Gold just finished its worst week in more than 4 years, and the one time hibernating gold bears were out in full force. The media was full of talking heads talking down gold. What I like about gold is that its value is based upon the greater fool theory, so there are almost infinite ways to value it. There is no way to run a dividend discount model on gold because gold doesn't pay a dividend, gold doesn't have earnings, gold doesn't have a growth rate, it simply has a price and a price history. Because gold isn't a company with cash flows, technical analysis dominates its analysis. Basically if gold is going higher buy, if it is going lower sell. Others try to establish a supply and demand model, trying to forecast the future demand in China and India, and the cost of production for the miners. Just

Commitments of Traders

Last week's commitments of traders report (cut-off date Tuesday May 21) showed little change (approx. 3,500 contracts net), but only about 83,000 contracts remain of the large speculator net long position in the 100 ounce COMEX contract. Since the price declines later in the week are not captured in this report, further changes have since then presumably occurred. Again, it is not bullish when the large speculator gross short position increases and it is still doing so (currently at 103,195 contracts). Gold has given a new MACD sell signal on the daily chart, so these short positions have probably increased further. That may change if the test of the April crash low is successful, which currently appears to have low probability due to gold stocks having reached lower lows late last week.

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Gold, commitments of traders. Small speculators are now neutral and the

Many have been quite surprised by the demand for gold in India of late. In fact, gold and silver imports into India in April more than doubled the amount from a year earlier. So, why did gold fall this past week?

Well, in very simple terms, sentiment is not yet ripe for the rally to take hold, but we are getting much, much closer. However, I am still unconvinced that it will be more than a corrective rally, as my primary expectation of a bottom is sometime in the summer or fall.

As I discussed in my most recent silver article, it seems that many are now coming to the realization that QE will not drive metals prices higher. In my silver article, I pointed towards John Wagner's recent gold article noting the same. But I also explained why I feel that most market participants inappropriately look towards the fundamental