"The numbers to watch have been relentlessly stated. Gold had to hold the previous lows first at $1550 and then the more significant lows of December 31, 2011 and last April/June lows of $1520. It has broken both today with a massive sell-off to the next big number of $1500. Technical analysis dictates that the probability is now to as low as $1400. Traders will watch to see if $1500 can hold on the close but no matter – the price action is down.

David Bensimon’s target given to seminar attendees in October was $1440 – others like Mark Leibovit have $1400 in their models. As always the market will dictate where the ultimate lows are but those numbers simply serve as a warning and a potential price target.

It is irrelevant why gold and silver sold off. The trend is clearly down whether we can identify the correct reasons that seller are outnumbering buyers.

My guess is that Cyprus is selling gold to shore up the banks capital structure and financial institutions in Japan are also selling to raise cash in reaction to the recent volatility in the Japanese bond market. And now that a major short term term sell off has taken place traders and hedge funds who have borrowed money to buy gold will be forced to liquidate in order to meet margin calls.

The market has not given us a reason to buy since late September, which is why I have chosen to stand aside since that time.

A break in silver below $26 brings $21 in play.

The challenge for many investors is that they feel gold should be going up given the huge printing of money by central banks. And they may be rewarded for that view in the long term but for now the short term trend is clearly defined and only market action will dictate when the bottom is in place. "