We are experiencing a correction in the gold bull market that is within the bounds of our past experience. In 2006 gold had a correction of -22+% in a breathtakingly short period of time, and then consolidated and retested and starting moving higher to the new highs in 2007.
The correction in 2008 while uncomfortable is still very much in line with this bull market. We seem to have violent corrections every few years with major bottoms reached after capitulation lows. More often we experience lesser corrections of 10%.
One possible concern is that this correction will be a sustained central bank intervention, with all the stops out as a move in desperation. Even it is is, it will fail.
This is a possible caution for short term trading, make no mistake. Nothing is certain. But it is just another point along the way for serious long term investors looking for a hedge for their wealth, buying physical metal without significant leverage.
For aggressive traders, we need to be aware of a major opportunity in buying more short term positions in the miners and funds, although this is for the experienced with deep pockets and strong stomachs. A market decline may sink many boats. Deleveraging is still the major market trend.
We can expect violent price swings including moves of even $100 up in less than a few days as the collapse of the dollar hegemony causes a seismic shift as major political constituents migrate to different standards of global valuation.
Here is an essay from Seeking Alpha that contains some interesting charts and data that is useful to review.
The Bedrock Case for the Return of the Gold Bull
