by Greg Canavan, Daily Reckoning.com.au:
So have we found a bottom in gold? Following last week’s plunge to around US$1320/oz, the gold price is now up to around US$1,470/oz, for a gain of US$150/oz. And the gold miners rallied strongly in the US on Wednesday night (as they are in Australia today), suggesting we may have seen an end to the capitulation selling.
And there was plenty of capitulating going on. On Tuesday, we asked a friend who works for a fund manager about a certain gold stock – mid pummelling. There were huge trading volumes going through the stock…the selling looked like pure capitulation. He responded that they were selling that day too. The reason? There is only so much pain you can take.
We could be wrong, but Tuesday and Wednesday seemed like the point of maximum pain for many gold stock owners. When you see the price fall day after day, it conditions you to think that it will keep falling.
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