You will vividly remember the frenzy about gold during the Brexit. Everyone and his uncle was talking about gold, and mainstream media were excessively optimistic. We warned our readers at that time, as sentiment was extreme right at a time when the secular bear market trend was being tested (read Gold's Most Critical Test: Strongest Resistance Area Of Its Bear Market).

Now we start seeing the confirmation of our observations. Gold's chart is looking increasingly weak, buyers ran out of steam, and our 'fear' (given that we, somehow, are gold bulls) is that gold is pointing south. We do not exclude the scenario of gold testing $1000 an ounce in 2017.

Our key concern throughout the whole year has been the futures market. As the COT positions show, below chart, the positions are HUGE. Now one day, potentially sooner rather than later, these positions will mean revert, which implies that gold prices will come down sharply.

We start sensing that gold is at a make-or-break level: if this price level does not hold, the massive futures positions will implode, and so will the gold price. If gold goes higher from higher, we could see a huge meltup similar to 2011, though chances for that scenario to play out are small.

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