Gold was down big today.  You will get different quotes depending on where you look, but some quotes show it was down over $100 today.  That is really incredible if you think about it.  The yellow metal was only trading at $300 a decade ago and now we are seeing 100 point swings in one day.  I won’t be surprised to see 100 point swings going the other way in the somewhat near future.

Today’s action is actually good news for gold investors.  I know that sounds crazy, but this is actually very bullish.  Gold is still up for the month and it needed a pullback.  A few months ago, silver went up huge in the matter of weeks and it came crashing back down in the matter of days.  It is still about 25% off of its high now.

I am expecting gold to go parabolic at some point.  This didn’t happen now.  It will go parabolic when it is in bubble territory and I think we are a long way off from that.  Right now, it is two steps forward and one step back for gold.  We shouldn’t be surprised at all to see a big retreat after the run we just had.  It is always impossible to accurately time the pullbacks and it is just as hard to predict how big of a drop there will be, but it shouldn’t surprise us.

While I am not making any short-term predictions on the price of gold, I do expect the price to continue its climb in the next several years.  The fundamentals are all there.  The economy is still struggling, unemployment is still high, the deficit and debt are huge, and price inflation is relatively low.  On this last point, you may think that that is bearish for gold, but I am not seeing it that way.  With price inflation still relatively low (especially as compared to the 1970’s), it might encourage the Fed to start QE3 (more digital money printing).  The Fed is more likely to continue its policy of monetary inflation if it doesn’t see price inflation as an immediate threat.

Expect more and bigger volatility in the gold market.  I would expect to see silver get in on the action soon.  Silver is usually the more volatile metal, but that hasn’t been the case in the last few months.  It is also a good time to eye some gold stocks for speculation purposes.  Just be prepared for a roller coaster ride.