Gold

Today gold broke below any recognizable support level in the $1270 area. That means the probability is now that it retreats back to the late June lows in the $1183 range. My question to an analyst last week was – which part of the phrase “bear market” don’t you understand with regard to the gold price.

My experience tells me that we are entering the "give up" phase for gold. This is where even some gold bugs will give up the faith – especially if the price can’t hold the $1183 range. You need the gold cheerleaders to throw in the towel before a bottom can form. And then it is usually significant because all the sellers are out of the market.

Personally I will own gold and silver again but not until they show the signs of a bottom by breaking the downtrend line. At this point I continue to guess – and I mean guess – that I am still two years away.

In the meantime investors continue the search for yield in this deflationary environment and that doesn’t lead to gold’s door.