Here we go, Fools! Careening into relative weakness following an historic surge, gold, silver, and their related equities are taking the sort of nosedive that seasoned precious metal investors have learned to expect (and even welcome!).
The way sentiment flips on a dime in these intensely volatile markets, you'd think the Federal Reserve had suddenly found a way to print bullion in place of fiat dollars. As with previous pauses in the upward trend, however, I maintain that the fundamental pillars supporting continued long-term strength in precious metals have not eroded in the least.
The way I see it, the stark reality of state and municipal budget shortfalls in the United States has yet to spawn the realization that a completely new sort of bailout may well be on the horizon. Meanwhile, underfunded pension liabilities hover like an anvil over the dominoes of nascent American recovery hopes. Confidence regarding Europe's sovereign debt problem appears to be enjoying an upswing, but the underlying ailment has no more been cured than the toxic derivative exposures and "legacy assets" that fester throughout the global financial system.
For those who agree that gold and silver remain very far removed from anything resembling a peak, this modest pause that evolved into a more meaningful correction Thursday is signaling opportunity just as the weakest hands in the game are busy liquidating. I trust that veteran gold and silver investors raised a bit of cash during the surge for just such an occasion, and I encourage some redeployment of booked gains into these bouts of relative weakness.
Snapshot of a golden opportunity
Although I can not forecast whether this correction will continue to carve a deeper trench into that mountain of recent gains, I urge prospective newcomers to consider the nature of the opportunity presented here. Shares of Goldcorp
If Yamana Gold
The silver slingshot snap-back
Exhibiting the familiar characteristics of silver's tethered price relationship to gold (which I have affectionately termed the slingshot effect), the recent snap-back in prices for silver and its related equities has indeed produced broader moves on a percentage basis than those seen in gold. Here again, and even to a greater degree, the opportunity for investors who remain bullish on silver's long-term outlook to capitalize on this pullback need not be overlooked.
A momentary buzz seemed to surround Coeur d'Alene Mines
Silver Standard Resources
Further down the totem pole of silver production scale, Endeavour Silver
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Coeur d'Alene Mines, Endeavour Silver, Freeport-McMoRan Copper & Gold, Goldcorp, and Silver Standard Resources. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a gilded disclosure policy.