The bulls are scared the market may violate the lows of October 10. The bears are afraid of another sudden snapback rally. Corporations fear a global recession will wipe out their bottom lines. And consumers are scared they won't have any purchasing power this coming Christmas. 

Bond buyers fear the potential for default. Bond-rating services are afraid their internal e-mails will be read aloud before a Senate subcommittee.

 According to a recent Investor's Business Daily poll, 42% of the voting population is afraid Barack Obama will be elected president... and 46% fear it will be John McCain. The remaining 12% is scared of both.



This is remarkable.

 In an environment where governments all over the world are printing money and financial catastrophes occur daily, gold should be rallying.

 The fact that gold can't catch a bid says the forces of liquidation are stronger than the forces of economy.

In other words, investors, governments, institutions, and hedge funds are raising cash and will sell anything and everything to get it.

  This creates a very scary environment in the short term. It's an environment in which price doesn't matter.

And logic doesn't matter. All that matters is the need to deleverage and raise cash.

 The biggest risk, though, is not to gold or to gold stocks. The biggest risk is to the general stock market. 
 So when funds need to unwind 30-to-1 leveraged bets, we conservative traders, are held hostage.

 I'm tempted to buy any number of stocks trading at historically low valuations. But now, I'll wait until they get even lower. And they will.

 The market is not responding as it should to oversold conditions. It's not responding to positive earnings announcements. ..........And it's not responding to bullish comments from analysts.

 It is responding to liquidation requests. And I fear we haven't seen the last of them.