In a year where stocks have soared and bonds have gone no where, the 30% year to date slump in gold (GLD) is that much more noticeable. Not only is it conspicuous, but it's also tempting many investors who feel that the metal's retreat is overdone.
And why not? It wasn't that long ago that gold was fetching almost $1900 an ounce. There's also the reality that, at some point, world markets will surely face turmoil again and trigger an inevitable flight to safety.
And yet, CME-based professional investor Bill Baruch of iiTrader.com isn't buying any of it and currently sees nothing but downside for the currency of yore.
"We're looking at (gold) prices down to about $1,000 sometime next year," Baruch forecasts in the attached video, eschewing the aforementioned arguments that gold is ripe for a rebound.
As he sees it, the Fed's reduction of its bond-buying program is a question of if, not when, which should see the dollar rising inline with the upward trend in rates. It's a scenario, he says, that prohibits gold from prevailing, simply because it is priced in dollars.
On a technical basis, with Gold now below $1250, this senior market strategist says the next real resistance is $1225, and then below that, it's nothing but downside until $1,000.
If he's wrong and gold starts to recover again, as it did in July and August, Baruch says he'd cover his short above $1300. Roughly speaking, at approximately $1250 an ounce, that's $50 of upside risk versus $250 of downside opportunity if Baruch is correct in his $1,000 call.
"People are going to be quick to the trigger to sell this," he says. "The days of hyper-inflation are over."
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