Sunshine Profits

Gold seems mercurial lately sliding up and down causing some gold investors to grey prematurely.

This Wednesday Goldman Sachs reiterated its position that investors should buy gold.

Last week, we devoted the beginning of our essay on the possible move up in gold to reassure our bullish outlook on precious metals despite the fact that prices were falling then.

It’s tough being a lone voice saying that gold prices will go up when they have tumbled and the financial press is writing obituaries for the gold bull market

According to a Bloomberg survey at a precious metals conference this week, gold is poised for a 21 percent gain in 2012, extending its bull market to 12 consecutive years. Bullion may rise to $1,897 an ounce in New York by Dec. 31 from $1,566.80 at the end of 2011.

The roller coaster metaphor we used two weeks ago after the $90 flash crash in the price of gold seems appropriate this week as well. It must be tough out there for precious metals investors. Wednesday gold futures tumbled again.

The recent precipitous plunge in precious metals was one of the biggest sell-offs in recent memory. The gold “Flash Crash” even prompted a serious newspaper such as the Financial Times to run a headline stating “Flash Crash Rouses Suspicions of Witchcraft.”

On Tuesday gold prices continued to break down, falling for a fifth consecutive day breaking below the 200-day moving average.

Based on the March 2nd, 2012 Premium Update. Visit our archives for more gold & silver analysis.

When a roller coaster plunges it’s gut-churning, heart-racing, blood curdling, in a word–petrifying. That’s how precious metals investors must have felt Wednesday when gold plunged more than 5 per cent to hit a low of $1,688.44 ounce, after earlier trading as high a $1,791.49 an ounce.