Gold did not have a good week! Indeed, it had a particularly bad secondhalf
week! The pm fi x of January 19 was $1372.00, whereas the fix today
came in at $1343.50 – the low for 2011 to date. On a Friday-to-Friday
basis gold is down $23.50 furthermore, and from year-end 2010 gold is
down $66.75 – or 4.7%.
How bad is this? Not so bad, really! The price chart on this page and the
“technical” chart overleaf show that gold has experienced other setbacks
in this cycle – indeed, setbacks that have been significantly greater than
that which has occurred in 2011 to date. The biggest setback occurred in
2008, of course, when the economic world was falling apart and COMEX
was liquidating. From top to bottom gold declined nearly 30% during that
setback!
The channel in which gold currently finds itself (refer to “technical” chart
overleaf) is defined by the December 2, 2009 peak of $1212.50, and the
February 5, 2010 low of $1058.00. This represents a decline of 12.7%
over a period of roughly two months. Where would gold be if such were to
be duplicated today? Well, from its November 9, 2010 peak of $1421.00
gold would then have to fall by about $181, to something around $1240.
But the “technical” chart is not drawn in log form, meaning the channel
would actually be broken were gold to sink through $1275. Either price,
$1240 or $1275, is significantly below the present price of $1340.
