the puke indicator, page-73

All4One, gold is a Giffen good that is inverse to usual laws of supply and demand. Demand increases as price rises, and demand falls as price declines. With the break of golds 18 mth trading range gold has entered a bear market. The supply of gold for non-investment uses will come from, production and reduced gold bullion investment holdings. High cost producers will close, production will fall, but so will the demand as investment holdings enter net decline(a lot of the GLD physical gold will now get sold as the price declines and people exit GLD). Liquidated physical holdings will now be placed on the market and be available for jewellery, electronics etc. The key is movement from increasing net worldwide investment holdings of gold bullion/ coins, to an outflow (ie net decrease worldwide investment holdings of bullion). The closure of high cost producers will lower the average cost of production. The gravy train for managers will end and they will have to cut their cloth to fit the new gold environment further reducing the cost of production. Hence falling gold = less demand,with less supply from mines, counteracted by liquidation of investment bullion that adds to the available on market supply of physical bullion. And a fall in the global per oz cost of gold production. Hence floor is a lot lower than the 1200 bandied about as worldwide cost of production. And markets always over shoot to downside.

In short term likely bounce to $1500, then down with lower highs and lower lows.

Everyone has to check their assumptions.