Your Best Shot to Buy Cheap Gold This Year

Your Best Shot to Buy Cheap Gold This Year
By Jeff Clark
July 07, 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.

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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

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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.
•	Earnings today... International Speedway, Ruby Tuesday.

	Last	Change	52-Wk
S&P 500	898.72	+0.26%	-28.84%
Oil (USO)	34.71	-3.72%	-70.29%
Gold (GLD)	90.76	-0.54%	-1.41%
Silver (SLV)	13.10	-0.46%	-27.23%
U.S. Dollar	80.08	-0.37%	+10.18%
Euro	1.40	+0.29%	-10.83%
VIX	29.00	+3.76%	+17.03%
HUI	329.07	-3.98%	-24.52%
10-Year Yield	3.51%	0.02	-0.41

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Company	Sym	Industry
Labopharm	DDSS	pharma
Ardea Biosciences	RDEA	biotech
Sciclone Pharma	SCLN	pharma
Merge Healthcare	MRGE	health care IT
Books-A-Million	BAMM	book stores
ATS Medical	ATSI	medical devices
Spectrum Control	SPEC	electronic controls
Invesco Mortgage	IVR	virtual bank
Trian Acquisition	TUX	acquisitions
Arcadia Resources	KAD	home health care
Lithia Motors	LAD	auto dealers
Aixtron	AIXG	machinery
Dynamics Research	DRCO	software
Air Transport Svcs	ATSG	air freight
Protalix	PLX	biotech
OMNOVA Solutions	OMN	chemicals
Capitol Acquisition	CLA	acquisitions

Company	Sym	Industry
Green Bankshares	GRNB	bank
GTX	GTXI	biotech
Pinnacle Financial	PNFP	bank
Myriad Genetics	MYGN	diagnostics
Clayton Williams	CWEI	drilling
Genomic Health	GHDX	research
Pacific Capital	PCBC	bank
Medidata Solutions	MDSO	software
Central Pacific	CPF	bank
Susquehanna	SUSQ	bank
Citizens Republic	CRBC	bank
S&T Bancorp	STBA	bank
Standard Register	SR	office supplies
Callaway Golf	ELY	golf equipment

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