Past Gold Bottoms: 1976, 1982, 1985, 1993
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Daily Bar Chart
10 and 20 day MA 
Weekly Bar Chart 20 and 40 week MA 
$US 2.00 x 3 P&F Chart Based on Closing prices 
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The US Treasury didn't have any "official" auctions this week, although Treasury debt was of course bought and sold daily as it always is. That being the case, global markets have calmed down considerably on almost all fronts. "Commodities" are no exception. On the Comex, daily volume has fallen back well below 100,000 contracts and open interest is steadily declining. After a $US 13.20 fall on Monday (June 15) this week, Gold has been trading in a very tight range
Last week, Mr Obama, Mr Geithner and Mr Bernanke were at pains to convince us that their headfirst dive into debt is "temporary" and that they have plans to cut the deficit down to more "normal" levels - just as soon as the situation warrants it. This week, the focus has switched to their plans to re-regulate the US financial system to make sure that what has happened over the past two years never happens again. As any student of history knows, the more they "regulate", the worse things get.
But this proposed bout of re-regulation, assuming it emerges from Congress unscathed (unlikely) is more sweeping than even the first Roosevelt Administration (1932-26) dared to contemplate. Mr Obama has plans to follow up his predecessor's "Department of Homeland Security" with a "Department of Financial Security".
Here are the relative performances of $US Gold, the $US Index, and the Dow since Gold broke above $US 300 to stay on March 27, 2002:
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Please note the performance of Gold in $US since March 2002 compared with the Dow. Yes, we know, Gold doesn't earn any interest, but what does these days? Look at the respective percentage gains. Actually, look at Gold's percentage gain in $US terms. The Dow has fallen nearly 20 percent BELOW its level it was at more than seven years ago in March 2002. And that is after a HUGE rally which has seen the Dow rise by more than 30 percent since March 9 this year. That rally is showing distinct signs of faltering after the Dow actually get back into the "black" for the 2009 at the end of last week
The USDX did not close above the 80.00 level for just over a year - from September 2007 to September 2008. On Monday, March 17, 2008 (as Gold topped $US 1000) the USDX hit a nadir of 71.30. Then came the turnaround. On September 11, 2008 the USDX got back above the 80 level for the first time in a year, closing at 80.15. On November 21, the USDX closed at its highest level since April 2006. By December 16, the day the Fed cut its rates to ZERO, the USDX had dipped back below that 80.00 level. Since then, the USDX has challenged its September highs twice and actually closed above the 89.00 level on March 5. Up until the HUGE Treasury auctions earlier in June, the USDX had one of fastest falls on record in percentage terms. That fall has since stabilised with the USDX closing this week above 80.00 again.
Back on September 11, 2008, as the USDX regained the 80 level, Gold broke down through its August 2008 lows and sunk as low as $US 745 before a rebound on September 12. Then Gold rebounded all the way up to $US 920 on an intraday basis in one if its most spectacular weekly performances ever. Then Gold gave all that back and more. Gold hit a new spot future low close of $US 705.00 on November 13. But by the end of 2008, Gold had rebounded all the way up to $US 884, posting a healthy gain for 2008 as a whole. On February 20, Gold made it back to $US 1000. Since then, there have been two "forays" below the $US 900 level, the most recent of which was reversed at the beginning of May with Gold moving above $US 900 again. Two weeks ago, Gold made it back to just below $US 990. Since then, the $1000 level has proved elusive once again with Gold falling to $US 927 at the beginning of the week before stabilising.
On the daily bar chart, the 10 and 20-day moving averages were crossing and re-crossing each other for months. In early September 2008, the shorter-term MA moved just above its longer-term counterpart. That situation was reversed with Gold plummeting below the $US 750 level on September 11. Then the shorter-term average moved above its longer-term counterpart again on a fantastic plus $US 100 turnaround in Gold. That situation was reversed early in October and in mid November, Gold plummeted at one point almost $US 70 below its ten DAY moving average. That was the signal. Gold has moved steadily upward ever since. In late January, the price moved above both moving averages with the shorter-term MA crossing back above its longer-term counterpart. After that, Gold bounded all the way up to $US 1000 and then retreated all the way back to its longer-term (20 day) MA. In March, Gold fell sharply below both MAs before an upturn brought the price back above the longer term MA. In early May, the 10-day average moved above its 20-day counterpart. Now, with Gold having fallen away from the $US 1000 level again, that position has been reversed - again.
On the weekly chart, the 10-week moving average (MA) moved below its 20-week counterpart in mid May 2008 for the first time since the beginning of the "credit squeeze" in August 2007. How ironic that in August 2008, the shorter-term MA moved back above its longer-term counterpart. That situation was quickly reversed and in mid September, Gold fell to well over $US 100 below both MAs on this chart. That is as big as discrepancy (in reverse) as was the case in March 2008 when Gold hit $US 1000. As you can see, when Gold hit $US 1000 the price once again soared above both moving averages. Once again, the move was too fast. In early March, Gold dipped below the 10-week MA while in early April, the price fell below the 20 week MA for the first time since January. Now, both MAs are pointing up with the shorter-term average still just below its longer-term counterpart. The fall of Gold this week has brought the price back close to - but still above - both moving averages.
For a better view of the point and figure chart, please see this chart (link appears here in original analysis). Gold has had a wild ride since it hit $US 1000 back in March 2008, falling as low as just above the $US 700 level last November and then rebounding to close the year just below $US 900. As you can see, the big rise in February took Gold all the way back to the $US 1000 level and led to a steep uprend line on the chart. Gold broke below its uptrend line on the chart with its move down below the $US 875 level on April 6 and continued that move with its close below $US 870 on April 17. As you can see, the chart has now retreated from just above the $US 980 level as the uptrend line established by the move to $US 1000 back in February this year has not been breached.
Here's another perspective - a comparison between Gold's 2002 low and its present price and the $US index 2002 high and its present "price". All data is on CLOSING levels:
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As always, we refer you to the strategic $US 5 x 3 point and figure Gold chart (link appears here in original analysis) for an overview on the situation.
This chart is a superb example of the value of point and figure charts for showing LONG TERM trends in a market.
Gold's big run up to $US 1000 started in September 2007 with the metal ending the year just below its all time highs in $US terms. It rose above the $US 800 level on November 2 and to all time highs above the $US 900 level on January 14, 2008. Then came mid March and $US 1000 - and then came the correction.
That correction bottomed out in November 2008 with Gold just above the $US 700 level. The metal had succumbed, along with every other "commodity" to the HUGE bout of deleveraging and capital repatriation which was such a feature of the latter half of 2008.
But unlike all the other "commodities", Gold rebounded late in the year to become one of the very few investments worldwide which actually rose in $US terms in 2008. And after another sell-off in the first half of January, that rise has resumed. At its 1002.20 close on February 20, Gold regained its all time high on this chart.
The chart has already smashed above the two downtrend lines established during the correction from the $US 1000 level. Now, we have a strong resistance line established at $US 1000 with support in the $US 870-880 area. As you can see, this chart is in an immense "reverse head and shoulders formation" with the two "shoulders" marked by Gold's two forays to the $US 1000. Two weeks ago we had the first downturn on this chart since the end of April and since then, the price has fallen further. The point at which the chart turns up again now becomes VERY important. Right now, an upturn on the chart would require a spot future Gold close of $US 945 or higher.