I've noticed lately different people have compared the gold market now to 1974, when gold lost nearly 50%.
I decided to do some research and found that the reason why gold lost so much in 1974 was because of central bank selling.
From: http://www.usagold.com/gildedopinion/buckler2.html I think it was Monty Guild that mentioned this as well in his interview with Chris Waltzek on goldseek.com radio.On January 1, 1975, after 42 years, it again became "legal" for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it "burned" large numbers of small individual investors.
So it wasn't because of the stock market rally that gold went down, as people often point to. Rather, central banks were suppressing the price of gold. Fast forward to today, it appears we are on the verge of another stock market rally. If the stock market does rally, this time things should be different simply because central banks are now net BUYERS of gold.
After saying all that, could gold go down some more? Sure, after all we are still in correction/consolidation mode right now. Anything is possible here. But something tells me we won't be seeing $1000 gold again. As others have said, "buy the dips!"
Enjoy the ride, people. We've got some gut wrenching days ahead as well as some awesome days ahead.