August 16 2006

Ready To Bounce

Gold appears to have found its latest bottom, and seems ready to surge ahead once again.

The gold and gold stock markets appear to have reached an important crossroads.

You see, as I have been pointing out in recent editions of my Gold Newsletter Alert Service, gold has followed a very similar summertime pattern during this long bull market -- a pattern characterized by a mid-summer bottom, followed by a significant rebound, which is then in turn followed by a correction that falls within 1% to 3% of the previous bottom.

After that test, gold has invariably embarked upon a rally lasting through the rest of the year, and even well into the following spring. By closing at $622.50 on August 15, or within 2.8% of its July 24 low of $605.70, gold seems to have hit its low mark.

In addition, the way price has refused to crater despite gold-bearish developments of late (including the Israeli-Hezbollah cease fire and an actual decline in the core Producer Price Index, among others), is an indication of the kind of quiet strength that I look for to identify key turning points.

Given the mounting technical and fundamental evidence, in my opinion, the gold market has made its turn back upward, and the next big rally has begun. Of course, I could be wrong. We could see more weakness in the yellow metal, and a probe closer to the July 24 low of $605.70 would not be too surprising.

But regardless of what happens in the ultra-short term, the big picture remains intact: The summer doldrums will end in due course, and the positions entered into now will likely stand as the lowest prices of the coming year. That means profits for those who can see a little further down the road.

I’m scanning the market carefully for the best bargains, and will issue a new “shopping list” for my subscribers in the near future. In the meantime, remember that our window for getting these bottom-of-the-cycle buys won’t remain open for very much longer.

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 New Orleans Conference will feature Steve Forbes, Jim Rogers, Dr. Marc Faber and Dennis Gartman...plus dozens of today’s top gold and resource stock analysts...and a blockbuster debate between Doug Casey and Newt Gingrich. To learn more, visit www.neworleansconference.com.