Gold continues to collapse lower. The metal is trading at $1,606.50, -29.00 (-1.77%). Many retail investors have been shocked by the massive sell in gold but I called it out in multiple articles weeks and months ago.
The key to recognizing the sell off in gold was simply to compare how many retail investors had bought into gold in the last few years on pumps from the media and analysts. Just like the market in 2007, the media pumped like crazy and the average investor bought, hook line and sinker. The markets dropped more than 50% off those levels. When the average investor is all in, the top is in and a collapse will ensue. The bottom will only be reached when the average investor throws in the towel and sells for a major loss.
Word to the wise: When one out of every four commercials on news radio stations says to buy gold in your 401K, avoid like the plague.
The supports on gold are as follows. First the $1,500 level. This level is a major point. Should it continue to collapse, $1,200 is the next stop.