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Gold: The Correction Is Finally Over



  • The correction in gold has been ongoing for about four months now.
  • In fact, during this time frame gold had declined by as much as 15% from peak to trough.
  • However, despite the drop, the intermediate and long-term backdrop remains extremely favorable for the precious metal.
  • Additionally, price action in gold miners is suggesting a bottom in the GSM (gold, silver, and miners) market is likely in.
  • Gold is likely headed substantially higher.
  • This idea was discussed in more depth with members of my private investing community, Albright Investment Group . Get started today »


The "gold trade" has essentially been left for dead in recent months. The correction that began in early August had shaved as much as 15% off gold's top, toppling the precious metal from an ATH (all-time high) of roughly $2,080 all the way down to the $1,765 level.

GoldSource: StockCharts.com

So, What's The Problem With Gold Lately?


Aside from the technical factors that illustrate gold got massively overbought back in early August, it seems that every time some news regarding a COVID-19 vaccine comes out gold gets pummeled.

In fact, if we take a closer look at the gold chart, we can see that gold looked like it was forming a double bottom around the $1,850 support level. Gold began to make a strong comeback, and right around crucial resistance at roughly $1,960 news about the Pfizer (PFE) coronavirus vaccine came out.

Well, we see what happened immediately after this piece of news came out. Gold plummeted by about $100 in one day. Shortly following this meltdown, Moderna (MRNA) brought forth more promising data regarding its vaccine designed to prevent COVID-19. So, gold took another leg lower, eventually breaking through $1,800 support.

What Do COVID-19 Vaccines have to do with Gold?

It appears that many investors are looking at gold as a "fear trade." However, gold is not a trade, gold is an investment. Regardless of when the coronavirus vaccines get introduced in mass quantities around the globe, the economy is not getting back to the "old normal" in my view.

Here's What the New Normal May Look Like

  • Continued easy monetary policy from major central banks around the globe, including the Fed.
  • Substantial fiscal stimuli packages around the world (from countries that can afford it).
  • Perpetually increasing debt burdens on already heavily indebted developed economies.
  • Extremely low

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This article was written by

Victor Dergunov profile picture
The #1 Service For Diversified Portfolio Profits

Hi, I'm Victor! It all goes back to looking at stock quotes in the old Wall St. Journal when I was a kid. What do these numbers mean, I thought? Fortunately, my uncle was a successful commodities trader on the NYMEX, and I got him to teach me how to invest. I bought my first actual stock in a company when I was 20, and the rest, as they say, is history. Over the years, some of my top investments include Apple, Tesla, Amazon, Netflix, Facebook, Google, Microsoft, Nike, JPMorgan, Bitcoin, and others.

Analyst’s Disclosure: I am/we are long GDX GDXJ PFE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article expresses solely my opinions, is produced for informational purposes only and is not a recommendation to buy or sell any securities. Please always conduct your own research before making any investment decisions.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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