Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver Correction Has Begun

Commodities / Gold & Silver Oct 23, 2007 - 02:13 PM GMT

By: Bob_Kirtley

Commodities Sam Kirtley writes: Gold and gold stocks have been doing incredibly well over the last couple of months, but nothing goes up in a straight line, and we believe that a correction in gold and gold stocks is imminent, and yesterdays trading could have signalled the beginning of the pullback


Readers of The Gold Prices Newsletter will know that on August 16th we wrote in an article entitled “ Buying Opportunity in Gold Stocks ” that “A great buying opportunity in gold stocks is rapidly approaching, if it is not already here.” That was the day that most gold stocks hit a bottom, and from there many gold stocks have risen 40% or mor e.

Then on the 22nd of August , we told our readers that gold stocks were very oversold , as the HUI/Gold ratio was at one of its lowest points in two years, and therefore it was a great buying opportunity.

Those who followed what we were saying are now sitting on some very substantial returns, in a relatively short space of time. However we told our subscribers that gold and gold stocks were preparing to correct roughly a week ago. We changed all of our stocks in our free gold and silver portfolio' s from BUY to HOLD in anticipation of this coming correction.

From the HUI chart above we can see that the correction has begun, and the index has fallen below 400. We feel that the HUI and gold stocks have more to fall, and we could see the HUI going to 360 or lower before the correction finds a bottom and we can continue with the gold bull that we believe is taking gold prices to $1000 and eventually we see no reason why gold prices could not go to $3000/ounce. However for the moment we have locked in some profits and sold some of our gold stocks, whilst maintaining a strong core position that will remain in place throughout the ups and downs of the precious metals bull market.

The chart above clearly shows gold precariously high above its moving averages, and so a correction to at least the 50dma is to be expected. In our opinion one of the most important technical indications at the moment for gold is the RSI (Relative Strength Index). In our opinion this is too high and looking back through the charts of gold in the past, usually when the RSI is this high, gold corrects.

Therefore we are waiting for this correction to play out, which has already begun, and will resume buying gold stocks when they have corrected to a more reasonable price.

Silver prices appear to have found resistance at the $14.00 level and one could argue that the silver chart below shows a double top formation in silver prices.

A double top formation means that a correction is due, and could signify that this coming correction in silver prices could be perhaps more severe than previously thought .

We think that a $1.00 drop in silver prices should be expected, which on the chart above would take silver down to $12.50. If one takes a look back at the trading patterns of silver, one notices that when silver corrects, it corrects hard and fast, usually within a few trading sessions. We could see silver correct very quickly in trading this week, do not rule anything out. The correction could be over in just one day, so if you intend to trade this market, make sure you closely monitor what's going on in silver each day. In august, silver prices dropped over $1.00 in just one day and it was shortly after this that we signalled a short term BUY on silver for a upwards move of $1.00. Details of the trade can be found on a website www.silver-prices.net but we traded silver via spread betting on the futures price and made 100% profit in 30 days . We intend to perform a similar trade after this coming drop, buying silver for another move up.

However the question we have at the moment is whether or not we short silver at this point. We are in no doubt that silver will correct very soon and so it looks ripe for a short. Silver could fall below $13.00 in the next week or so, therefore on the safe side we could short silver with a stop at $14.25 and a limit at $13.00, which would return roughly 60% in profits if successful. There is only one thing stopping us.

Precious metals can soar upwards sharply without warning. A significant geopolitical event could send silver and gold up sharply in a matter of minutes, which would not allow us enough time to close our trade. For example, Turkey has now massed over 100,000 troops on the border on Iraq , ready for military intervention in the Kurdish rebel strongholds. Although that area does not posses a great deal of oil, significant oil pipelines run through Turkey and if these are disrupted, gold and silver would spike up very quickly, wiping out our short position.

Therefore we are going to watch silver drop, and purchase more silver stocks and perhaps a futures position when we feel the correction is over, in order to profit from the next leg up. In the meantime we have maintained a core position in gold and silver stocks with some cash on the sidelines to add to our positions after the correction.

Keep updated on the silver market and silver stocks , what we are buying and when we buy it by subscribing to The Silver Prices Newsletter at www.silver-prices.biz completely free of charge.

Stay informed about gold stocks and the gold market by going to www.gold-prices.biz and subscribing to the FREE Gold Prices Newsletter

By Sam Kirtley

For ideas on which gold stocks to invest in, subscribe to the Gold Prices newsletter at Gold-Prices.biz completely free of charge.

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in