It’s not unusual for a market to trade sideways after a huge rally and subsequent correction. The market usually needs to take a “breather”. Figures things out. Was the rally justified? The answer to that question is yes, absolutely. So, we’re left scratching our heads now because gold can’t seem to break out and hold above $2,000. Nothing has really changed in all the various bullish arguments. ETF inflows continue. The Dollar is still weak. The Fed has promised to keep rates low for long, and to allow inflation to overshoot its target rate. Has all the uncertainty gone away? Of course not! Fiscal stimulus has stalled but that’s just politics. There’s more to come…

There’s a clear and definable trading range. I still think that we will see $2,100 before $1,800 and that you should play gold from the long side with some Put protection. The market could trade sideways for a long time, but not forever. Perhaps we just went too far too fast. All the bullish factors that drove gold prices towards $2,100 are still here today and not likely to go away. The Fed can print money but it can’t print gold and we will start to see gold supplies tighten and then its off to the races.