULL market is simplicity itself. Gold will be in a BULL market if and when the $US 300 ceiling which has held it back since 1997 once again becomes a FLOOR.
So, the answer to the question - ARE WE THERE YET - is NO. But we are VERY close.
The longer Gold stays at or above $US 300, the closer we are. The highest closing price for spot future Gold since the uptrend was established in April 2001 is $US 305.90 set last Tuesday (April 2). If Gold stays at or above $US 300 and then goes higher than that April 2 close (preferably to $US 310 or better) then we WILL say that Gold is now in a BULL market.
Right now, Gold is sitting RIGHT ON $US 300. There have not yet been any overt moves to crunch the price back into the safe sub $US 300 region. There have been no new Central Bank sale announcements, or more precisely no new RUMOURS of possible Central Bank Gold sales. Nobody is coming out and saying they are going to be taking over from the Bank of England and starting a new set of Gold auctions. There are no new threats from the IMF to dump their "Gold reserves". There is nothing obvious.
Instead, we have such predictable phenomena as the global media putting down Gold's new found strength purely to the chaos in the Middle East. The implication being, of course, that as soon as the Middle East sorts itself out, Gold will head south again. This isn't working all that well, right now, since many people are starting to suspect that the Middle East will NOT sort itself out this time.
Then there is Newmont Mining, which recently took over Normandy Mining on the Aussie stock exchange and then gained a listing on said exchange. No sooner had the Aussie Gold index hit a multi year high of 1341 (a 100% increase in a year) on April 2 than Newmont decided to dump their entire (220 million plus) shareholding of Lihir Gold. That took the wind right out of Gold stocks, all Gold stocks, not just Aussie Gold stocks.
And there are also Gold lease rates - presently at their lowest levels in years - if not ever. Ever since the Bank of England finished their Gold Auctions a month ago, Gold lease rates have been inexorably falling. It would seem that while the world is getting more and more nervous over the prospect of higher official interest rates, that concern does not extend itself to anyone wanting to borrow Gold.
In short, there has been no lessening of the efforts to keep the $US 300 Gold ceiling in place, it is just that these efforts are having less and less effect. Any investment, even Gold, that has been trending up for a whole year is bound to attract some attention. And it is, as are Gold stocks.
The financial PTB would have been much better off if they had never forced Gold below $US 300 in the first place. It would have been much easier to control if it had been left to cycle between $US 300 and $US 500 as it had been doing since 1982. But once they forced it below its floor, they had to keep it there. And the longer they kept it there, the more dangerous the situation for them if it ever broke back above $US 300.
Gold has been kept below $US 300 for 4 1/2 years. It spiked above the floor in late 1999 and early 2000 - before it had established a bottom. But now, Gold has regained $US 300 for the second time since February after an unbroken uptrend which celebrates its first anniversary on April 11.
Uptrends do not usually take a year to turn into bull markets. This one has, and it ain't there yet. But it WILL get there, inevitably. Relax and enjoy the ride. After all, the longer it takes, the better, right?