It has been psychologically draining for goldbugs to watch day after day as the "pig" makes new high after new high, obviously benefiting from the inflation-fueled concept we in America now call an economy.

From the July 13 update "Endgame"...

"I believe corporate chiefs are wink winking and nudge nudging with Wall St. as they prepare to show the public the goods for the June quarter."

This forecast was borne of anecdotal evidence seen daily in my other role in which I play an American manufacturing business owner. If you recall, public companies "ABC", "XYZ" and "PU" were doing all they could to dress up Q2 results for Wall Street. What immediately followed was a continued party on the Street, as the rally from the April bottom extended. I also wrote at the time: "But In my opinion, woe be anyone who buys this as anything more than a trade. Ma 'n Pa stand to hold a bag of unimaginable weight. If I am wrong I am wrong, but I sense a huge level of desperation and plan to watch ever more closely from this moment on. It appears that the mark up phase of the endgame is upon us."

Nothing has happened to change this view. In fact, the elaborate Kabuki dance going on in Wall Street offices and corporate boardrooms combined with extreme complacency and bullish sentiment only serve to bolster the bearish case. The bear ranks are bruised, beaten and slap happy as they have been bullied repeatedly. Again, this is a bearish condition. If it's cool to be bearish, you may be on the wrong side of the trade.

Meanwhile, gold and gold mining stocks have been painfully stuck in the mud since mid-June after a sharp rally off of the May lows. The HUI to Gold ratio was in danger of breaking down but the S&P was still within its "going nowhere" channel when measured in real money.

I admit to having a few unsavory thoughts about this chart (as noted in biiwii's initial investment letter) breaking to the upside, but assigned greater odds to a gold rally while the broad market consolidates or an utter broad market tanking while gold basically "hangs around". Also noted: "We are however, slowly dripping into the miners." It is hard to buy while holding your nose, but when you know the system runs on inflation of credit and currency, you also know that gold's bull market is not complete...not by a long shot.

For goldbugs who are already well positioned, this can be looked at as a favorable time. The sector is not yet over bought, it's most visible stock, Newmont Mining, has broken above 40 on volume, the HUI-Gold ratio is repairing itself and best of all, it is the sector that beckons the "smart" money in that the risk to reward ratio is much better than the extended broad markets. Fundamentally, it is gold that exposes the inflationary policy that runs the economy. In other words, the economy and stock market ain't goin' nowhere without gold in the longer run.

This does not mean rush out and buy the miners (or bullion for that matter). There are always opportunities. I am happy to be in position to ride the next leg of the gold bull market, whether or not it has already started, but will only add to positions on pullbacks or consolidations. Buy low and sell high (the miners, the metal is a long-term store of value).

Meanwhile, what of our friendly "pig", festooned with bullish regalia and beckoning Ma 'n Pa to step up to the table? Ask yourself, "what is the risk from here and what is the potential reward?" and the answer should be fairly evident. There is potentially some decent upside left, but I personally prefer to buy value, not price or momentum.