This gentleman goes by the handle 'Gold Majestic.'

http://www.capitalstool.com/forums/i...

The usual fear and confusion (and IMO false conclusions), the buyer's remorse, the second guessing, etc., that comes with bottoms is alive and well as it has been at every bottom in this secular bull market in gold and gold stocks.

The simple fact that for every investor expecting gold to hit $1,200 by year end, there are 5 who think gold is headed to much lower levels. Just check out the extreme level that the Put/Call ratio for gold stocks has risen to for the proof, a level that has consistently represented bottoms. IMO, the extreme Dover Sole nature of the gold stocks sector has probably more to do with a hedge fund's liquidity issues (shades of Aramanth). The extreme nature of the Dover Sole indicators lasts FOR A VERY SHORT PERIOD OF TIME as viewed from an historical perspective. The people that are gripped with fear projecting gold and gold stocks to continue down from here don't have a clue as to the facts. (period) To the contrary, when a state of pervasive, extreme irrationalism prevails, (a state of confusion aggravated by rampant ignorance) as we're witnessing today, we get violent recoveries in bull market sectors much sooner than later.

After this occurs, the fear mongers leave never to be heard from again, the fear stricken then become reassured and once again partake in the bubbly happy talk about how rich they're going to be. Those that sold at the bottom return to eventually buy back in near the tops (as we have seen so many times ad nauseam.)

In other words, AN ANOMALY that will VERY SOON be corrected, IMO.

In fact, over the past months, currency traders have been speculating that the ECB was going to begin to lower their interest rates and that the US Fed would raise ours to fight inflation. Well, I for one have been vehemently opposed to this line of thinking and point out that so far my reasoning has been spot on, that those expectations after the most recent FED/ECB meetings failed to occur. In fact, as I've continue to opine, the US Fed is trapped in a corner that suggests a higher probability for them to LOWER rates than raise them. The US economic downturn will continue. Europe has a comparative stronger economy and growing wage pressures. The US has a weakening economy with growing unemployment and a worsening housing/financial sector problems. As the manic market heard slowly recognizes these facts, the USD will continue its secular down trend against Gold and other currencies.

The weekly USD chart I'm posting supported by the fundamentals says the dollar has reached the level that it will begin to turn back down, the level the shorts begin to pile back in. Divergences can last for several weeks, but those grounded in the simple facts (fundamentals) see the big picture as clear as day. The problems with the financial system are years from being sorted out. I continue to opine that if this were a baseball game, that we're about a third of the way through, having only completed the first three innings.