The precious metal may be trading below $1,200 an ounce, but the pullback will be short-lived.  Here are two reasons why...

When gold hit a record $1,266.50 on June 21, we were smack dab in the middle of Europe’s credit crisis and worries about a double-dip recession were rampant. But since that peak, gold has retreated quite a bit.

The metal hovered around the $1,200 range in the first 2 weeks of July – and now today we’ve dipped to $1,180 level.

Does this mean the recessionary weeds growing through the economy are dieing?  That Europe has turned the corner and is now a pillar of financial strength?

Hardly...

We’ve seen dips like this before.

It happened back in February when gold touched the $1,050 mark, only to go on a tear shortly thereafter.  I think we could see the same thing happen here.

Listen, the fundamentals don’t lie...

The US has the most debt in the world.  The government is running trillion dollar deficits.  The economy has no jobs.  And people can’t afford thier homes.

Are any of these problems bullish for our economy?  Of course not.

How about Europe? The European Central Bank may have been able to piece together a bailout package for troubled Greece.  But the fact of the matter is that this is a “band-aid” fix that glazes over the real, fundamental financial problems that exist.   Not to mention, the austerity measures now being imposed threaten to sink Europe into an even greater recession.

Mark my words: Gold will be back above $1,200 in no time.

So do yourself a favour.  Buy on the dips while you still have a chance and protect yourself from the storm ahead.  With the way the economic picture is shaping up, you’ll want to have at least some of your wealth in precious metals.

Yours-in-profits,