There is a great war going on in the gold markets. On the one hand, investors (mainly in the future markets) are selling as much gold as they can. And why shouldn’t they, great returns lie ahead is the bottom breaks. On the other side, investors (mainly in the physical markets) are buying gold hand over fist. And why shouldn’t they, the breakout level of the bear market is just a few steps away.

These forces are keeping a lit on the gold price. But this can’t hold forever. A breakout, either way, is right around the corner for gold.

The shorts have the technicals on their side, the longs are backed by fundamentals.

And in the end, the fundamentals ALWAYS take the lead.

That’s why we are positioned on the long side. Also, the returns on the upside could multiply, while on the downside, the maximal returns are a simple double-up (and that’s even in theory, as the gold price never goes to zero).

Lets look at this is in long term chart of the gold price versus the yearly percentage change.

As you can see in the chart above, gold is currently barely moving.

Up till 2011, the gold price was making yearly moves of up to 50%. Not bad, but have a look at the period of 1978 to 1980. Gold was screaming higher, with yearly percentage gains of over 250%!

That’s what we call a bubble.

The recent years, when gold was on a run, don’t even come close to being a bubble. The bubble phase, like in the seventies, is still on its way for gold.

And back then, the biggest returns where made with gold mining stocks. So, as these stocks are at decade low depression levels, why wouldn’t we be buying the most hated stocks in the market.

Remember, successful investors buy low and sell high. Move against the heard, pick up dirt cheap stocks… Gold miners fit this category perfectly.