Dent a deflation kills gold bear even thinks it goes up near term
He says >
"The truth is that gold has been mortally wounded.
Do you remember how oil went up to $147 in 2008 and then collapsed down to $32 in just four months? That was thanks to highly-leveraged hedge funds and financial institutions speculating on the price of oil and then suddenly having to meet margin calls when the music stopped.
Now, the same thing is happening to gold, only to a lesser degree.
Many funds had to sell to meet margin calls between April and June 2013. Even after that wash out, every time gold rallies, it falls back again as more funds and investors cover their losses and leveraged bets.
So where to next for gold?
The next strong support in gold doesn't come until around $700 or $740. The ultimate support is around $250 per ounce, the 1998 to 2000 lows before the bubble began.
In this long period of off-an-on-again deflation, gold will just get weaker and weaker. It may go up in the anticipation of a financial crisis in 2014, just like it did into June 2008. But when the crisis actually hits, debt starts deleveraging and deflation sets in (again like in late 2008), gold will continue its painful meltdown.
Since gold has become oversold and I see another financial crisis building, my advice is simple: Sell what gold you have left on significant rallies ahead, especially into early 2014."
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