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When stocks fall, value mentality often springs.
But the gold bulls —and there continue to be gold bulls out there — have been relatively quiet.
It seems people are losing hope in gold's ability to do what it's investors believed it should do.
UBS's Edel Tully is out with a brief note titled "Gold Post-Mortem."
Tully visited with clients, and the feedback was incredibly bleak:
Seeing clients in the US this week, one thing is clear – market confidence has suffered severely and there is little appetite to buy the (massive) dip. Negative feelings towards gold dominate, the reasons for which range from the US and global growth improvement, the diminished tail risks out of the Eurozone, the consequent redundancy of defensive assets, and rising talk of tapering QE among Fed members that suggest a sooner rather than later end to US money printing. Many are concerned about the persistence of large ETF outflows, and the potential for this to continue given how much this investment segment has grown over the past several years. Others point to intense disappointment with gold’s failure to rally significantly even during periods when the stars were supposed to be aligned in its favour. Indeed, these sentiments echo that of counterparts in Europe. Interestingly, while the potential for central bank gold sales was generally deemed an important contributing factor to the decline, quite a few also share our scepticism and view further sales from other Eurozone periphery central banks a rather small possibility.
Tully and her team, however, don't think it's the end of the world for gold.
"But...gold has already lost so much in such a short period that we are now inclined to think that the worst is likely over in terms of violent price declines," she writes. "We do not think this is the end for gold.
"We expect gold to eventually trade back to around $1400 /1450 and find a home there. Clearly this is not the same as reclaiming its old price ground though. Gold has lost a lot of fans in the past week, and it won't get them back quickly."