GOLD TRADING AT $985, CONTINUING CORRECTION

by Joe Battaglia | September 25, 2009

The correction in precious metals continues today in spite of the fact that the dollar is trading at about unchanged and oil is up $.23 to $66.12 a barrel. Dow Jones Wire Service said, "Spot gold is trading lower, testing support at $985 a troy ounce after the dollar strengthened following poor U.S. durable goods data …if gold trades below $985/oz next support is at $980/oz. Below that could trigger sell stops in the market." Clearly, gold has excellent support at the $985 level and it is unlikely to trend below that. That comment was written earlier in the day when the dollar was trading at a high of $77.07. While a stronger dollar got the metals moving down, once gold broke below $995, it then opened the way for a test of support at $985. That support level held nicely. In fact, I would not be surprised to see gold rally considerably from where it is now. In addition, we have end of week profit-taking and end of quarter profit-taking occurring in the market as well. In other words, some see this as just a technical correction and a buying opportunity.

Gold is giving investors who missed out on the chance to acquire it under $1,000 another opportunity to do so and gold offers more potential gains than it did just a few days ago. Yesterday afternoon, Bob Haberkorn, a senior market strategist with Lind-Waldock said, "It's a healthy correction. We were a little overbought and were not able to make new highs in the gold market. We had some profit-taking based off of strength in the dollar.… Still, the chart remains constructive for gold. The tune in the market has not changed it's still a bullish chart pattern. I think this downside move will bring a new wave of buyers into the market for both silver and gold." Reported Dow Jones Wire Service.

Durable goods orders fell 2.4% in August, when they had been expected to rise 0.3%. That was one factor that clearly influenced the markets this morning. This was the largest drop in durable goods orders in seven months, largely due to lower aircraft demand. The Reuters University of Michigan 12-month inflation forecast is 2.2%. The five-year inflation forecast is for 2.8%. August new home sales rose 0.7%, which was less than expected. However, do not overlook the fact that there is a huge overhang of shadow inventory in the market.

As the day wears on, I think other factors will also help improve the picture for the precious metals. For example: on a geopolitical note the U.S., France and the UK accused Iran of building a covert uranium enrichment facility. They said that Tehran is directly challenging global nonproliferation rules and putting more pressure on high stakes talks scheduled for next week. Dow Jones Wire Service reported, "The existence of this facility underscores Iran's continuing unwillingness to meet its obligations under U.N. security counsel resolutions. President Barack Obama said in brief comments at the G20." Israel also responded with remarks that indicated that this will not be tolerated. The fact of the matter is, that this could be pointing to a potential for further conflict in the Middle East. If that were to occur, it is possible that Iran would seek to close the Straits of Hormuz, choking off oil supplies as they did in the 70s and this could drive gold prices dramatically higher. It would also add fuel to the inflationary fire. Higher oil prices, combined with a falling dollar would clearly have a positive impact on the gold market based on what we saw in the 1970s.

There are many reasons to view today's correction in gold as a great buying opportunity. To take advantage of that opportunity, call Goldline at 1-877-341-2646. Also, ask Goldline for the free gold investor information package and a free copy of the Peter Grandich interview on CD.

Investors should ask Goldline to explain the features, benefits and cost structure of the various gold and silver investments that are available. Select those that best meet your own personal and individual investing needs and objectives. Investors looking for low transaction costs may wish to consider bullion assets such as American Eagles, Swiss 20 Francs, Krugerrands, Canadian Maple Leafs, Silver Bags or Silver Bars. However, the Price Guarantee Program is not available with these assets.

If you would like to take advantage of the Price Guarantee Program, which provides you with a two-week window of opportunity in which to re-price your order in the event of a correction, you must select assets with some collectible value such as 20 Francs, Double Eagles and Silver Dollars. Call Goldline at 1-877-341-2646 for further information on the Price Guarantee Program.

To receive the free information package on gold investing, call Goldline at 1-877-341-2646. You will also receive the Client Account Agreement, a company brochure and a Coin Facts Risk Disclosure Booklet. Read these carefully before you make an investment. Call Goldline at 1-877-341-2646 now to receive your free information package.

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

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