With the following advice that went out to subscribers Monday night, we managed to side-step gold’s $32 plunge yesterday:

“Since a history-making push to $1,000 seems like a foregone conclusion, let's look for things that could go wrong so that we are not caught napping if the action over the next few days doesn't follow the script. Most immediately, it must be acknowledged that the futures have failed so far to achieve a Hidden Pivot target at 992.80 whose provenance, as the accompanying chart (see below) shows, could not be clearer. Monday's high at 991.90 missed the target by less than a point, and although that may not seem like much, it is nonetheless a tad shy of our minimum expectation. A weak thrust today is all it would take to complete the move, but keep in mind that if the futures were to fall first to 980.10, creating a bearish impulse leg on the hourly chart, that would turn us cautious for the near-term (i.e., 1-3 days). Regardless, the two rally targets given here yesterday -- 1047.60 and 1057.20 -- will remain valid in theory unless 888.40 is exceeded to the downside.”

(Click on charts to enlarge)

In retrospect, it would appear bulls had grown too comfortable with the seeming inevitability of a push up to $1000. With all of them already on board for the ride, who was left yesterday to buy the Comex futures up to their historic destination.  No one, apparently, and that’s probably why they dove, taking with them any trader who was not on a hair-trigger alert. You can see how steep the fall was in the chart below. But why, I asked in the chat room?  Came the following response -- probably as good an explanation as we’re going to find:   “[The dollar] stayed relatively steady, traditional technical analysis had both gold and silver as super-overbought, and the commercials decided today was the day to push 'em down.”

That sounds about right to us, although we’d have preferred an explanation that did not ascribe life-or-death power over gold to commercial players who are hugely short the stuff and praying it doesn’t get away from them.  Meanwhile, you can smell the accumulation a mile away, and we suspect that the strong hands doing the accumulating are going to complete the task before allowing gold to punch through $1000. The big question, presently unanswerable, is whether it will be up, up and away thereafter. Some old-timers may recall that in 1966, when the Dow Industrials hit 1000 for the first time, few could have imagined the blue chip average was about to meander for the next 16 years.  Could something like that happen to gold?  Although we doubt it, especially with the global currency system in a state of incipient collapse, no such possibilities should go unimagined by the prudent investor.