A 10% Correction in Gold Is a Good Thing

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In a bull market, violent corrections on the downside are normal and expected, they are designed to scare out speculators and leave behind only the long term investors. If the new bottom is higher than the last bottom, itís an indication the base of long positions has increased and the rally should continue.

Everybody knows a parabolic rise leads to a parabolic decline. The occasional correction is welcome because it helps prevent unreasonable growth and often presents a valuable buying opportunity...

In a bull market, violent corrections on the downside are normal and expected, they are designed to scare out speculators and leave behind only the long term investors. If the new bottom is higher than the last bottom, itís an indication the base of long positions has increased and the rally should continue.

Predicting when corrections will take place is not a simple task, I certainly wonít profess to any notable short term trading skills, which is why maintaining reasonable expectations and focusing on the long term picture is much less stressful and often much more profitable.

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