The first true correction of this gold bull market took the price of gold down 26%, silver down 52%, and the VanEck Gold Miners ETF (GDX) down 39% from late January to the beginning of this month. But now they’re off to the races once again. This rebound fits in perfectly with our predictions, writes Brien Lundin, executive editor of Gold Newsletter.
The pullback was painful. But I have to tell you that all of the experienced metals and mining investors I corresponded with or talked to over that period weren’t overly concerned. They — like you, if you’re reading this — were confident in the powerful drivers behind this bull market...the absolute, mathematical necessity of accelerated currency debasement in the months and years ahead.
So, they knew that this correction couldn’t derail the long-term uptrend. Moreover, while that torrid run to over $5,400 in January (and the attempted recovery in February) would have burned itself out at some point, the long correction was sparked by the anointment of Kevin Warsh as the new Federal Reserve chairman and the outbreak of war between the US and Iran.
Both of those factors are temporary and will end in the not-too-distant future — the former as the market realizes that the Fed will not and cannot embark on an aggressive rate-hike campaign, and the latter as US midterm elections approach.
Gold gained nearly $300 last week, or about 7.2%. This rebound fits in perfectly with our predictions, based largely on seasonality effects, of a bottom sometime between mid-July and mid-August. As you know, I’ve preached that those taking advantage of this buying opportunity could get as much as a 20%-30% jump on those investors who wait until September to get back into the game.
Well, about 15% of those gains have already been realized. But it’s not too late to get on board. These early gains have taken some of the risk off the table, confirming the new rally, and will pale in comparison to the tremendous moves ahead.
