The following is an excerpt from Boris Sobolev's piece in Resource Stock Guide. ...Sorry I can't provide the gold graph:

One outcome that we feel we have to mention is the worst case scenario. The current commodity correction could extend for a few more months, easily pulling gold to below $800. If gold stabilizes in the $700s, lower $800s would become new resistance levels, causing precious metals to stall for a longer period of time.

Although this will in no way cancel the secular gold bull market, it will, however, likely lead to a cyclical bear market. The chart below shows that gold can fall to the lower $600s and still keep the long-run gold bull alive. During the seventies' bull market gold lost about half of its value in a period of two years, just before embarking on an unprecedented run that took the price to $850/oz.

One more point. Gold ended 2007 at $838 per ounce. Is it so outrageous to expect 2008 to be a down year for gold, after seven straight years of gains? We think not.

While this bearish outcome for gold is not unreasonable, how would gold stocks react in this scenario?

This is an excerpt from the Resource Stock Guide Newsletter dated August 10, 2008.