Gold is down nearly $31 per ounce this morning and silver is down around $.91 as I am writing this. This correction in gold came right after Germany said they would no longer tolerate naked short selling in Euro denominated assets like bonds and bank shares. This proclamation from Germany has set stocks and commodities in a sell-off. Gold initially rallied after the news but so many investors had to cover trading losses and margin calls that gold bullion soon succumbed to selling pressure.
This is a healthy trend in the market. Those of us that are invested in the gold market want to see gold prices rise and fall. If gold prices shoot up dramatically they will fall dramatically as there would be no support underneath the price action. We want to see healthy support and resistance levels being built as the upward trend continues. The nine year trend is up and we are in uncharted waters in terms of price action above $1,240 an ounce. So look for the price to be somewhat volatile. Support is probably somewhere between $1,180 and $1,200, and resistance is probably somewhere between $1,230 and $1,240.
Eric King of King World News had it right when he said this on his site on Monday, “Stop looking at the daily fluctuations in the price of gold; they are completely meaningless. Keep your eye on the big picture, and that is the secular structure of this bull market in gold. Do not give up your core position in gold. Learn to look at significant corrections in the gold market as opportunities to accumulate.”
Simply put, gold is up 9 years in a row; therefore look for corrections as opportunities to accumulate more gold and silver. The great thing about numismatic/rare gold coins is they tend to lag behind bullion in terms of price action. Gold is down $31 per ounce but numismatic gold has not moved even $1. If the downward trend continues there will ultimately be a correction in numismatics as well, but the rarer the issue the less likely short-term corrections in gold prices will affect them. Rare gold coins do not fluctuate nearly as often as gold bullion, therefore they tend to be somewhat more stable.
When looking for opportunities look at the fact that bullion is at an all-time high, but rare gold coins have not even come close to the levels they experienced in 1989 (their last major bull market).