I owe all of you an apology. Approximately a month and a half after the end of every calendar quarter for over a year now, we've made a point of taking a good, complete, unbiased look at demand for gold, and how that may impact its price in the future. This time though, I flat out forgot to do it when the World Gold Council published the information in mid-November. We're going to rectify the error today, and show you the gold demand charts nobody else seems to want to put together for you. If you remember our quarterly gold updates, you'll know exactly what I'm talking about and why these reports are so important. If it doesn't ring a bell though (or if you're new to the newsletter), we're not talking about the day-to-day interest rate or inflation chatter that may or may not affect the price of gold. I'm talking about our thorough look at whether or not gold's buyers are adding or subtracting from their hoard. Money talks, you know? After that, we most definitely want to dissect the market after today's drubbing. We're now at a major inflection point, and what happens the rest of this week is going to make a huge difference in how December takes shape. Another Miserable Quarter For Gold We alluded to it above, but let's make it crystal clear - what you're about to read regarding gold is primarily for long-term investors and not for short-term traders. The following data is a look at the "fundamentals" of gold we all seem to hear a lot about but rarely actually put our hands on. The information is so big in scope, in fact, that it borders on the philosophical aspects of gold as an investment. If you're strictly a short-term trader, feel free to read, but you may not want to necessarily respond to it. So how did gold's fundamentals shape up in Q3? To hear the World Gold Council's assessment, things are just fine. As was noted in the press release accompanying the report published in Mid-November... Gold continues its journey from West to East as buoyant consumer markets balance investment outflows. The latest World Gold Council Gold Demand Trends report, which covers the period July-September 2013, highlights the resilience of the global gold market in what is traditionally a slower quarter for gold demand. The continued growth in consumer demand across the globe and the strength of Asian gold demand overall, reinforces the patterns first seen at the beginning of 2013, clear evidence of the self-balancing nature of the global market. Overall demand for gold in Q3 2013 was 869 tonnes (t), down 21% on the same period a year ago. However, demand remained strong across most countries and sectors. The exceptions were gold-backed ETFs, which had net outflows of 119t this quarter, compared to 402t in Q2 2013, and India where the result of government intervention in the Indian gold market was to reduce demand by 71t this quarter. Taking the year as a whole so far, the jewellery, bar and coin sectors are showing year-to-date increases, while technology demand remains robust. ETF investment demand is the notable exception, having weakened this year. Sounds ok, right? I'm just wondering what the folks at the World Gold Council are smoking, because the numbers and trends I'm seeing are anything but "robust" and "resilient". Let's dig in, starting with the bigger picture. Last quarter, gold consumption totaled 869 tonnes. That's the weakest figure since the third quarter of 2009, when gold prices and consumption were just starting to move towards their peak from the third quarter of 2012. Gold prices are now about 25% below where they were at that peak, but despite the cheaper price now, nobody wants the stuff anywhere near as much as they wanted it then. In fact, demand for gold has now fallen for three straight quarters, and has fallen in six of the past eight quarters. Like I said, there's nothing resilient or robust about it. So which of the key areas of gold consumption are driving the decline in demand? That's the concerning part about the whole thing - all of them are broadly deteriorating. The ETF industry continues to be a net seller, and that may be the biggest reason for the slump. Though the net-sales of 400 tonnes of gold from the fund industry in Q2 was whittled down to "only" net sales of about 100 tonnes for Q3, that's still enormous pressure on gold prices. And, though central (government) bank purchases of gold perked up from net-buying of 50 tonnes in the second quarter to 93 tonnes in the third quarter, that's still off of the peak purchase levels we were seeing over the course of 2012. Consumption for jewelry-making and bars/coins also nose-dived last quarter after what was admittedly a very encouraging Q2 on both fronts. Jewelry usage fell from 575 tonnes in Q2 to 487 tonnes in Q3, while bars/coins consumption fell from 508 tonnes to 304 tonnes. It's still too soon to call it a trend, but it's not too soon to be thinking about the possibility that even these semi-reliable arenas are starting to fade. Folks, I've said it before, and despite the fact that it's going to make some of you want to throw rocks at me, I'll say it again... gold-mania and the accompanying "trade" that went with it is over. You can theorize and hypothesize all you want to about the reasons it's going to go higher in the future. I just don't see it happening. See, the best thing gold had going for it (and in retrospect, maybe the only thing gold had going for it) between 2009 and 2012 was the crowd's hysteria. The trade is no longer hip, chic, novel, or fun, however, so folks have moved on to justify other trading themes. With that lack of interest as the backdrop, I can see gold sliding all the way back to ... well, let's save that discussion for tomorrow when we have time and room to do some good technical analysis on it. We'll compare it to the U.S. dollar and interest rates (which do have a short-term impact on gold's price). Now, about this market... It's Still Not Time to Sweat, Though We're Close Hey, before I forget, did you get into our recent picks on Skyworks Solutions (SWKS) and Fred's (FRED)? I hope so. While Fred's hasn't done much yet, I still think it's going to be a nice trade for us. And as for Skyworks, you only have to look at the nearby chart of the stock to see it has indeed broken out of the triangle pattern, as I expected it to. While it's only up about 4% from our entry point, the ball is rolling, and that's good enough for now. I'm still looking for a few new ideas, but honestly, I'm just not finding much I like. It may have something to do with the fact that stocks are starting to struggle. If you'd like a few more stock picks than I'm giving you though, I suggest this. More pressing is a look at the market after today's sizeable dip, which - in poker parlance - is forcing traders' hands. More directly, if the bulls are really interested in staving off a pullback, they're going to have to do so here and now, as in tomorrow. The reason I say that? The S&P 500 finally brushed the 20-day moving average line with today's low, and even managed to push up and off of it a little bit to wipe away some of the loss. It wasn't a great pushback though, and the issue is still in question. Simply put, if the S&P 500 closes under the 20-day average sometime this week, that should jump-start a more significant dip. If instead the 20-day line becomes a floor from which the bulls can mount a charge, we should get a few days' worth - maybe even a months' worth - of trade-worthy strength. It's as simple as that. While I'm keeping an open mind until we see the 20-day moving average line crossed or not, I don't mind telling you the VIX's persistent rise this week has me concerned. It is above the ceiling around 14.3 I was talking to you about in recent newsletters, so technically speaking, you could already make a bearish case here. I'll just add how I've got a feeling the bulls are going to put up something of a fight here no matter what, probably tomorrow, in an effort to unwind the weakness we've seen this week. We even saw a little bit of that late in the session today. Don't be lulled into thinking one or two good days is indisputable proof we're headed for yet-another round of bullishness. That'll just be a little volatility. A lot more needs to happen to really cement a renewed uptrend into place. Strong buying volume will be one of those needed clues, and honestly, the slower any rally unfurls, the better. You know what though? We'll just have to cross that bridge when we get to it. Of course, we may well get to it tomorrow. Talk to you then.