The Biggest Worry in Gold isn’t Really a Worry

 

Since reaching a peak of $1,900 an ounce last month, gold is down more than $100. The metal is trading at its lowest level this month… which has many gold owners worried.

Today, we look at gold’s recent action and note that gold is well within its rights to decline even more.

While we’re bullish on gold over the long term, we also know markets are like runners. They can’t sprint flat-out for miles without taking a breather #-ad_banner-#or two. As you can see from today’s chart, gold “sprinted” this summer. The metal surged from $1,500 to $1,900 in under two months. This type of parabolic move is often followed by a healthy “shakeout” that backtracks 50% of the previous climb.

Should the “50% rule” apply to gold’s latest jump, the precious metal would fall down to $1,700 per ounce. This fall might scare some latecomers, but we’d see it as a natural, healthy selloff.