Gold has dramatically underperformed recently. Is this the new norm? (Written June 2013)

The truth is, there is nothing normal about markets or trading them. The current environment encompasses market sentiment and volatility levels, but tomorrow could be dramatically different. Accordingly, what you assume to be the norm won’t necessarily carry into the future.

Since posting an all-time-high in September 2011 near $1,900, the asset class once revered as a safe haven has been tearing holes in investment portfolios. Just as traders and investors were willing to jump on gold’s bullish bandwagon, the speculative community has turned on the yellow metal with vengeance.

 Nonetheless, at the precise time gold felt most bullish a few years ago was the exact time it was topping out. We feel like the eventual bottom in gold will feel the same; the moment in which the bulls are desperate for relief and the bears are salivating for yet another new low will be the point at which a magnificent price reversal will be possible. At the time of this writing, we were assuming this scenario would be looming within the July time frame. Once the tides turn, the pain felt by the latecomer sellers, or simply market chasers, will be fierce.

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