By Sean Kelly
“If only I had bought gold below $2,000!”
That’s a line we’ve heard a lot since gold broke above $2,000 just days ago.
Today (Tuesday, 8/11) that opportunity knocked.
After moving up almost every day for about three weeks from $1,800, last week the price of gold appeared headed to $2,100.
Today we got a break in the price. At the market’s close, gold on the COMEX was at $1926.70, a drop of $113. Silver experienced a correction as well, closing at $25.05, down almost $4.22.
Although it sounds dramatic, it really only gives up the gains of August, returning gold and silver back to their price levels of late July.
The moves were accompanied by a drop in stocks. The Dow Industrials traded up about 300 points for much of the day, an optimistic reaction to an announcement that Russia has given regulatory approval to a Covid-19 vaccine. Much more awaits being learned about that development, and by the end of the session the Dow was off more than 100 points.
We think Wall Street profit-taking explains the break in metals prices. After a 34 percent gain in the gold price this year, no one should be surprised to see profit taking. The only way traders and speculators, leveraged hedge funds, and commodity traders realize their gains is by selling. Generally, they are willing to let their gains continue growing during a sustained run, and then realize profits at the first sign of a correction.
For those of us seeking to protect our wealth and retirement, those of us keeping an eye on compounding US debt, those who are watching the Fed’s magical money-making machine crank out trillions of unbacked digital dollars, this price action opens a window of opportunity. We remember the words of the famous fund manager who said last year that if you knew what was coming, you would buy gold at any price.
Long experience tells us that while the powerful gold and silver bull market fundamentals remain in place, we should take every break in prices as a chance to add to our portfolios at “sale prices.”
We don’t know how long this break will last, but having seen this kind of action before, we suspect it could be brief. The last time we had a buying opportunity break in prices was in March as the Covid-19 lockdown got underway.
That one lasted only two weeks.
We recommend using any breaks in the gold and silver prices as a chance to add to your holdings.
In fact, we may even want to thank speculators on Wall Street for giving the market a chance to catch its breath, and for giving us a change to buy at lower prices.