Although gold (NYSE:GLD) is in its longest winning streak since 1920, price corrections do occur. The past three trading days have been brutal for both gold and silver (NYSE:SLV). Gold experienced its worst three day drop in 28 years as the precious metal (NYSE:DBP) dipped below $1600. Silver, which has an industrial and safe haven component, was even more volatile as it dipped to $26. After the rapid selloff that started last week, gold and silver are rebounding higher today.
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Gold futures for December delivery jumped $71 to $1,666, while silver surged nearly $3 to climb back to $32.90. Zero Hedge reports, “It appears rumors of precious metals’ demise have been greatly exaggerated yet again. After hitting a low of $26 an ounce just shortly after 24 hours ago, the metal has since soared by a whopping 26%.” With the current rebound in gold and silver, miner stocks are surging higher. The Global X Silver ETF (NYSE:SIL) and Market Vectors Junior Gold ETF (NYSE:GDXJ) popped more than 5% this morning. Individual miners such as First Majestic Silver (NYSE:AG) and Yamana Gold (NYSE:AUY) also climbed higher. Gold, silver, and even copper (NYSE:JJC) miners look poised to regain ground and head higher as bullion prices stabilize and panic selling subsides.
Many investors are wondering why gold and silver suffered a steep correction that brings back memories of 2008. Sprott Management offers some insight on aggressive selloffs. The investment firm explains, “Investors still remember how badly gold equities got crushed in 2008. There was a reason they sold off so aggressively however, they were the most profitable positions investors owned going into the ’08 crisis. Gold equities had enjoyed a strong bull trend going back to 2001, with the HUI Index appreciating by 980% from its November 2000 low through to August 2008. Investor behavior is fairly consistent-when panic hits, you sell your winning positions first.”