It’s unlikely that gold has bottomed.

The steady drip lower in gold and silver prices continued over the past week, and the inevitable test of the July cycle lows drew closer. 

There is now nothing standing in the way of gold making a push to $1,180 and silver similarly moving to $18. 

This year’s downtrend in gold has essentially been on pause since gold bottomed in July. But that could soon change if gold breaks below the key $1,180 level.

Weighing on the market is a resumption of selling by exchange-traded funds. After plunging earlier this year, ETF holdings stabilized during the summer.

Now ETF investors are back in selling mode, having liquidated 1 million ounces over the past month, with 600,000 ounces of that coming over the past week. 

Gold ETF Holdings

The renewed decline in ETF holdings suggests that investor liquidation is not over. Contrary to what some had believed, the “weak hands” in the market haven’t all exited. 

Were the Fed to taper its bond-buying program in December or early next year as many expect, that could spook jittery investors, prompting more selling by ETFs. 

In this context, our confidence is growing that gold will break below the current $1,180 cycle low and make a push to the psychologically significant $1,000 mark in 2014.

GOLD (YTD)

SILVER (YTD)

PLATINUM (YTD)

PALLADIUM (YTD)

….read page 2 HERE