Quietly yesterday, while most of the market was concerned with the Canadian government changing the taxation rules on income trusts, gold bullion rose $12.50 to a new recent high of $619.30 U.S. per ounce. After following and studying the price action of gold bullion closely this year, I believe gold bullion has hit a price bottom and is now moving higher. In my opinion, the correction that has been taking place in the gold market since June of this year is over.
As a refresher: Gold bullion prices hit a new 20-plus year high in May of this year, closing just short of $720 U.S. per ounce. The price action of the yellow metal attracted many speculators (as does every investment when it’s moving up). By June gold bullion was down to $550 U.S. per ounce, squashing the hopes and dreams of quick money speculators.
Since June, gold bullion prices moved back and forth from the $575 to $600 U.S. per ounce level. At that point, I had written gold was forming a base from which to make its next price accent. I also wrote at the time that I didn’t know how long the gold bullion price correction would take.
Right now, and technically speaking, the gold bullion chart looks the best I’ve seen it in months. The metal now trades above its September 2006 high which is bullish. Gold’s 200-day price moving average could also soon be broken with a move on the upside. Price activity of the larger gold bullion producer stocks has also been bullish over the past couple of months.
In short, I saw yesterday’s price action in gold bullion very bullish. I’m calling the bottom and the price correction for gold as being over. There are a variety of large gold producers trading on the stock market at what I believe are reasonable prices If you don’t have any exposure to gold in your portfolio, this may be an excellent time to consider such a move.
NEWSFLASH–Abhijit Chakrabortti of JPMorgan New York said yesterday he expects the slowdown in corporate earnings to start hitting the stock market. The global equity strategist said he expects the S&P 500 will drop about 7% in the months ahead.