Proof This Gold Stock Correction Near Its End

By: Michael Swanson | Wed, May 2, 2007
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Dear Investor,

If you missed my email last week, don't worry. I didn't send one! You see, gold stocks were in a correction and I didn't see many buying opportunities in the broad market. I only want you to alert you when there is action to be taken. You'll understand why in a minute.

But first, let me say this. If you have been shaken up by this current dip in gold stocks, you may be wondering if the gold bull is over. Well let me reassure you. No, it is not.

In fact, I'm still extremely bullish and believe that we are on the verge of a huge bull run in gold stocks. Several weeks ago, if you can recall, I outlined three indicators that I said would signal the start of a bull run.

One of them has already been triggered and the two that remain appear poised to give buy signals of their own in the next few weeks. I'll let you know as they get closer.

You could easily wait for these buy signals to occur before you get invested. There is a big drawback to this however because these buy signals will likely occur when gold stocks are at much higher prices. This is why I'm writing to you now.

I believe this current correction is just about over and within days gold stocks are going to start to rally up to their recent highs. In bull markets, you buy dips and this dip is just about over. If it didn't already end yesterday.

I'll give you some hard evidence for this.

One thing I often talk about is the XAU/gold ratio. Just yesterday it did something it has only done a couple of times in the past 7 years. It hit 5.0. According to Mineweb, "at or above this level, of 32 observations in the past 24 years, only one year has returned a negative for holding of gold stocks. For the balance of 31 observations, the average return for holding gold stocks for one year is 40%" over the next year."

So, according to this, we should see a 40% gain in gold stocks from right here.

Gold Spot / XAU
Index Indicator
# of
Observations
# of Positive
(Negative)
1 Year Returns
on XAU Index
Average 1 year
holding period
return on
XAU Index
Total 268 132 (136) 5.1%
Greater than or
equal to 5.0
32 31 (1) 40.0%
4.75 - 5.0 16 12 (4) 22.5%
4.5 - 4.75 28 22 (6) 27.3%
4.25 - 4.50 38 25 (13) 12.5%
4.0 - 4.25 33 14 (19) -2.5%
3.75 - 4.0 27 6 (21) -4.9%
3.5 - 3.75 28 8 (20) -8.9%
3.25 - 3.5 31 9 (22) -13.3%
3.0 - 3.25 22 5 (17) -14.1%
Below 3.0 13 0 (13) -24.3%

I see this current correction as the opportune moment to load up on gold stocks. My triple buy signal is on track to complete itself in the next few weeks. The market has given us this gift of a correction and I'm not going to miss out on it. I don't think you should either.

But be forewarned. The more that people begin to realize what we already know, the quicker these low prices will rise again. Take a moment to sign up for your risk-free trial of WSW Power Investor and you'll get my top 10 list of the highest potential gold stocks to invest in during this next massive bull run. You'll also get my personal bulletin posts as I watch this lead up into the next run.

It is my priority to make you a lot of money in gold stocks this year. But I can't help you if you don't go through the quick and easy sign-up process that thousands of WSW PowerInvestors have already been through. It's your rite of passage. Take it.

Don't let us have all the fun. Sign up now at this link: http://www.wallstreetwindow.com/wswpowerjoin.htm

Sincerely,


 

Michael Swanson

Author: Michael Swanson

Michael Swanson,
www.wallstreetwindow.com

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