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Well, it looks like our favorite gold bug, Jim Sinclair (and Alf Field) was wrong.  $1,630 did not hold.  Neither did $1,600.  It is a bitter pill to swallow, but technical analyst Larry Edelson may prove yet to be correct.  My friend Trader David R is looking for gold to test $1,550.  The sooner we get back safely above $1,600 the better.  Let’s hope it holds there or the fall could be nasty – though very short-lived with a “V” bounce back up.  As much as I am a student of the “big picture,” it appears that the short-term hedge funds are now in charge and the support in physical off-take from Asia (China and India) has yet to materialize to stem the drop.

None of these hedge fund mavens are looking ahead to QE to infinity, which is a certainty in Europe, Japan and the US.  They are only interested in the latest headline or event and never embrace long-term fundamentals.  This is the time to take note of Jesse Livermore’s wisdom and remember, “Men who can both be right and sit tight are uncommon.”  This is the time to sit tight.  As Trader David R says, “Keep you powder dry.”  The buying opportunity of a lifetime is around the corner.  The big picture for gold could not look better and these setbacks are really buying opportunities.  Gold is headed to $2,000+++ and silver will rise along with it.  Stop worrying!  Or take Sinclair’s advice, “If you can’t stand the heat, get out of the kitchen.”  True fundamentals will rule!

As tough as this is for gold and silver holders, it is considerably worse for those holding mining shares.  The boyz must be pleased – they have engineered a short-term environment that is steering big money into the dollar, bonds and to a lesser extent the US stock market.  As soon as the stock market rebounds, gold should move up too.  Commodities are, for the moment, out of favor.  Note, I said “for the moment.”  This trend will not last long.  When the bounce arrives, as early as next month, the move back up should be fast and furious.

As the day progressed, gold, silver, the XAU and HUI all turned positive.  That’s encouraging.