Do price corrections in bullion present an opportunity as it relates to projected prices?
''Gold's Next Leg Up is $1,350 an Ounce
GOLD CRESTED ATOP $,1227 per ounce last week before falling back hard. Suddenly, momentum lovers got a taste of market reality.
What goes up on momentum can comes down just as hard.
To be sure, the long-term bull market in gold is still very much intact and my next major upside target is $1, 350 an once - revised from the $1,300 as offered in this column two months ago.
But in the short-term, the gold trade was very crowded and its pace was on an ever accelerating slope. Its look becomes similar to one side of a parabola, a shape perplexing geometry students everywhere.
Such parabolic moves up are often followed by a similar parabolic move back down and we only have to look at the March-May 2006 run-up in the yellow metal for precedent here. Gold ran from roughly 560 to 730 in nine weeks before coming all the way back down in only five weeks.
A similar retracement now would bring the yellow metal down to $1,000 an ounce where very strong support lies. Personally, I don't think it will get that low as many a gold bug will be drooling over the second chance to buy into this long-term bull.
Impatient investors will likely hop back into this market well above chart support, thinking that it will shoot higher without them if they don't.''