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Whiplash And Recovery
PLUS: The best gold stock you can buy right now.
 To say we live in a fast-paced world these days would be quite an understatement.
Consider what has happened to the gold price over the last month and a half and it's little wonder that some investors are in a state of shock from one of the most vicious price corrections ever seen in the gold market. Yet the price is still higher than it was two months ago, when we were riding a wave of euphoria over gold's ascent.
Crazy days, for sure. For those who were brilliant enough to spend time on a deserted island somewhere, completely out of touch with the markets, let's recap what's happened.
Beginning from a low of $1,483 on July 1, gold had soared to around $1,610 by the beginning of August. From there gold rocketed to over $1,900 on Aug. 22. But in the next two days it peeled off more than $160, only to spike back up to around $1,900 again in the first week of September. From there it was a bumpy ride back down to $1,600 before starting back up.
The triggering events of all this volatility were the escalation of the European debt crisis and a sharp refocusing on the U.S. debt disaster-in-waiting—thanks to Standard & Poor's controversial downgrade of U.S. sovereign debt—and reaction to the Federal Reserve's "Operation Twist." |
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During the ascent to $1,900, some long-time gold bugs began saying the price had gone parabolic and an end to the bull market was at hand.
At the time in our Gold Newsletter Alert Service, I noted that the price hadn't yet gone parabolic, but it was extremely overheated and a correction was imminent.
But the correction that began on Aug. 23 surprised me in its severity. Gold bulls were devastated, and the financial media was full of calls for hundreds of dollars in new losses, and the end of the decade-long bull run.
I disagreed. In one recent Alert I noted the following:
"I don't think this is the end of anything but the short-term spike of recent days... At the first sign that downside momentum has slowed, bargain-hunting buyers will come into the market in force. |
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"Also consider that on a decline of this size, we're seeing more than simple long liquidation—a goodly number of shorts have been added during this melee. With gold entering its seasonal high point for physical demand, with the debt crises in the U.S. and Europe headed back for the front pages at some point, we are likely to see a new rally that will force these new shorts to cover."
In other words, we're seeing tremendous volatility, and we'll need to get used to it. Like a test dummy viewed in slow motion during a crash, the gold price is now simply bouncing back and forth after the sharp impact of the original correction.
It may seem as if we're recovering from whiplash for awhile, but it appears as if gold is now oscillating to and fro around its original trendline, and will ultimately calm down to resume a more-orderly ascent. So now is the time to take advantage of some bargains.
Kaminak Gold (KAM.V; KMKGF.PK; C$3.25) looks very attractively priced right now, as a wholesale movement out of the junior mining sector during gold's recent correction was completely indiscriminate, taking down strong and weak stocks alike.
Kaminak has had the bad fortune recently of releasing strong results from its Coffee project in the Yukon into indifferent or falling markets. The latest example of this trend was the release of assays for 44 holes drilled on Coffee's Latte Zone, which now stands at 600 meters by 1,350 meters at surface and 275 meters in depth.
The assays are part of a 40,000-meter, $15 million drilling program at Coffee in 2011. This is, without question, one of the most ambitious, aggressive and successful programs anywhere in the junior mining space. The company currently has three diamond drills and an RC drill churning out assays on the property.
Simply put: Coffee has the potential to turn into another multi-million-ounce gold deposit, one that could match or even surpass the size of Underworld Resources' White Gold discovery.
This potential of this project, combined with the current volatility in gold prices, has opened up a buying window on Kaminak that's not to be missed. It's another strong buy at current levels.
—Brien Lundin |
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 The Road To Peace And Prosperity »
Texas Congressman and 2012 GOP Presidential candidate Ron Paul explains the route to peace and prosperity. That road, he says, is paved with individual liberty and sound money. With individual liberty, the individual, rather than the state, is sovereign. This keeps the state in check. With sound money, the government is unable to finance its wars, corporatism and welfare without imposing a tax on its people so high it risks rebellion. For a common-sense explanation of the role of government and sound money, watch this speech from Ron Paul at the 2009 New Orleans Investment Conference. More » |
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Brien Lundin is the editor and publisher of Gold Newsletter, a publication that has ranked among the world's leading precious metals and resource stock advisories since 1971. To learn more about Gold Newsletter, visit www.goldnewsletter.com. Mr. Lundin is also the host of the famed New Orleans Investment Conference, the world's oldest and most respected gold investment event. This year's event will feature Glenn Beck, Charles Krauthammer, Marc Faber, Peter Schiff, Stephen Leeb, Dennis Gartman, Stephen Hayes, Stephen Moore and dozens of other top experts... plus a scintillating debate pitting Charles Krauthammer against James Carville and P.J. O'Rourke. To learn more, visit www.neworleansconference.com. |
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