Mike Swanson writes: With a lot of people proclaiming that the 11 year gold bull market is over and with the recent drop in gold it is time to sit back and think for a second. Yes as I posted yesterday it does look like gold is in a correction and I think that it is likely to continue until the Euro crisis is over and we get a final bottom in what to me is a global bear market. But after that I'd expect the gold and commodities bull market to resume.
It looks to me like a big correction in what is still a secular gold bull market. I don't see any real explanations given by the people who say it is over for good. What has changed? The fundamentals of the secular bull haven't. The Federal Reserve and central bankers of the world are still printing money. In fact they are going to print more of it.
The economies of emerging markets may be taking a breather now, but over the next decade they are going to continue to display huge rates of economic growth and create demand for commodities which means inflation. And look out for peak oil.
So what gives? I have an explanation. This stock market for the past three years has been dominated by hedge funds. Since 2008 the individual investor as a whole has gotten knocked out of this market and has been doing more selling than buying. In the third quarter of this year mutual funds met with more redemptions than deposits from individual investors who got scared during the August and September drop.
Hedge funds are made to trade the markets on a monthly basis and not to invest for the long-term. So they chase the flavor of the month and in the end most of them don't really base their decisions on investing on fundamentals. Yes they do trade in stories, but few invest in them….
Wait, wait...there's more at http://www.wallstreetwindow.com/node/4488
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