WOWZA......

So many good things on such a bad overall day in the market.

It was very NOICE to see gold up $23+ and take out a 28 year high closing at $857. But more important and more impressive were the gold stocks. The HUI was up $25!! $25 mfing points, while the overall market was down 200. Who woulda thunk it. Today, maybe was the first time I have ever seen the gold stocks act independent of the overall market. A good sign if I say so myself.

So why was gold up this much. A few reasons. First, the action on Friday was a complete joke in gold and the dollar. Both were victims of low volume. Second, it is becoming quite obvious that the US economy is in rapid decline. I think a recession is already here. Once the ISM report came out and it was dismal, all bets were off in the market and the dollar. Once the dollar began its free fall, it was off to the races for gold. Oh yeah, oil at $100 helped also. Like I previously said, once gold broke clear of $847 (prior resistance) with some authority, gold would not look back.

Once I saw gold eclipse $850, I doubled my positions in my gold stocks. Now, given the overall performance of the market, I was very nervous doing this. But, surprisingly, my worries were for nothing, as the gold stocks had a mind of their own. I could not beleive that after the market opened, it was possible to buy a few of the major miners up only a few pennies. That, is called a gift. Overall, it was a very profitable day. However, not as profitable as if I had come into the day long my normal quotient of gold stocks. But, I was very unsure where things would be heading this first day of the year. However, as they say, profits are easily made up then losses. There have been plenty of days I came into the market long and wished I hadn't. I can honestly say those days are worse than missing a profit.

So what now brown cow? As I write this around 10pm, gold is down $3 (surprise, surprise), but I guess that is to be expected. I don't expect the bears to just roll over and play dead, as I am sure they will take a stand somewhere, they always do. However, I think gold gets to $887ish relatively quickly and without a problem before there is a meaningful correction.

One thing I noticed was that whenever gold was mentioned on CNBC, it was usually with some derision. Tonight, on Fast Money, Guy Adami, who has been short gold for a while and calls for it to go back to $700, was basically waving yellow flags begging people to get out. I quote "if you are in gold, you need to aware of the fact that you could wake up and gold could be down $100. I have seen it happen before."

This quote is so wrong on so many fronts. Gold was down $100 after a huge spike up back in 1979. The whole gold movement back then is so different than this one. Back in '79-80, the country had rampant inflation, AND spiking interest rates. This all culminated with gold hitting $850 in a matter of a couple of weeks. It was an unsustainable ride up. This led to gold coming down just as quick. The gold bull of 1979-1980 was one of the few times in financial history where the average investor cashed out at the top.

Folks, this gold bull market has been going on for six years now. It is the quietest bull market I have ever seen. This is the type of growth that you want to see. Slow and steady is the best way. Now, back in 1980, there was Federal Reserve that actually knew what it was doing. Paul Volker, knew the best medicine for the economy was higher rates. NOT cutting them, as Benny B, believes. Also, the country is in much worse economic shape now then it was in 1979. This is thanks to Easy Al and his '"Bubbles R Us" approach to Fed stewardship.

So, unless the Fed finds religion and is willing to accept a prolonged recession, gold has no where to go but higher. It is for these reasons, that IMO, gold cannot and will not fall $100 in a single day. That doesn't mean we won't have plenty of "oh shit" type of days, but gold still has much higher to run.

Think about this, prior to today, how many people know that gold was even close to a new high. How many average people even own gold? When I start having my friends, who I have been preaching gold to for years, start asking me how to buy it, and when I see gold on the cover of Time magazine, then I might start rethinking my gold positions. But for now, all roads point to gold.