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Your Best Shot to Buy Cheap Gold This YearBy Jeff ClarkTuesday, 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
Further Reading:
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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.
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