We expect further declines once the massively oversold market conditions have been unwound, despite the plethora of online commentators proclaiming this to be, yet again, a "once in a lifetime" buying opportunity.
The massive volume on the sell off contrasts markedly with the hesitant and muted buying since, despite allegedly strong physical demand from China and India.
Everything that is unfolding right now is screaming DEFLATION to us - plunging precious metals, copper, oil and other commodities, equities forming a top and a resurgent dollar. Although this seems counterintuitive, considering the massive stimulus programmes across the world and record low interest rates since 2008, that is what the markets are telling us.
If this is the case it is a very worrying development, as central banks have used all of their big guns and have nothing left - if the markets don't turn around, and fast, we could be looking at a liquidity crisis that will make 2008 look like a picnic.
However, we are traders and can make money whether markets are falling or rising, trending or rangebound. Our overall strategic bias is now bearish, unless or until we break back above 1525. A move above this level will see us turn "neutral" on gold and a break above 1800 would be strongly bullish.
Today's video for subscribers looks at the trading patterns since the sell off and our strategy for our next trade.