Gold Reaches New All-Time Highs!
April 27, 2010
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Although gold prices in USD have yet to break beyond the previous high near $1,220, the charts for gold in several of the world's major currencies look decidedly different. Gold as priced in Euro has reached a new all-time high ... same for the British Pound, the Swiss Franc, and the Japanese Yen.
Fools who have been paying attention will recall that I used the same non-dollar breakout back in October 2008 to telegraph the imminent breakout in USD gold prices that carried through the previous high of $1,033 to $1,220.
Here's the associated TMF article I wrote on the subject.
And here's that blog post from October 2008 containing relevant charts.
The same phenomenon is playing out again, with the same correlative implications for the coming direction of the USD gold price. The differences are clear, as this time around we have U.S. markets sitting atop a monster rally rather than mired in panic-driven freefall, but this difference will not change the outcome ... it's the similarities that are more important here. Just as in October 2008, we have the dollar in a substantial counter-cyclical rally that represents the early stages of a flight to quality as macroeconomic concerns mount. As the flight to quality matures, savvy investors who realize that the dollar provides no safe haven begin to expand their gold holdings. Presently we see reported holdings of the GLD ETF reaching a new record as already foreign investors moving away from European sovereign debt know better than to expect safety in the USD.
The last time we had gold break out to new all-time highs in a wide range of key global currencies prior to an associated breakout in USD terms, gold plummeted by $200 per ounce over the span of two weeks before mounting a massive rally from $700 per ounce to $1,220 -- a $520 appreciation (74%) over the course of 14 months -- before consolidating into the present corrective phase. This time around, there is no $200 pre-rally crash in the cards. As I have said before, I consider $1,000 the new long-term floor beneath gold prices. Although nothing is impossible in a market this blatantly manipulated, I think we're far more likely to remain here well above $1,100, and launch from here to re-take the previous high, than we are to dip back lower to re-test the $1,000 mark first as I have also maintained as a possibility throughout this corrective phase.I believe that this next surge could bring us to anywhere between $1,500 and $1,800 per ounce before the next significant pause. In terms of broader chapters in gold's multi-year move, this connotes just three more chapters remaining to take out my conservative price target of $2,000 gold (two more major surges with one substantial corrective phase in between). If you are not thinking of this multi-year bull market for gold in terms of its broader chapters, please begin here to get yourself up to speed.
Please enjoy below the following array of gold charts as deominated in a range of individual currencies, as well as in a basket of currencies to create a Gold Currency Index. Because gold price movements will periodically move in and out of relative synchronization with major movements in the USD, this Gold Currency Index created by Promethius Market Insight provides a valuable instrument for tracking the trajectory of this bull market.
Charts will be presented below in the comments section, so please hold comments until seven charts appear below. Thank you, and I wish you all the best of luck with the next phase of gold's bull run.
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