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Sometimes
it can be particularly useful to look at gold's chart pattern in terms of the
weakest national currency. The reason is that gold is clearly identifying the
major trend when viewed against the weakest currency, providing a message for
what is to come for gold in terms of other currencies. It can be a useful
forecast.
To
explain this point, gold either climbs or falls against all the world's
currencies, but it does so at different rates. See for example, the table
presenting gold's rate of appreciation this decade against nine of the
world's major currencies in the alert dated January 2, 2009. Gold is rising against
all of these currencies, but doing so at different rates. Gold is rising at
the fastest rate against the weakest currency, and is achieving the slowest
rate of appreciation against the strongest currency.
For
some time the weakest currency has been the British pound. For the eight
years ending December 31, 2008, gold has risen at an average annual rate of
17.1%. This trend has continued in 2009, as gold is up 6.8% against the
British pound so far this year.
Right
now I think gold's chart in terms of pounds is telling us a lot about the
future direction of the gold price for all the major currencies. Compare the
following three charts carefully, which are presented below from the weakest
currency to the strongest.
 
These
charts show that gold is strongest in terms of the British pound. Gold is
only 8.0% below its recent high in British pounds, but 10.3% and 11.8% below
its recent high in terms of the Swiss franc and euro respectively. Gold is in
an uptrend against all of these currencies, but is leading - appreciating at
the fastest rate - against the British pound.
Nothing
in these charts suggests that gold's uptrend has ended. So continue to expect
new highs for gold, probably to be achieved first against the pound, followed
soon thereafter by the Swiss franc and euro. I continue to expect a new
record high for gold in terms of the US dollar too.
The
first quarter has ended, and gold did not exceed or even reach US$1,003 as I
had forecast. Nevertheless, its trend remains up, as is clear from the
following chart. Note gold's "V" bottom on this chart that was
discussed in the last alert, which is a very
powerful and bullish chart pattern.
The
bullish fundamental reasons driving gold higher remain in place. So continue
to expect higher prices, and that US$1,000 will eventually be exceeded.
James Turk
Goldmoney.com
James
Turk is the founder of GoldMoney
(www.goldmoney.com) and the co-author of The Coming Collapse of the Dollar (www.dollarcollapse.com).
Copyright © 2007 by James
Turk. All rights reserved.
Published by
GoldMoney
Copyright © 2008. All rights reserved.
Edited by James Turk, alert@goldmoney.com
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