On Thursday, February 4, gold prices took a front-row seat on the Nosedive Express: In just two hours of morning trading, the yellow metal plummeted more than $40/ounce -- its fastest price drop in more than 14 months.
As for why -- well, according to the mainstream experts, a slew of negative economic news took the wind out of gold's upwardly-mobile sails; namely:
"Gold Falls On Sovereign Debt Concerns" -- AND -- "Gold Follows Dow Futures Down" -- AND -- "Gold comes under pressure on disappointing weekly US jobs data."
Oh how the tables have turned. See, as recently as December 2009, gold prices were soaring to never-before-seen record highs. And, as far as the financial in-crowd was concerned, gold was the ultimate safe-haven, the shatterproof bomb shelter as all other assets were being blown to smithereens.
Case in point: When the black clouds of a bearish ISM reading, a negative Labor Department report, and a $60 Billion Dubai World's debt crisis darkened Wall Street on December 2, 2009 -- the gold bulls were sing'n merrily in the rain, as this news item from the time makes plain:
"Gold continues to defy gravity and for good reasons... Gold has historically been seen as a safe haven asset to which investors flock at times of financial and economic turmoil... Dubai's debt woes have helped spur the realization that the danger for investors is" spreading. (MarketWatch)
Yet -- On December 3, 2009, gravity came crashing down as gold prices lost grip of their record peak. Since then, the precious metal has been falling, falling more than $160/ounce to the three-month lows we see today.
As for seeing gold's inability to "defy gravity" BEFORE the tide turned -- here, EWI's team of analysts worked together to achieve that very goal via the following insights below:
December 2009 Elliott Wave Financial Forecast: Presented the following chart of Gold's wave structure since the 1999 low versus the Disparity Index and wrote:
"Our chart labeling of gold shows that once again, prices have reached the upper end of the 10-year trend channel; also notice the weakening..." of the Disparity Index over the last three years. "Prices and conditions are more ripe for a reversal. The severity of gold's upcoming decline should surprise investors."
December 4, 2009 Short Term Update:
"The fuse is lit for a major reversal in the precious metals. Odds are strong that prices have already topped. We said the reversal will be 'violent.' So far. So good."