After the panic of a couple of days ago, gold has recovered nicely. As I was telling you, waterfall moves are the time to buy in a bull market. Spike moves are the time to sell, even in a bull market.
I think the odds favor a correction before $2000-$2100, but this was a nice trade for people with the discipline to buy. It takes discipline to sell when everyone is euphoric and it takes discipline to buy when everyone says the world is ending. The best traders do both consistently.
Gold equities remain extremely cheap and they are screaming buys on corrections. If gold stocks go down 20%, I buy. If they go down another 20%, I celebrate, then buy some more. This debt crisis was a long time in the making and the repercussions will therefore be very serious.
I’m so confident in this trade because I’m not trading against facts, I’m trading against human nature, self-imposed delusion, and government stupidity. Human nature is a constant. Government stupidity cycles, and we are in a clear bull market in government stupidity. These are the kind of trades that don’t come around often.
Even gold bugs are not believers, if this makes sense. These are the type of people that can see gold rise to $1000, but that’s it. Then $1200. Then $1500. Then $1800. At every point they were more bullish than the masses, yet they were dead wrong. They were not bullish enough. They did not grasp the full extent of the debt crisis.
For everyone who truly understands what lies ahead, I’m telling you that without a doubt the best thing that can happen right now is a monster correction. This is something I’m expecting. I expect a period of calm in markets where everyone thinks the worst is behind us. This is when you should be getting aggressive. Like a pendulum, gold will be building energy for the upside on any correction.
Source: Is the Gold Correction Over?