Since October, it has been nothing but up for the U.S. stock market, an uptrend that's been especially unrelenting over the past 3 months. But while this rally has put a lot of money into people's pockets, it has also served as a painful, relative reminder of how poorly gold has done at the same time.
But if you are thinking gold's $250 giveback in the past 7 months is enough of a haircut to revisit the yellow metal, Rich Ilcyzsyzn, Founder of iiTrader.com would disagree.
"If we close below $1600 you can probably bank on $1525," Ilcyzsyzn says, adding that, down there, he would "probably start to get a little bit long."
As he sees it, the trouble really picked up with Bernanke. "The verbage that he said (a couple weeks ago) that I keyed off of is that he's gonna keep rates low through 2013-ish," says Ilczyszyn, adding, "we had all been playing 2014." It was then, when gold had a chance to break $1800, that it faltered.
Ilczyszyn is also expecting volatility to stick around, arguing that $100 swings will be the norm and not the exception. "This is how the market is going to move from now on. We have such a high price, $100 is going to be the normal."
The rising dollar has also played a role in gold's retreat say Ilcyzsyzn, who sees a "disconnect between the old dollar-gold and dollar-stock market" trading mantras.
As much as his call on gold is a ''technical trade" that can be adjusted daily, Ilczyszyn points out that swapping to silver is not the antidote to gold's woes. In fact, he's bearish there too and sees "the redheaded stepchild of the metals", aka Silver, slumping to its own near term lows.
"I think the next level in silver is probably going to be about $30.50" he says, warning that it too could see a boost from foreign buyers utilizing their weaker currencies. For Ilczyszyn that may not be a bottom for silver either as he thinks it may continue to follow gold down to those December lows of last year. Specifically he's not rushing in to buy silver until it slumps to $26.
What about the argument, predicted by some, that risk aversion will return in the second half of the year; something that will undoubtedly send the metals higher? Ilczyszyn says it would work well with the lows he's predicted, allowing investors to get in on those bottoms before that risk aversion sends the metals higher.
What do you think? Is it time to get out of gold and silver? How low do they need to go for you to buy them? Let us know in the comments below.