The Really Useful Gold Thread

from Richard Russell today:

"Gold isn't very overbought in the context of a major bull market and a long-term perspective. That's what people forget. It's overbought on the dailies, but as you always remind us, the dailies don't mean much. And most people's experience with gold has been post-1980, which is to say outside of a major bull market in the metal. Remember those long term charts I made up a couple of years ago, back to 1970 on gold and the mining shares? Well I was going over them, and here's what overbought is:

Spring of 1974. Gold hits 180 and is 24% above its 34 week moving average (in a bull market).
Winter of 1979. Gold is over 500 and 35% above its 34 week MA (in a bull market)
Early 1980. Gold hits $850 and is 53% above its 34 week MA (in a bull market)
Early 1983. Gold is $509 and 17% above its 34 week MA (in a bear market)
Autumn of 1986. Gold hits $480 and is 25% above its 34 week MA (in a bear market).

Today. Gold is at $520 and 14% above its 34 week MA (in a bull market)

As you know, the distance above/below the 34 week MA is as good a long-term overbought/oversold indicator as any for gold. History shows that gold has been substantially more overbought than today, even when it was in a bear market. Today's price, relative to its 34-week MA, is only very modestly overbought for a bull market, especially considering the fundamental potential of this market. The ease with which gold sliced through and remains above $500 is testimony to its strength and a reminder that we are in the middle of the strongest time of year for gold, given its historical seasonal tendency to rise during the fall and winter months.