Normal Gold Correction, Or Manipulation? - Investing In Gold

Let?s face it, gold fell this week because a larger amount of participants in the market were disappointed with gold?s inability to break through the $1,800 level. The question arises, is this a normal correction or manipulation? Only time will answer that question completely, but I would venture to say that it is a combination of both.

Round numbers attract attention and when expectations are high and there is no follow through, short term investors tend to bail out. There are many factors at play here and I am sure that a lot of gold investors expected that the QE-3 announcement by the FED would send the gold price off to the races.? In fact, it is simply too soon to tell exactly how much the Fed is doing and whether or not they are keeping to the amounts that they stated when they announced QE-3.? Throw in seventeen days before the election, while adding the ?improved U.S. economic data? (if you believe the numbers that are coming from this administration) and gold is primed for manipulation at this point.

Let?s look At The Charts

The U.S. Dollar

As is usually the case when gold is forced down, the dollar makes an attempt to hold its head up and look presentable. With $1.3 trillion deficits stretching out for at least the next four years of a continued Obama presidency, there is simply no reason why the dollar should be gaining any ground. If you take the optimistic view and you factor in a Romney/Ryan win, the deficits won?t disappear, but rather they may slow going forward. In either scenario, the dollar should be making a be-line for .72, taking a short breather there before hitting .68. No matter how you look at it, the dollar is one sick puppy that no one is really paying attention to at the moment. At best when you look at the western currencies, it is the strongest ?sick dog? in the pack!

24 Hour Gold

Gold had moved up $200 since the move started in August, so it is only normal that investors would want to pull some profit off the table.? The Euro?s struggles have help the dollar firm because everyone runs to the U.S, dollar when other currencies are falling. This adds pressure on gold as you can see by the chart on your left. This game can be played for a while longer, but soon the dollar is going to get hit when the U.S. gets another downgrade due to the Congress? and the President?s financial ineptitude.

Does the phrase ?fiddling while Rome burns? come to mind? It should, because unless these idiots get their act together, the entire house of cards is going to come down around us all. Unfortunately, that is exactly what I think ?The Community Organizer In Chief? wants. If he gets it in his second term, the republic will never recover. If it occurs in the Romney term, the ?organizer? will be ready to foment revolution. In either case we are not looking at life as we knew it for a long, long time.

This past Friday?s close under $1,729 opens the door for a test of support at the 50 day moving average near $1,720. If that fails to hold, that round number $1,700 will come into play. My best guess is that $1,700 will hold as buying comes in, but with the election so near, it?s anyone?s guess what will happen. If $1,700 fails, then we could quickly run down to the 200 day average at $1,668, but I don?t see that happen, at least not right now. I hate to hedge my bets like this, but we live in very uncertain times and things can change with the next headline.

24 Hour Silver

Silver walks in gold?s shadow, so it is no surprise that silver has fallen after nearing $35 per ounce to $32.07.? With all of the factors that are involved with this correction, silver?s slide should be taken as an opportunity to add to you holdings of physical silver. There is just no other way to look at it. Silver should be priced way higher than this and it will be as things play out in the market place. When investors are fearful and selling, you should step in and take advantage of the dips in the price of silver. Once gold breaks through $2,000 per ounce, you will look back on these days and beat yourself up if you failed to take advantage of the bargain prices that we are experiencing right now.? Sell on vertical moves up and buy the big dips.

Fear And Greed Control The Markets

Until the election is settled, the precious metals markets will be treading water with a bias to the downside. Gold has to be kept down so that the dollar looks viable, if Obama is to have any chance of a repeat of his 2008 deception. The odds are not looking so good for a socialist victory, but the numbers are close enough for voter fraud to tip the scales, if you believe the polls that the various mainstream media outlets are peddling. I personally feel that the American people are way smarter than the politicians think and they will do the right thing and correct the mistake that they made in 2008.? Either way, we are going to see some violent action in the markets in the months to come. Gold and silver will reflect that change, no matter which direction it takes.

Greed will get the trader in the end, in just the same way as manipulation causes a false top or bottom in a trade that causes it to spring higher, or lower, once it has run its course.? Both of these are in play now and will continue to be in play until there is a dramatic change in direction of the Republic. Until that change comes and after we absorb it, we need to be responsible for our own futures by choosing the investments that will help us to prosper and live free.

Till next time, good luck and good trading!

More Gold Market Analysis:

Source: http://www.buygoldco.com/normal-gold-correction/

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