BullMarketRun.com

It has been a wild few days for Gold…the yellow metal was down as much as $50 again this morning, hitting a low of $1,702, but it found support and has recovered almost all of its losses…what we’ve witnessed since Monday is one of the 10 largest corrections in Gold since the early 1980’s and it was one we warned was likely to happen, though it didn’t take a rocket scientist to figure out that Gold had become extremely overbought on the charts…despite the $200 drop, Gold is still the second-best performing commodity so far this year, up 24.6% through yesterday which is just below Silver’s 30% gain this year…Gold’s sharp rise this month to slightly above $1,900 did not represent a final “blow-off” in a “bubble phase” as some analysts have stated…our contention, based on all the technical and fundamental evidence at hand, is that the “bubble phase” in Gold has not even started yet…the worst of the decline in Gold is now over and a consolidation phase has set in…after a $200 drop, a rally can certainly be expected but we caution that Gold likely won’t bottom out until it retraces down to just above $1,600 an ounce – a process that could take a couple of months…the final quarter of the year could be quite spectacular for Gold if John’s chart proves correct…his track record has been exceptional and his $1,938 target for Gold was only 1% off the mark…

Here’s how the scenario could play out in terms of a timeline for Gold bottoming out around $1,600…

Below is another interesting chart on Silver that shows how it needed a couple of months to consolidate and unwind an extremely overbought technical condition like Gold was just in…

Gold and the equity markets have had an inverse relationship during Gold’s rapid climb above $1,900, so it’s safe to assume that with Gold in a consolidation pattern for a while, the equity markets should rally despite this morning’s weakness…that means we likely saw important lows put in on the major indexes in early August (10,614 on the Dow August 9 and $11,618 on the TSX August 8)…the August low for the CDNX came on the 8th at 1676…strength in the major markets and a changing of the calendar from August to September should help the CDNX…in fact, even with Gold acting a little sloppy, the potential for a significant move to the upside in the CDNX next month is very real, especially if some good exploration news rolls in…a tsunami of drill results is expected over the next couple of months…markets are nervous today ahead of Fed Chairman Ben Bernanke’s speech tomorrow at Jackson Hole, and speculation about a possible short-selling ban in Germany has rattled some investors…Gold is well off its lows, trading down just $5 an ounce as of 9:15 am Pacific…news of another margin hike for Gold contracts by the CME (27%) contributed to weakness overnight…the CDNX is off 2 points at 1734…Gold Bullion Development (GBB, TSX-V) is up half a penny at 37 cents after releasing an exploration update on its Castle Silver Property near Cobalt, Ontario…GBB intersected numerous vein structures independent of the existing mine workings which is highly encouraging…the best result out of 12 holes drilled was 189 ounces (6,476 g/t Ag) over 3.09 metres (true width unknown) which included a half-metre section of extremely high grade, 1,194 ounces (40,944 g/t Ag) per tonne…Castle is a promising asset and if you’re a big believer in Silver over the long-term, as we are, it makes sense for GBB to continue to explore this property aggressively which means spinning it out into a separate entity as a dividend for GBB shareholders…considerable work and expenditures will have to be dedicated to Castle…August has been a terrible month for equities, so when you see a stock that is out-performing the market you need to pay attention…Visible Gold Mines (VGD, TSX-V) was up 49% for July and it’s currently unchanged for the month of August at 33.5 cents…that’s an amazing fact given the state of the markets recently and it suggests to us that VGD’s fundamentals have turned very bullish and that we could see a major breakout in this play in September…the company is focused on two outstanding exploration areas at the moment, the Wasamac area just west of Rouyn-Noranda as well as the former Joutel mining camp about 150 kilometres to the north of Rouyn-Noranda…more assay results are pending from VGD’s Wasa Creek Property where the first hole intersected several zones of significant Gold mineralization where virtually no exploration had previously occurred…VGD seems to have rock-solid support at 33 cents, its low this morning, and is now up half a penny at 33.5 cents…Richmont Mines (RIC, TSX) hit the support zone we identified between $8.40 and $8.60 this morning and has rocketed higher in a major reversal to $9.20…encouraging drill results from Kaminak Gold’s (KAM, TSX-V) Coffee Project in the White Gold District…KAM has been as high as $4.16 this morning and is currently up a dime at $4.00…much more on individual stock situations tomorrow…