November 25, 2024 Advertise | Contact Us | About Us | Search

Gold Indexes

March 10, 2003

FT Gold Index

The London FT Gold index has a massive reverse head and shoulders. The current period is merely completing the right shoulder. The main up trend remains well intact.

Gold in Swiss Francs

This is another massive reverse head and shoulders pattern to which I have alluded on several occasions. But what I have not previously detailed is the five wave flat top triangle that is the right shoulder. This pattern is close to the end of its fifth wave sell off. This is an extremely bullish picture and I have detailed its implications on several previous occasions.

Gold BUGS Index

This is a US index of Basically Unhedged Gold Stocks. The main uptrend remains intact.

JSE Gold Index in $

The dollar value of the JSE Gold index hit the main downtrend and has spent the past six months building up the necessary strength to penetrate this major resistance line. The uptrend from 2000 remains intact. Once the index moves above the major down trend it will signal a completely new bull phase for the JSE Gold index in $.

JSE Gold Index

I have again detailed this picture on many occasions. In early 2002 the index broke above the massive long term resistance area at the 2300 level. Since then it has merely pulled back to test this level. This is not a bear market reaction but a classic breathe in an ongoing bull market. Once this test is over the index will move well above its previous highs of last May.

Kruger Rand

The uptrend remains intact. There was not divergence sell at the May peak as there was at previous peaks. The current reaction is merely testing the major support up trend.

Rand Price of Gold

The main up trend remains intact. There is a flat top broadening pattern that I have previously detailed. BUT in addition we now have a BUY divergence indicating that the pattern is very close to its end and that a major trend reversal is close at hand.

KR Premium over Rand Price of Gold

This chart illustrates the premium over the Rand price of gold that investors are willing to pay for Kruger Rands. The 100 level is parity i.e. no premium. You will note that the KR sometimes trades at a discount, under 100, to the Rand price of gold. But it has also traded at up to a 40% premium. Judging by the up sloping trends of the past three years investors continue to pay an increasing premium for KR's.

Philadelphia Gold Index (XAU)

I have previously detailed the reverse head and shoulders pattern on this index that indicates a major bull trend in the offing. The current up trend remains intact.

Toronto Gold Index

This index of Canadian gold shares has mapped out an extended fifth wave in the C wave of the downtrend. This index is right at its low point and in Elliott has nowhere else to go but UP. Astute observers will note that the down move from the 3-4 is a falling wedge pattern that usually leads to a vertical reversal. If Canadian golds are ready to reverse so are those on the JSE.

CONCLUSIONS

The uptrends that have supported the bull market of the past three years remain intact on all indexes.
Many indexes are merely testing major support levels.
The Toronto Gold Index indicates that it has completed a full Elliott downside count and is ready to reverse.
If this is the case then all gold indexes will reverse.
There is a significant BUY divergence on the Rand price of gold.
KR's are trading at a premium to the Rand price of gold.
The JSE Gold Index broke above its major resistance level and is merely pulling back to test this support.
The JSE Gold Index in dollars has not yet broken above its main down trend. But when it does it will signal a major new bull market for gold shares in dollar terms.
There are absolutely no signs of any reversal of eh major uptrend into a bear market.
All the indexes are indicating that the current weakness, dramatic though it may be is nothing more than a retest of major support levels.