-- Posted Thursday, 4 June 2009 | | Source: GoldSeek.com
I’ve been asked today several times whether gold is now breaking down and heading for a correction. The simple answer is no. The long answer is maybe.
Gold touched the long time resistance line at $990 early this week and has since fallen back. I talk about the very strong fundamental reasons every weekend for the precious metals in my free letter so I won’t go into that right now. Basically gold should be much higher based on fundamentals and should continue to move higher right now according to those same fundamentals. But technically it looks like we need to blow off a little steam before resuming a rolling boil again.
The test of the $990 was very significant. It will be beaten but maybe not quite yet. All the indicators are showing quite overbought readings and while they can stay that way for long periods it makes me far less nervous when they are not as elevated as the presently are.
The RSI has turned lower but has not broken down yet below the recent support line. The moving averages look great and the 20 day corresponds with the up-trend line making me think we may even fall to that level, now at $940. That would be a gift.
I drew in some support lines I see on this chart. $960, then $950 and $930. I don’t expect a move down to $930 but it could happen.
MACD is still bullish and actually not that overbought at the moment. Slow STO has been overbought coming up to a month now and can stay there for another month as far as I’m concerned.
The premise of this missive is that last week many investors were showing much interest in, just now, buying physical metals. I said then to them personally, perhaps they should wait for a correction even if it means paying a higher price.
Now this week I am getting questions from people nervous and certainly not ready to buy. It comes down to doing the opposite of what you think you should do for most investors. Anytime an asset you want, and believe is in a bull market declines, you should be happy and buy. Don’t worry just do it.
One strategy the great James Turk has pounded the table over the years is to buy a certain amount every month regardless of price. While I can’t disagree I can argue that when the asset in question is in an obvious strong move higher as in gold over $1,000 and moving up. Perhaps you should bank a month or two’s worth of investing cash and wait for the inevitable correction.
So far this week there have been a plethora of important stories that I’ll bring your way on the weekend in this weeks free letter so if you’re not signed up yet be sure to either add your email in the left margin at http://www.preciousmetalstockreview.com/, or send an email to warren@preciousmetalstockreview.com with “subscribe” in the subject field. And if you’d like to see which stocks I think will do the best in the years to come please see here http://www.preciousmetalstockreview.com/s_15.asp for more information.
Until then, take care and enjoy the sunshine.
Warren Bevan
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-- Posted Thursday, 4 June 2009 | Digg This Article
| Source: GoldSeek.com
