Is there anything more telling than the destruction of gold right now? It tells you the hedge funds are positioned wrongly, and are furiously liquidating, as the dollar gets stronger and deflation is in the air.
What to do? First, let's have some perspective: Gold is up 34% year over year. To me that means profit-taking is in order, as the price is still very elevated. I know I am a gold bull, but even bulls can't be blind to the possibilities of a decline after that kind of run.
Second, remember who owns a lot of gold. Right now some fund managers who could face liquidations are in big. They may have to go out big.
Third, gold's been rising for 10 straight years. Could it take a breather? Holy cow -- why not?
What to do? I say wait until you see the whites of the gold sellers' eyes. Let's call it $1,500 per ounce for now.
Then come right back in.
I'm still a gold bull long-term. I'm just way too cognizant of how people have to sell gold, like everything else, and I don't want them to knock me back while they run out the door.