Another Golden Opportunity for Investors…Almost

Being a big believer in the theory that the stock market always gives investors a second chance to get in or out, it looks like that second opportunity is finally starting to develop for gold and gold stock investors.

This morning gold bullion is trading around $920.00 U.S. per ounce, down about $80.00-$90.00 from the metal’s recent record high. Why have gold prices been falling these last two days? Well, there are two answers to this question: What we read in the papers and the true story.

The reporters tell us that gold is down in price because this past Tuesday the Federal Reserve did not reduce interest rates by the full percentage point that analysts and the stock market were expecting. Instead, the Fed lowered rates by “only” three-quarters of one percent and that move sent the U.S. dollar higher and precious metals down.

I’ll tell you what I believe is the true story behind gold’s recent price weakness in two words. Gold prices fell the last two days because finally investors decided to do some “Profit Taking.” Simple as that.

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The price charts tell the truth. The U.S. dollar has been in a decline against other world currencies for years now. Gold bullion prices, on the other hand, have been in a bull market since 2002.

I’ve been telling my loyal readers that gold would give investors a second chance to buy in at some point. I believe that point is here now. All great bull markets have mini-corrections built in them. Similarly, all bear markets experience small rallies on the way down.

Gold is no exception. After making what really visually translates into a straight line up from $800.00 U.S. per ounce to over $1,000 U.S. per ounce, the price correction for gold bullion, I believe, is finally here. Investors should look at this weakness in the gold market as an opportunity to either get in for the first time or to dollar cost average down quality gold producing stock holdings.

From what I interpret of the price charts, gold prices could move to $800.00 U.S. per ounce and still be in a strong bull market. In fact, I wouldn’t be surprised to see gold moving back to the $800.00 level, testing that price, making a base at that level, and then moving higher again. Hence, I see another opportunity in the gold market “almost” there.

Another Golden Opportunity for Investors…Almost — by Michael Lombardi, CFP, MBA

Being a big believer in the theory that the stock market always gives investors a second chance to get in or out, it looks like that second opportunity is finally starting to develop for gold and gold stock investors.

This morning gold bullion is trading around $920.00 U.S. per ounce, down about $80.00-$90.00 from the metal’s recent record high. Why have gold prices been falling these last two days? Well, there are two answers to this question: What we read in the papers and the true story.

The reporters tell us that gold is down in price because this past Tuesday the Federal Reserve did not reduce interest rates by the full percentage point that analysts and the stock market were expecting. Instead, the Fed lowered rates by “only” three-quarters of one percent and that move sent the U.S. dollar higher and precious metals down.

I’ll tell you what I believe is the true story behind gold’s recent price weakness in two words. Gold prices fell the last two days because finally investors decided to do some “Profit Taking.” Simple as that.

The price charts tell the truth. The U.S. dollar has been in a decline against other world currencies for years now. Gold bullion prices, on the other hand, have been in a bull market since 2002.

I’ve been telling my loyal readers that gold would give investors a second chance to buy in at some point. I believe that point is here now. All great bull markets have mini-corrections built in them. Similarly, all bear markets experience small rallies on the way down.

Gold is no exception. After making what really visually translates into a straight line up from $800.00 U.S. per ounce to over $1,000 U.S. per ounce, the price correction for gold bullion, I believe, is finally here. Investors should look at this weakness in the gold market as an opportunity to either get in for the first time or to dollar cost average down quality gold producing stock holdings.

From what I interpret of the price charts, gold prices could move to $800.00 U.S. per ounce and still be in a strong bull market. In fact, I wouldn’t be surprised to see gold moving back to the $800.00 level, testing that price, making a base at that level, and then moving higher again. Hence, I see another opportunity in the gold market “almost” there.