Bearish Case Against Gold Falling Apart

Two of the bearish cases against gold and gold stocks that has developed in recent weeks has been that the Fed was imminently ready to raise rates and reduce its balance sheet..... which has been nearly invalidated by Bernanke's testimony and recent Fed officials. The second pillar has been the idea that the European economy was improving. Well so much for that.

First, we had comments from Lars Feld, an economic adviser to Germany's Merkel, stated in Handelsblatt (source Zerohedge).....

The Italian economy would not find their way out of the recession, according to the pessimistic assessment by Lars Feld: "The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance."

Apparently, the Italians were not ready to move on the path of reform that has been taken by Mr. Mario Monti, Field said.

"You can not expect that Italy's European partners or the ECB will stabilize the Italian economy, when its people are not ready for reform."

 Additionally, the Eurozone Retail PMI indicates continued weakness for European retailers.

The bear thesis for gold was apparently that an improving economy would lead to a pullback in central bank QE efforts. Ya, that is going to happen.