Gold and Silver Down Again on Reports

Gold and silver registered losses again after economic data out of the US painted a relatively rosy picture about the status of the economy. Gold fell more than 2 percent after a US home sales report brought better than expected news to the markets and signaled a sell-off. Prices in gold were as low as $1,534.25 per troy ounce, or 2.15 percent decline. Silver followed gold by dropping 1.3 percent, trading at $27.21 per troy ounce.

Partially to account for this action in the gold and silver markets is the release of relatively optimistic data concerning the economy. US housing sales emerged, marking a better than expected month for sales of single-family homes during the month of April. This triggered a market sell off in gold and silver followed suit.

Generally, these declines in the prices of gold and silver are to be expected in the greater market environment, which is currently experiencing a correction that will be relatively long and deep. News from the economy can tip the scales either way, but we are generally looking to have prices at lower levels.

Gold is now at the significant 20 percent mark. Technically corrections are from 10 percent to 20 percent off highs and gold is now 20 percent off its September 2011 high of $1,923 per troy ounce. Many speculators may be concerned or confused going forward as we see gold and silver possibly decline more.

The reason for this is the type of market in gold and silver now. Gold has been on a decade long Bull Run and it is overdue for a correction. Such an extended bull run is unusual, though not impossible, and represents a need for a larger than usual correction.

This is viewed as an opportunity to increase positions and initiate positions in the gold and silver markets as the larger bull market fundamentals are still intact and will be for many months or even years. Lower prices, such as the prices we’re seeing now, have been anticipated for quite some time by investors looking to capitalize on the gains that will be made in the gold and the silver markets over the coming years.

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