High Gold Prices

High gold prices? Yes but you ain't seen nothing yet. Friday January 11, 2008 gold hit $900 an ounce. Gold likes to make high in January, according to the seasonal pattern. Since 2007 followed the normal seasonal cycle the odds are extremely high we will see a top before the end of the month.

This high gold price we are making is only a temporary high. Most great buying opportunities present themselves after a shake out of the weak holders. This is classic price action not always recognized a the time. In fact most traders will believe the final top is in as price declines over 20 percent.

If you are a swing trader you would be looking at the opportunity to short this market. Then once the decline is complete reverse your short position to long and take advantage of the continuation of the bull market

So the word of the day is patience, there are great buying opportunities just ahead. Once the weak holder have scared out of their precious metal holding the next leg of this bull market can get under way.

Once the froth is out of price, how high can an investor of gold and silver expect price to go. Because after all what good does it do to triple you money, only to give it back during the next decline. As in all markets their is a center of gravity or mid point of price.

Now here is the part that makes average investors wealthy. If you've been following the markets for any length of time you have heard the analogy of price. It is like a giant pendulum swinging from under value to the opposite of over valuation.

The longer price is under what is considered to be the norm or mid point, the farther and longer the advance. The fundamentals of this are directly related to supply and demand. Sometimes there is price manipulation associated with some of these swings exasperating the extent of both the decline and the advance.

Once that manipulation is overcome, look for the current high gold price to be exceeded by two or three times. Final gold highs could easily explode past 2500 dollars an ounce before a major correction occurs.

Once this decline is over, and price again makes a low look for a huge advance to take place. How about three times the price of the low over the next four years.

To sum up...look for gold to make high near 900 with silver putting in high at 1640. Downside to cause 20 to 25 percent decline in gold and about half that in silver.

Stay tuned for the coming low...it will be the turning point. The time to hitch up your wagon and load it with the precious metals of your choice. We will be examining which metal will be the better investment for the next leg up. The right one should be a 10 bagger.