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Your Best Shot to Buy Cheap Gold This Year

By Jeff Clark
Tuesday, July 7, 2009

Gold stocks have been taking it on the chin lately. And that's bad news for anyone who owns gold.
 
Gold stocks often move ahead of the metal. A rally in the stocks usually leads to a rally in gold, and a decline in gold stocks often foretells of weakness in gold. So the 20% drop in the Gold Bugs Index (^HUI on Yahoo Finance) over the past five weeks is a bad omen for the shiny yellow metal.
 
But a little pain now could lead to the best shot we'll get to buy cheap gold this year. As I've mentioned several times before, gold is a good buy anytime it drops below $900. And by the look of the following chart, it'll likely get there within the next week or two...
 
 
Gold is on the verge of breaking to the downside of a consolidating-triangle pattern. A move below $920 per ounce will likely set off a short-term correction down to support around $870.
 
That's a good spot at which to add a little more gold to your holdings. But pay attention to the action in the gold stocks. If they're still weak by the time the metal hits $870, then support is probably not going to hold, and we may get a move all the way down to the February lows around $810.
 
That'll be the time to take a major gold position.
 
You see, we know gold is in a bull market because the metal is trading above its 40-month exponential moving average (EMA), which defines a bull market for gold...
 
 
A move down to support at $810 puts gold just above its 40-month EMA. It keeps the bull market intact, and it creates a wonderful risk/reward setup for buying the metal.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux Recent Articles
Market Notes
Metals and mining slammed yesterday... all down 5%-10%.
 
Natural gas ETF strikes new 52-week low.
 
Oil drops 9% in one week.
 
Several regional banks hit new lows... sector down 25% from May peak.
 
Earnings today... International Speedway, Ruby Tuesday.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1223.12 -0.1% +10.6%
Oil 38.22 -0.2% -0.3%
Gold 139.11 +0.8% +22.3%
Silver 29.51 +3.2% +62.6%
US-Dollar 79.17 -1.3% +4.3%
Euro 1.33 -0.8% -10.4%
Volatility 18.02 +0.1% -15.2%
Gold Stocks 590.99 +1.6% +25.5%
10-Year Yield 2.94 -2.7% -15.5%

World ETFs
Symbol Price
Change
52-Wk
USA 122.76 -0.1% +10.6%
Canada 30.56 +0.2% +18.0%
Russia 21.98 +0.2% +17.2%
India 37.92 +0.2% +19.4%
Israel 16.76 +0.4% +10.4%
Japan 10.69 +0.5% +7.0%
Singapore 13.71 -0.2% +18.1%
Taiwan 14.92 +1.0% +20.2%
S. Korea 57.19 -0.2% +21.5%
S. Africa 72.26 +0.5% +29.7%
China 43.84 -1.3% -3.3%
Lat.America 53.21 +0.1% +9.2%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.74 +0.1% +20.2%
Big Pharma 63.99 -0.2% -3.2%
Internet 72.58 +0.7% +25.0%
Semis 16.18 -0.3% +26.4%
Utilities 31.19 -0.3% +1.8%
Defense 18.47 -0.3% +8.9%
Nanotech 10.08 +0.5% +1.3%
Alt. Energy 10.24 +1.6% -2.0%
Water 18.62 +0.7% +13.8%
Insurance 16.08 -0.4% +19.0%
Biotech 20.56 +0.1% +26.6%
Retail 19.59 -0.6% +26.6%
Software 24.65 -0.6% +22.7%
Big Tech 53.85 0.0% +22.1%
Construction 13.20 +0.8% +14.8%
Media 13.73 +0.7% +24.7%
Consumer Svcs 67.38 0.0% +23.4%
Financials 55.01 -0.1% +5.7%
Health Care 63.90 -0.6% +1.2%
Industrials 63.51 -0.1% +19.3%
Basic Mat 74.64 +0.4% +27.8%
Real Estate 55.35 +0.1% +21.8%
Transportation 91.39 -0.4% +23.9%
Telecom 22.65 +0.3% +16.8%