Gold Is Now in a Bear Market by Definition as It Tests $800

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...on the positive side for the gold investor, this is traditionally a weak time of year for gold. The lower prices will make it even more difficult for new potential producers to generate finance and global supply will likely to continue downwards, although low prices do tend to push some operations to concentrate on higher grades and, this may mitigate production falls...

...The dollar is strengthening by the day as the oil bubble has burst and the black gold has lost over 20 percent of its peak value against the dollar - and whether it has dragged gold down with it, or vice versa, gold has also tumbled by over 20%, putting both effectively into defined bear market territory. Meanwhile the dollar has continued ahead, not because the US economy is strong, but because economies elsewhere are playing catch-up with the effects of the US led financial crisis and credit crunch...

So where do we go from here? Logic tells us that the global economy is still in a mess - and one which is likely to continue for the foreseeable future. But whether those controlling the enormous investment funds which dominate the markets will take any notice of that remains to be seen. Gold may yet survive to fight another day, but short term the outlook isn't great for the gold investor and with the rapid falls seen recently there has to be a strong chance that it will break downwards through the $800 level and perhaps test the $750s before stabilising and recovering - although today has already seen apward kick although one fears this may be temporary at best.

But, on the positive side for the gold investor, this is traditionally a weak time of year for gold. The lower prices will make it even more difficult for new potential producers to generate finance and global supply will likely to continue downwards, although low prices do tend to push some operations to concentrate on higher grades and, this may mitigate production falls.

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