Over the past week I received numerous emails regarding my June 13 post Mish Buys a Basket of Miners.

People want to know if I am still in the trade. Others taunted they will be buying when I selling. Well good luck with that idea, because this is an investment not a trade.

One reader proposed "My prediction is when the Fed finally stops printing, gold will drop to $750 and when they start raising rates gold will drop to $500. What do you say about that?"

I answered "Your prediction seems as silly as those who knew gold would be at 2400 or even 3000 by now. No one can accurately predict such things."

I bought with the intention of holding for a lengthy period, stating "I believe precious metal miners represent true value, but I cannot state when the market will come to the same conclusion."

What's changed? The answer is "nothing". So am I selling? Of course not, and it seems silly to even ask.

Anti-gold sentiment is amazing, but sentiment alone is not a good timing factor. It can always get worse.

A Plague of Gold Bears and The 'Tapering' Myth

Acting Man touched on the sentiment theme in A Plague of Gold Bears and The 'Tapering' Myth.

Readers may recall that in 2010 and 2011, after largely ignoring the fact that gold had been going up for more than a decade, virtually all the major mainstream banks and brokers suddenly turned bullish on gold. It was a huge warning sign as we now know with the benefit of hindsight (and as a few people suspected at the time). At the time target prices for gold were all of a sudden raised by all these worthies. Not even one of them sounded an alarm.

These days, not a day passes when they are not ganging up on gold, practically falling over each other with ever more bearish forecasts. Here is the harvest from just the past two days:

Gold to Drop Even Further as Fed Increases Real Rates: Goldman Sachs

Deutsche Bank cuts gold, silver forecast for 2013

Credit Suisse cuts gold, silver, Brent forecasts

"Paradigm shift" to send gold sliding to $1,200 an ounce: SocGen

And last but not least, what is probably the funniest headline yet delivered by all these newly minted gold bears:"UBS Says QE's End May Render Gold 'Obsolete'"

A major theme of these forecasts is, you guessed it, the Fed's alleged imminent 'QE tapering', and/or 'raising of real interest rates'.

To the latter we would point out that real interest rates (nominal interest rates relative to inflation expectations) have indeed risen lately, but it was certainly not the Fed's fault. They are rising in spite, not because of the Fed. In fact, their recent rise, which has surely sent a few 'players' scrambling for cash (and many imaginary bank profits into the nether reaches of money heaven), is a strong reason to suspect that monetary pumping will not only not be 'tapered', but may well end up being increased. But that is of course speculation and is neither here nor there. Instead, we want to point out a different error in the thought process described above.

Keep in mind by the way, that the same banks that are bearish on gold due to the 'tapering' mirage are bullish on stocks inter alia because 'tapering' is thought to be 'still far away'. In reality, all they are doing is extrapolate recent trends, while making up 'reasons' for these extrapolations that are meant to make it sound as though they actually knew why markets are doing what they are doing.

It is really quite remarkable: for ten years while gold did nothing but go up, most of these these guys were largely silent. Their gold price forecasts were on average dead wrong with unwavering regularity - they kept predicting price declines. Then, as it approached its peak, they suddenly turned bullish and finally raised their price targets (again, on average). Now that it is going through the first major correction since the bull market began, its decline is accompanied by inordinate sound and fury. No other market has produced such a flurry of widely and loudly telegraphed grave dancing.

Grave Dancing

I invite you to read the rest of the article because it's worth a closer look.

Curiously, Just as Acting Man discussed above, talking heads say the stock market is up today because the lower GDP print means the Fed will not taper bond purchases, yet tapering is bad for gold.

For discussion of ECB and Fed tapering as well as the unexpected slowdown in US GDP, please see Draghi Announces ECB Exit From Easing Remains Far Off; Think the Fed Has an Exit Strategy?

What's the Real Long-Term Driver for Gold?

Most analysts are totally clueless about gold and gold markets. They cite jewelry, mining production, central bank sales, and all sorts of other irrelevant factors in their analysis.

If you really want to understand what gold is all about, I suggest you read an interview on Gold Switzerland with Robert Blumen: "What's really key for the price formation of gold?"

Blumen discusses assets vs. consumption, mine supply, jewelry, marginal demand, the alleged (and nonexistent "gold deficit"), and sentiment.

Blumen does not offer much commentary on the GATA price manipulation thesis other than say it's "plausible". I suggest most of what GATA says is at best strongly over-hyped, including the GATA alleged "gold deficit" (a point on which Blumen agrees).

Rather than excerpt the interview, I simply suggest you read the article in entirety, save this one humorous anecdote at the end:

"People who say [gold is in a bubble]did not identify the equity bubble, did not believe that we had a housing bubble, nor have they identified the current genuine bubble, which in the bond market. But now these same people are so good at spotting bubbles that they can tell you that gold is in one. Most of them did not identify gold as something which was worth buying at the bottom, have never owned a single ounce of gold, have missed the entire move up over the last dozen years, and now that they're completely out of the market, they smugly tell us for our own good that gold is in a bubble and we should sell."

Unsafe At Any Price

Indeed, sentiment has soured so much that MercBloc president Dan Dicker says Gold Is Unsafe at Any Price

I leave it to the reader to decide if that headline is even more ridiculous than UBS Says QE's End May Render Gold 'Obsolete'