Is it the time to buy gold?

First of all, I hope all my friends will be safe when Hurricane Sandy hits us in the next few days. Keep my fingers crossed that we will still have power in service.

Some friends ask me whether now is a good time to buy gold, given gold has corrected quite some percentage now in the past few weeks. It is a difficult question because my answer will be Yes and No, depending on your situation. It is YES, if you haven't bought any gold yet. For me, gold should always be an important part of your portfolio. It may not be cheap compared with a few years ago but it is still very cheap if you look back a few years later. This is what I'm pretty sure about. We can try our best to speculate what may be the bottom of this correction and then wait for that point to get in, but any analysis is indeed just a wishful thinking, which may not always be exactly correct. Good technical analysis may decipher the right direction but it is very hard to pinpoint the exact entry point. I will be very disappointed to miss the big uptrend simply by waiting for an artificial ideal entry point, which may just be a few dollars difference. However, if you have already got some gold and are waiting for a better chance to get more, then I think more correction is likely in the next few weeks. At the moment, gold is sitting around $1700, just dropping below its 50 day moving average (DMA). There is a good chance that gold will further decline to test its 200 day MA around $1660. However, that is a rather strong support for gold and I think it will hold there and start to bounce back. Below is the chart for GLD. You may notice that the 200 DMA for GLD is at around $160 (the red line) and interestingly it is also the low end of the Bollinger Band (the lower grey line). Stocks usually bounce back and forth within its Bollinger Band. This coincidence is further suggesting that gold is likely to bounce back from its 200 DMA. If you are waiting for a better chance to get in, I'd wait till it drops to that level.