Look at the 10 year chart on top and the 1 year chart beneath. This is a big picture for the yella metal.
Between 1999 and 2002, Gordon Brown as Chancellor of the Exchequer sold 60% of the UK’s gold reserves at $275 an ounce. As of May 2006, it has been calculated that this cost the UK $6.6 billion, and it marked the bottom of the gold bear market, a 20 year low. Where did this gold go? Did it go to EU banks (in a gold suppression game where the sellers loudly announce their gold sales, while the buyers keep quiet, all in order to save the bullion banks who have no hope of getting their gold back)? Was it really a way of legitimising gold that was surreptitiously lent out and can never be replaced in the market without triggering an all-out run in the gold price? Did the gold really go to Nibiru, to be replaced by paper money printed specially to cover the deal with the space aliens? I suspect it will be a very long time before we discover the real reasons.
Notice how before the bottom, the gold price generally lies below the long-term moving averages. After the bottom, the gold price generally lies above the long-term moving averages. This is an important clue to the bull market, because the gold price is pulling the moving averages up. The orange moving average is the 354 day, the yellow is the 219 day. These are not too dissimilar to the 1 year and 200 day moving averages. However, the number 354 is chosen for its special significance as the length of the lunar year (354.372 days to be precise). This year was used by Neolithic mound builders, in whose mounds gold artifacts were often buried. The Moon Goddess was the supreme goddess of time and space. The number 354 is also the sum of the first four fourth powers (1, 16, 81, 256) and the product of three distinct prime numbers (2, 3, 59). If you divide 354.372 by the fibonacci number (1.618034…) you get 219.0, which is my second moving average. The gap between these two moving averages narrows when gold is consolidating or is in a temporary counter-trend. This last happened in November 2005 and was followed by a run from the $475 area to $720.1. Now, on the 1 year chart, we see that the two moving averages have touched again. The latest drop looks like running out of steam near the 219 day moving average. Could it be that we are getting close to the end of a period of consolidation and about to see a new run?
As always, DYODD, IMHO, CYA, IIRC, AFAIK, YMMV, JMHO, ATM, E&OE, Caveat Lector and any other relevant TLAs.
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