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« Yamana Gold Incorporated: Stock Price Clobbered | Main | Gold to hit $1,350 - $1,400 by late Spring - John Embry »

Buy This Dip

Gold Chart 05 Feb 2010.JPG

We have warned in past that there would be days like this when gold gets hit for $50.00 and silver also suffers a similar fate. This is a dip and in our opinion it should be bought, we will look to add to our positions either tomorrow or early next week when the dust has settled.

Go gently with acquisitions, the adoption of a layered strategy could be very useful at this time, for example buy a few now and if it drops a little more then acquire a few more, just a suggestion. If gold continues to drop we should see support come in at $1050 and strong support at $1033, again just our view.

Gold is still a dollar play and the dollar is viewed, at the moment, as being the best of a bad bunch of currencies. The Euro is having a hard time hence the improvement in the dollar. The Euro is haunted by Greece as the Greeks are in a real financial mess, will the EU bail them out or not is the question. To alleviate the situation Greece could sell its reserves of gold which we understand is about 112 tonnes and that possibility could be casting a shadow over gold. But remember that India bought 200 tonnes in one hit so this transaction, if it happens, may just turn into a positive effect for gold.

If the EU does bail out Greece then Spain, Portugal, et al, will line up for a handout, how many Euros will have to be electronically created we wonder.

As the chart shows gold took a hit today as this correction continues and the technical indicators are almost on the floor suggesting that gold is in the oversold zone.

Hold tight and add to your core positions if you can, things will improve even though it looks bleak at the moment.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

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