Gold and silver have taken some hits since they posted new yearly highs the first week of December.  For gold bugs, this dip in price is just another buying opportunity.  For those who bought in at the $1200+ mark, the recent $150 drop has been a test of their intestinal fortitude.  This most recent dip has served to shake many investors out of the market.  Some investors, who have been in for years, chose to pull the trigger and sell their precious metals at the high point.  Silver stayed below $20 per ounce, but it’s nearly impossible to find any of the white metal for sale for less than $20 per ounce.  Currently, it’s sitting above the $17 mark, and has been bouncing around this area for the past couple of weeks.

The recent US Dollar rally has served to further push precious metals prices down as investors leave the gold and silver hedges for the US Dollar.  In reality, the US Dollar’s value hasn’t really climbed all that much in comparison to other world currencies.  The Euro has fallen, which when compared to the US Dollar, has artificially inflated the value of the US Dollar.  Gold and silver are still the go to investments for people still concerned with the economic crisis and recovery.  Billions of dollars are still being printed, and the recession has cost millions of jobs in the US, and the recovery of these jobs is no where in sight.

The Holiday season will be a real litmus test for the US economy and the US Dollar worldwide.  If the retail season goes well, and the economy that has been propped up by the government stimulus package in recent months, there will be even more signs of real recovery.  It is doubtful that the job market will recover, but investor faith in he markets, particularly the US Dollar and the stock market could return, bringing precious metals down.  If, on the other hand, the Holiday season turns out to be a bust, then investors may still be concerned about the legitimacy of the recovery and they could lose even more faith in the US Dollar.  If the US Dollar falls below recent lows, there could be a rush to other currencies that would further elevate precious metals prices.  Some experts are calling for $2000+ per ounce gold by the end of 2010.

Market volatility is nothing new, and investors should expect more of the same in the months to come.   The perma-bulls will tell you that gold still has a long ways to rise due to the potential for a currency crisis or a furthered economic recession.  History tell investors that in times of inflation an unabated money printing, that gold and silver store real wealth, and will rise in value against the inflated currency.  Whichever way you chose to go this Holiday season, there’s an argument to back it up.  Either way, this may be a great time for people looking to get into gold or silver during a price drop before another rise.