Plunges caused by forced liquidation don't usually last long, because the fundamentals simply aren't there to justify prices so low. Usually the smart investors, who have cash on hand, recognize the opportunity and pounce on it. For this reason, I expect a rebound will occur fairly quickly. Gold is a buy under $800, with little downside risk and tremendous upside potential.
The same can be said for gold stocks, many of which are now trading at near or below market multiples -- a clear sign that investors have grown out of touch with what's happening in the world today. For example, Barrick (ABX) is now trading at 15X earnings -- likely the lowest it has in history. To justify gold stocks being this cheap, the world would have to be safer than it ever has been. We would have to be sailing into incredibly calm and benign economic waters. Yet all you need to do is open a newspaper to see that the world is actually more dangerous than ever.
The only explanation I can see for gold selling off is forced liquidation and oil going down to $110. And like other bargain hunters, I am ready to take advantage of the liquidation sale within the next week or so. I doubt we'll ever find a buying opportunity this good again.
Of course, nothing in this business is ever a sure thing, but the opportunities I see in gold today look as promising as any we ever have.