Finally - A Meaningful Correction!

We've finally gotten a "meaningful" correction - but it's not in the stock market.

Guess where?

Gold and Silver.

Sure, the stock market has taken hits lately. And these seem to revolve around news about the war involving the U.S., Israel, Iran, et al. So when the Big Orange Guy tells us a "deal" is right around the corner, stock rise. But when the reality on the ground turns out to be attacks by all sides, stocks slide. And sometimes the slides have been more jarring than the rises were inspiring. 

With all that, stock still remain valued at historic highs. So even if there were a 10% drop - which some might call a "correction," they'll still be at historic highs. Four our purposes, this precludes us calling the correction "meaningful." What revealing or important meaning could be derived from a market that falls a bit and remains extremely overvalued?

Ah, but if we turn to Gold and Silver (and other precious metals), we see a different picture. These guys had a dramatic rise the last two years or so. The various minor corrections along the way never really amounted to anything we could call meaningful. Once things dropped, they turned around. 

Now, to be fair, Gold and Silver both hit historic highs this year and did drop quite a bit after that. So Gold fell from around 5,400 in March to the mid-4000s. It seemed a lot at the time. But then it was easy to realize that it had gone up too far too fast, and so it was to be expected that it would either fall or stay level for a long time. The level option is unusual in these situations, so it took the ordinary route of falling back. It then bounced around 4,400 - 4,800 for a stretch, and the hope of holders of Gold was likely that it would keep bouncing until re-starting its bull rise.

So much for hope.

More importantly, those mini-corrections weren't really meaningful. Not much changed for investors who bought since October 2025 when it was around 4,000. They still had their profits, and if things were to settle and head up again, they'd have more profits. It was the FOMO (Fear of Missing Our) investors who bought when a parabolic rise from 4,000 to 5,400 commenced who took it on the chin, And some of those bailed out when things turned south.

But if this drop approaches 4,000 (which it has) even crosses below 4,000, now we've got something. The 4,000 investors now will see losses - and mounting losses if Gold dives beyond 4,000. 

So either the landing on 4,000 or crossing below would seem to qualify as "meaningful."

What about an further drop? Well, maybe "more meaningful"?

In any case, "meaningfiul" here makes sense. We've got an asset that remains historically undervalued. (Even more so - much more so - in the case of the mining stocks that yank the stuff out of the ground.) Certainly so compared to stocks. 

And the meaning of such a drop is: For those who can manage not to panic, either hold right or buy more. The payoff will assuage any anxiety you may feel now.

Now, don't take our word for it. We can't predict the future, and could always be wrong. So none of this is advice. Just a cogitation on how a meaningful correction could be defined and how it can be placed in context.

Oh, and - watch this - we were alerted that the Gold miners Bullish Percentage Index reached zero (0) for the first time ever. This index purportedly reflects investor sentiment and says that bearishness runs rampant for the miners. It's used by some professional investors as an indicator that the miners are at a good level to consider buying. After all, they have nowhere to go once they hit zero except up, right?

At least that's the accepted wisdom.

To conclude - and maybe to clarify our meandering thoughts - we've got a meaningful correction in Gold and Silver, not stocks. Even if stocks drop 10% it won't be meaningful. What about 20%? They say that's the start of a Bear Market. But let's not get ahead of ourselves. 

For now, we'll stick with the Gold and Silver meaningful correction and see what happens next.

(Hmmm...Both jumped up yesterday on news the an agreement has been finalized to end the fighting with Iran and open the Strait of Hormuz. Could this be the start of a new Bull rise in Gold and Silver? Or could it just be a feint to set up a more dramatic and gut-wrenching drop that'll shake out all but the brave souls out there?)