Do price corrections in bullion present an opportunity as it relates to projected prices?
*Barron's, by Michael Kahn, December 7, 2009
”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.”
*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.