The calm person, who is not afflicted by these 

feelings and is steady in pain and pleasure, 

becomes fit for immortality. 

- The Bhagavad Gita

There were many factors swirling through the precious markets this week. We can start with the bigger emotions such as panic, fear, and disbelief. Then we can move to some big players, such as Goldman, who have jawboned and sold into the teeth of a bull market and have adversely affected the price of gold. Finally we can think about the limp in the world economy.

But meanwhile, we have seen a yin-yang develop that ascribes to the two forces battling over gold's price, almost equal strength. There is the rush of ETFs to sell their supplies and that pressures the price. But there is a countervailing influence, physical buying in Asia, that is helping gold find a bottom and hopefully move back at least to where it was before the debacle. Additionally, the word is that when gold was higher in the previous few months, jewelers' inventories drifted lower and lower and now that prices have fallen, the wholesale buyers/suppliers are stocking their cupboards.

Some central banks that considered themselves either light in the percentage of foreign reserves held in gold, or who are dollar flush, have also taken to buying gold. (Korea and Singapore are leading the parade.)

Although one doesn't like to wish anyone poorly, the British government's debt downgrading by Fitch's is just desserts for Britain's having embarked and staying the course on an ideologically-inspired austerity program that not only is slowing its economy but also let in the ratings dogs. Major downgrades of a nation's debt generally push gold higher (but not always!)

For the moment, the fear of European countries other than Cyprus having to unload their sovereign gold stash to pay debts has subsided somewhat. Often the first domino falls and the rest simply don't. We thought the fear was ridiculous anyway. Even weak-sister Greece wouldn't stand for that, whereas a city-state of a million people like Cyprus has to take their lickin' like it or not.

Investor sentiment is mixed according to the KITCO survey for next week. Of 27 respondents, 17 see prices up, 4 down and 6 see gold moving sideways. "Up," as we all know, is a relative word. 

Not much has changed fundamentally for gold, so its decline last week and this should be considered a very strong technical sell-off. There were also a lot of margin calls not just for spot and physical gold, but for those who were over-leveraged in paper gold or ETFs. As those excesses are wrung out of the market, some stability should return.

The softer economies of Europe, China, Japan and the United States are also an undercurrent lending some renewed support for gold as a safe haven.

As we said for much of the last 7 trading days: if you're a bull, it's going to be a hard grind up, but grind it will.

For the moment, we should be content with buying on dips and selling into the mini-rallies.