Is Gold’s Luster Fading?

I wondered when this day would come. Many of us expected gold to break $2000, possibly reach towards $3000 or even $5000. Yet the US dollar has not collapsed as many feared, the economy is showing signs of recovery although Europe is still struggling to hold it’s single currency intact.

Now hovering below $1600, down 15% from it’s September high, are we now turning bearish on gold? Well, no.. I look at this as a 15% correction that many missed cashing out on (including your’s truly). No matter what commodity you look at, a parabolic increase can rarely be sustained. True, had the US economy fully collapsed and US debt be called in, we’d be looking at $5-10 thousand dollar gold today. But cooler heads prevailed, for now...

But the fundamentals have not changed! We’re still looking at record debt, and though there’s been some recovery in the US, it’s all still precariously fragile. We hear murmurs of QE3 in the pipeline which should help gold regain some traction. And if the eurozone collapses, then it’s anyone’s call what might happen with gold. I’ll bet most countries will be bolstering it’s supplies to back-up reinstated currencies..

So the luster is technically still there. Have we seen the bottom? I won’t speculate on that, but it seems there’s more potential for upside than down...