The market is experiencing a divide that didn’t exist before. Until recently, there have been many people (millions) who misunderstood gold, treating it like a stock. Many of those people are disappearing from the market (having been washed out by the paper gold failure), and soon, most of those who are still in gold will be those who understand it. The higher the percentage of gold ownership that is in their hands, the more solid the floor.

Whatever that floor may prove to be, gold will stabilise. Then, inevitable inflation will cause renewed interest in gold by the misinformed, as it begins its inflationary rise. By the time gold passes $2000, the misinformed will be falling all over each other to get back in—still not understanding gold, but desperate to ride the coattails of “a winner.” It would be at this point that we would go into a period of dramatic inflation, with a concurrent gold mania.