From today's Gartman letter...... (10-15)

As for gold, we are fearful that far, far too many people are involved with this market and that a correction of some consequence is now upon us. The volatility of the past several days, where gold can rally $12-$15 in a moment’s notice, and then can fall the same, then rise the same then fall again is the hallmark generally of a market making a top… an interim one in our opinion, but a top nonetheless.

We suggest treading lightly therefore, noting that those who had been hoping to see material Indian buying of gold ahead of and during the Diwali Festival may find their hopes dashed. Thus far the buying ahead of Diwali has been so weak that this year’s festival is already being called the “Black Diwali” by the gold and jewelry dealers all across India. As our friends at Thebulliondesk.com note the comments from a dealer there,

"This is one of the worst Diwalis as there is no demand….Only some compulsory purchases are happening and all the jewelry shops are empty. People have started calling this year's festival 'Black Diwali' as far as gold and silver imports are concerned."

Diwali starts in two days and it is always considered wise to buy and offer gold jewelry that is believed, in India, to bring good luck and prosperity. However this year, despite its important cultural value in India and despite playing a key role in the Hindu marriage ceremony, according to thebulliondesk.com,

"Gold demand and imports have fallen sharply since the start of the year in conjunction with continued volatility in prices. "Local demand for gold is currently missing," refiner Heraeus said."

Gold import volumes have plunged to something close to 125 tonnes in the first nine months of the year compared to approximately 355 tonnes in the first nine months of ’08. Worse, according to the Bombay Bullion Association India imported 452 tonnes of gold in the whole of 2008 and the Association fears that imports in the 4th quarter could be close to zero. If the largest taker of gold is not taking it, who then is? And is that off-take sustainable or is it speculative in nature and therefore prone to being swiftly sold. We fear the latter, and if so a drop toward $990-$1010 might develop quite quickly, returning the market to health as the late longs are taken out of their positions. Such is the life of the late gold bull."