Gold – The Pause That Refreshes

A quick thought on Gold. It appears to me that we are in a normal correction, that will, based on the last 6 month’s history, last from 5 to 8 days, and will bring the price of gold down into the $930 range, although a drop to $875 would not be surprising either. Here’s the chart:

The vertical green lines show the “correction” phases. Obviously the high RSI levels also imply a fall is in order.

My plan, therefore, is to watch the action this week, in the hopes that my orders will get filled later this week or early next week.

I have buy orders in on K.TO – Kinross Gold Corp., AEM.TO – Agnico-Eagle Mines Ltd. and G.TO – Goldcorp Inc., at prices below where the market is today.

I own Kinross, and I have now covered all of my Kinross shares. I sold the March 24 calls for $1.20 last week, and sold more on Tuesday before the drop for $2.10. (They expire on March 22, 2008). I have an order to purchase them back at 50 cents.

More thoughts on Saturday.