Gold Stocks Could Correct In One Week

By: Bob_Kirtley

We feel that gold and gold stocks are in for a sizeable correction in the next week, possible few weeks. We have seen a massive rally in gold stocks, with the HUI rising over 40% from its August lows.

However to us many gold stocks look overbought and we have sold a proportion of our holdings, although we have maintained a significant core position, in anticipation of a correction across the board in precious metals. After this correction, we intend to buy back the shares we sold at lower prices, enabling us to purchase a larger overall position. For example if we sold 1000 shares at $20 this gives us $20,000. If the shares fall to $15, we reinvest our $20,000 and this now buys us over 1333 shares, so giving an increase of 33% on our original position.

We still are very bullish on gold and silver in the longer term, and we see gold making $1000 and silver reaching $20 perhaps sooner than you think and in a few years, we see no reason why gold could not be at $3000 and silver at $100.

As far as the shorter term is concerned though, we are waiting for a short sharp correction in precious metals and their associated stocks. This correction could happen very quickly in the stocks as in the past we have seen the HUI drop 20-25% in periods as short as one week.

This shows that this correction could indeed be over this time next week, let alone beginning! The correction could be very short lived, but it is needed in order to maintain the technical health of gold and gold stocks.

The same applies to silver and silver stocks as they move usually in unison with gold, but with silver being the more volatile commodity. We are looking to make another trade on silver prices, possible via spread betting again as we did back on August 20th, which resulted in 100% profit in 30 days .

Trading in and out of the market is not for every investor and we always maintain a significant core position in precious metals. One can simply buy and hold in this market and, provided one is invested for the long term, this should prove to be profitable. Trading the ups and downs of a market does however offer significant profits for those who can successfully call the tops and bottoms.

You can keep updated on our actions in gold by subscribing to The Gold Prices Newsletter free of charge and stay informed with what we think of the silver market and silver stocks by subscribing to The Silver Prices Newsletter again totally free of charge.

For ideas on which gold stocks to invest in, subscribe to the Gold Prices newsletter at Gold-Prices.biz completely free of charge.

By Bob Kirtley
www.gold-prices.biz

Bob Kirtley spent many years working on Oil projects including some in Alberta, such as the tar sands installations in Fort McMurray. He lived and worked in many different countries, as that is the nature of the construction business. Planning and cost control are key to a projects success and he tries to apply those disciplines on a daily basis when dealing with investments. His training in such areas as SWOT and Risk analysis can be applied from time to time.  His qualifications include being chartered in the United Kingdom, which is similar to that of a Professional Engineer in Canada, along with a Masters Degree in Project Management from South Bank University, London, England. 

He has been working for a number of years on a full time basis representing a group of investors in England.

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