Wednesday, December 9, 2009
Gold Correction - Are We There Yet?
It wouldn't surprise me if today's intraday low for spot Gold at $1116.80 ended up being the low for the Gold price correction. We hit my 9% target in price for this correction. We could go a little lower and dip below $1100, but no one knows for sure.
The price issue is probably resolved or almost resolved. The issue now is that of time. Will we hit a low, pivot, and march higher right away or will we do an A-B-C type correction over a month or so? Here's a 6 month chart of the Gold price ($GOLD) on a daily candlestick plot with my thoughts:
I bought some July expiration calls on Goldcorp (ticker: GG) near the lows today as my first major Gold stock purchase for this correction. I decided to go back to an old blue chip friend with a little leverage. I am going to wait a little longer to put the rest of my speculative funds to work.
I am thinking I may go into GDXJ ETF calls with the rest of my available gambling money. Since the latest available expiration date is May on GDXJ options, I am not in a hurry to buy these here but waiting patiently to see what happens next. I still hold a basket of individual junior miners and my Royal Gold (ticker: RGLD) Jan 2011 LEAPS.
Now is not a time for fear if you are a Gold bull, but a time for [some] greed. The time to be scared was when we popped above $1200 without a decent pause. The pause is here. The trend is your friend and the trend is up, up and away. Gold and Gold stocks can go lower from here. I think the downside is now relatively limited, however. I am choosing to wait to buy my last chunk of Gold equities for now, but that is only because I am otherwise already fully invested and I won't miss much by being picky here if things move up without me. I don't see making it through December without being fully locked and loaded for what I think will be a spectacular bull move in early 2010.
On an unrelated note, it looks like Greece is the first global market ($ATG) I watch to seriously break down. Here's a 15 month daily candlestick chart with the action thru today's close: