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« The Team In Travel Mode | Main | US Dollar: Bear Rally Due? »

Gold Approaching All Time High, This is Nothing!

Its been a great week for gold so far, with the yellow metal breaking through $800 on Friday and this week we have seen gold prices shoot up to near their all time high, climbing as high as $845.

Gold Approaching All Time High

We are briefly going to look at the short term and the long term prospects for gold, which are quite different in our opinion.

Firstly, short term we see a correction coming in gold prices. After such a great run up gold needs to correct, consolidate and generally take a breather from consistently putting an in excellent performance day after day for the last two months. A correction would take gold prices significantly below $800, to $750-$730 area. Similarly, the HUI should reflect gold in this correction and drop to 400 or below. We took some profits earlier on, as we had loaded up rather heavily on gold and silver stocks in the summer, particular in late August when we described the HUI as a “screaming buy”. However the vast majority of our investments are still in the market and benefiting greatly from the recent rally in gold and silver prices. However the stocks were somewhat hesitant today to follow gold to its new high and perhaps this is a sign that gold has gone a tad too far, too fast. In the short term we expect a correction and consolidation that should provide us with another great buying opportunity.

The long term picture for gold is much more positive. Although many are making a big deal out of the fact that gold is making 28 year highs as Dustin Hoffman said in the film Wag The Dog, “This is Nothing”, and it really isn't. Gold is not approaching an all time high at all, it isn't even close. True the number in front of the gold price may be the same as the one in 1980, the number is just a number, we must translate that number into an actual value. In terms of real value, gold is still nearly $2000 away from any “all time high” as inflation adjusted $850 gold is closer to $2500, perhaps more. So we are not even close to the end of this bull market, this is just the beginning, a mere taster of what is to come over the next few years.

This next correction could prove to be another good buying opportunity for gold and gold stocks so stay updated by subscribing to the FREE Gold Prices Newsletter, just click here and enter your email address.

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Reader Comments (3)

You might be right about seeing a correction very soon and add that to the psychological resistance of $850 and that bolsters your stance. Is it worth selling to make a tiny profit and taking the chance of having the gold train pass you by? I would say if it does more.

November 8, 2007 | Unregistered CommenterDan

Have you ever heard that Russian alchemists have found a way to manufacture gold from lead at a cost of 400-600$ an ounce? They have never done it before because the manufacturing cost was too high. However, at today’s gold prices they are making a killing! What do you think?

November 9, 2007 | Unregistered CommenterGold Blogger

First of all I thank you for sending your research on gold and silver. Yes your thought of correction at 850 is right I think why should we wait if we think that correction is due We should book more profit here so that we could buy more gold on correction. Also can we short gold stocks to earn double or we should wait for correction to buy more Please guide me I am new in this market.

November 9, 2007 | Unregistered CommenterDALIP PURI

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