Lower Bullion Prices Worth Your Patience


". . .wait for lower prices before doing any serious accumulating."

Last week, we said to wait for better prices if you're planning on buying gold bullion. That is still the case, although it looks like it may not be long before the promised bargains arrive. A week ago, with Comex August Gold trading for around $924, we projected a minimum downside target of $899. Yesterday, the futures settled at $924.60 after making a two-week low at 920.30. Lest you get the impression that gold sat still in the interim, we should mention that buyers goosed it as high as $947 last Wednesday. The rally looked like a fake, though, and we warned subscribers not to chase it. But the current bout of selling looks more convincing, which you should wait for lower prices before doing any serious accumulating.

How far might gold conceivably fall over the next few weeks? As far as boredom dares to push it, we'd guess. However, we see no real urgency in the selling right now, only a tendency by some investors to lighten up out of impatience. Nor is it gold's recalcitrance that has tested investors' patience; rather, many have grown bored with the bear rally in stocks that has temporarily sucked the life from the precious metals sector. For, as long as stocks remain buoyant, it will tend to distract investors from the gathering financial storm that seems destined to push precious-metal quotes to new all-time highs. For your information, and no matter how bored investors become, we doubt that August gold could go much lower than $882 over the near term. And even if it did, the long-term charts would remain a picture of health all the way down to $810.

Silver looks somewhat more vulnerable, at least in percentage terms. The September contract settled yesterday at $13.275, but a test of early Spring's lows near $12 appears all but inevitable over the near term. If this is correct, the retracement from these levels would amount to a tad less than 10%. Because we never like to chisel these forecasts in stone, here are bullish trigger numbers, first for September Silver: $14.425; and then for August Gold: $966.80.

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