For what seems like forever we have been mechanical in managing the precious metals because they have been bearish; period. This has been based on short and long-term technical indications and incomplete macro fundamentals. Gary the robot has had no difficulty whatsoever holding this stance despite Gary the human's unwavering view that the value of gold is in its insurance and long-term retained value qualities.

The precious metals took a hard bearish turn last week and that is the best news I have seen in a while because the complex has been locked below important resistance (failed support) for some time now and the sector usually completes its severe corrections and bear markets with a bang, not a quiet whimper.

We have noted that despite a 4 year bear market there have been too many perma-bulls doing what they always seem to do in dispensing reasons (rationalizations) for the hopeful herds (which had not yet been exterminated) to be bullish.  China demand, Indian Wedding Season (AKA the “Love Trade”) and world-wide gold jewelry consumption have been put forth as bullish fundamentals.

Indeed, one new promotion is that gold as part of the ‘fear trade' is a thing of the past. Those who consider gold as insurance against negative financial events are merely anachronistic has-beens says this new school.  Well, today the fear sits squarely in the belly's of those who bought this promotion [edit: this Monday morning, with media-fueled negative hype on full blast, it settles deeper still].

Gold has been contrary to what has been going on in the US and now, some global stock markets; namely gold has been bearish and risk ‘OFF' while stocks have been bullish and risk ‘ON'. That is in large part due to the fact that commodities have been bearish as well and there has been no overt inflation problem – according to financial markets (conveniently disregarding the creeping cost increases happening throughout the services economy) – and so an ‘inflation trade' has not been a component in the global bull atmosphere.