What has come can’t be changed, all that matters is the future. And it is critical to realize that all panics are emotional events, they have nothing to do with fundamentals. It is quite literally impossible for global supply and demand fundamentals in gold or anything to change fast enough to justify a 1/7th plunge in two trading days.

 

The bullish fundamentals for gold did not change one bit between Thursday afternoon and Monday afternoon, despite gold being 13.8% lower. The only thing that changed is sentiment. Traders got scared, the selling breached a major stops zone, which resulted in margin calls and forced liquidations, and the gold price is much lower as a result. But nothing fundamental changed in the gold market!

 

The central banks didn’t suddenly dump their vast gold hoards, no one figured out how to economically precipitate gold out of seawater or use alchemy to transmute it in a laboratory, and no massive new gold mines suddenly came online. Whatever gold fundamentals existed last week are exactly the same now. Gold is a global and slow-moving industry, with supply and demand trends gradually evolving over many years.

 

If fundamentals haven’t changed, then there is no reason for gold and gold-stock investors to join the hysteria and sell near major multi-year lows. Investing is about being brave when others are afraid, and in gold and especially gold stocks they are terrified right now. And thanks to the precedent of 2008’s stock panic, which hammered gold, we know that the gold extremes just reached are actually very bullish.