It didn't take much to bring beleaguered gold traders back from the brink. Jitters in Japan and fear over the Fed have stoked a reversal in gold that follows a seven month, 25% slump.

While the most widely traded metal is still only about $25 away from the two and a half year low it hit in April, Paul Schatz, president of Heritage Capital, thinks there's currently a lot more upside than downside in gold.

"This is probably only half or three-quarters of the way done," Schatz says in the attached video of the long-term rally in gold. In fact, in a recent note to clients he wrote, "I do not believe there is enough evidence at this time to conclude that the secular bull market in gold has ended."

What that means, Schatz predicts, is that "if you give gold 3-5% on the downside, I think your upside is probably 15%," which would push gold north of $1500 again. Not only does he think it is "way too early" to give up on gold given what's happening in Japan and Europe, Schatz thinks most investors have it wrong.

"I'm a very big believer in the masses being embarrassingly wrong at major turning points," Schatz writes to clients, adding that the skepticism about the metal's future has gotten ahead of itself.

After rising 80% in the past seven months, Japan's benchmark Nikkei 225 (^N225) stock index finally blinked. A staggering 7% single-day decline rocked Tokyo's market in ways not seen since the Earthquake-Tsunami disaster of 2011.

While the cause of the sell-off is being laid at the feet of weaker than expected Chinese manufacturing data and worries about the Fed curtailing its five year bond buying spree, Paul Schatz, president of Heritage Capital sees it a little differently.

"It's an elevator shaft decline," Schatz says in the attached video. "You can attribute any kind of news you want to it, but the fact of the matter is, this was a balloon so blown up with air, the slightest little prick was going to take an awful lot of air out really quickly."

So now the question is, will it continue in Japan? And will it spread to the U.S. and rest of the world?

From Schatz's stand point, what happens today and tomorrow is not as important as what happens in the next few weeks. While he predicts weakness here and "reverberations around the world" he thinks this will make for a great buying opportunity, albeit one that many people will miss out on.

"All the people sitting on the sidelines have been salivating for any chance to get in," Schatz says, adding, now that it's here, they won't. "I'll argue those people are not going to buy, that markets are going to stabilize" and then resume their uptrend.