Between October 3 and 19, spot future Gold was trading in the $US 370 - 380 range. Between October 20 and November 11, spot future Gold was trading in the $US 380 - 390 range. On November 12, Gold bounced to $US 395. And on Friday, November 14, spot future Gold closed at $US 398 with an intraday high of $US 399.40. Getting close, aren't we?
Before going any further, let's update the strategic $US 5 x 3 chart we showed here last week. On November 7, Gold was hovering at $US 385 with a potential double top on the chart. Now, Gold is hovering at $US 395 on the chart. As you can see, we are two "X"s above the previous high and only $US 2.00 short of a third "X" (at $US 400) which would take out The LAST Technical Hold On $US Gold.
Here are the important technical developments from when we featured this chart only one week ago:
Now, here are the durations and the extent of the four Gold bull markets since Gold came off its all time high of $US 850 in January 1980:
And here are the two bull markets, and their cumulative gain, BEFORE Gold hit that January 1980 high - don't forget, before August 1971 Gold was "fixed" at $US 35:
By way of comparison, here is the great Dow bull market from the bottom of its last bear market to the top of the great bull in January 2000:
For every investor who remembers the Gold bull market of the 1970s, a thousand investors remember the Dow bull market of the last quarter of the twentieth century. Yet the Gold bull market was quite a bit bigger on a percentage basis than the Dow bull market, and took less than a third of the time that the Dow bull market did.
It is true on any basis you want to measure it, there ain't no bull market like a Gold bull market.
Now, take a look at one more comparison between the Dow and the potential Gold bull market. The Dow first hit the 1000 point level at the end of 1966. It did trade above 1000 in the early 1970s, but never decisively broke through that level. Eight years later in December 1974 at the bottom of its bear market, the Dow was 423 points or 42.3% below that 1966 all time high of 1000. Right now, Gold is 56.1% above its 2001 bottom (see above). But it is still 53.2% below its all time high of $US 850 set in January 1980. Gold is still further below its all time high than the Dow was at the BOTTOM of its bear market in late 1974.
Finally, here are some comparisons using the percentage gains of the Dow bull of 1974-2000 and the Gold bull of 1971-1980.
There is NOTHING in any of the above which makes it certain that Gold will even regain its $US 850 high of 1980, let alone reach the $US 5000-6000 level. There is nothing which makes it certain that Gold will even reach $US 400. In markets, nothing which has not yet happened is certain. In economics, the future is UNCERTAIN. If it was not, then economics would not exist. That IS certain.
The comparisons are made to give some idea of the POTENTIAL of what is now unfolding for Gold. In the years between 1966 and 1982, when the Dow was repeatedly trying and failing to poke its nose above the 1000 level and stay there, anyone who said that the Dow would be almost 12000 by the end of the century would have been offered a padded cell. In the post war years when Gold was fixed at $US 35 per ounce, anyone who said that Gold would be $US 850 by the end of the 1970s would have been restrained and placed in the middle of that padded cell.
Actually, in the context of all time highs, Gold is still far below the level that the Dow was in August 1982 at the start of the Reagan Bull. In August 1982, the Dow hit a low of 776. At that level, had regained 41.9% of its fall from 1000 to 577 between 1966 and 1974. At its present level of $US 398, Gold has regained 24.1% of its fall from $US 850 and $US 255 between 1980 and 2001.
The potential for Gold is clearly substantial. As long as the primary bull trend is intact, and it certainly is that with Gold now at its highest level since early 1996, Gold MUST go higher, simply because the primary trend is upward. $US 400 is a big number psychologically. Above that, there is NO "bear market" technical indicator left on any scale. $US 398, the November 14 spot future close, is only $US 2.00 away. $US 399.40, the November 14 spot future intraday high, is only $US 0.60 away. Stay tuned.
