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One factor that is different this time about the gold rally, that wasn't true about past gold rallies, is that "paper gold" existed this time and the retail investor had a much easier time buying it. At one time, the SPDR Gold Trust (NYSEARCA:GLD) had more assets than the SPDR S&P 500 (NYSEARCA:SPY). Since its peak however GLD has been bleeding assets, and has liquidated 300 tons year to date, and is now under $50 billion in assets.

This video does a good job reviewing the status of gold and GLD. Key points are:

1) Outflows from GLD are accelerating. Retail ownership is turning out to be a double-edged sword. Not only did GLD make it easy to buy, it made it easy to sell.

2) GLD has liquidated 300 tons year to date. The fund's assets are 1/2 of what they were at its peak.

3) GLD is a "forced seller" and is having a large impact on gold market.

4) Balancing risk and performance is leading advisors to likely lower their allocation to gold. It is hard to recommend an underperforming asset when the overall market is doing so well.

5) Gold has fallen out of favor.

This video does a good job reviewing how a main driver for the demand of gold, the belief that inflation would develop, never materialized. Key points are:

1) Inflation never developed, removing a key reason to own gold.

2) Paper money never became "worthless" and we didn't become the "Planet of the Apes."

3) Gold was overhyped - "gold was going to $5,000."

4) The often maligned Federal Reserve has been right, and its critics have been wrong.

5) The Fed's "unwind" won't likely cause problems either.

When most analysts talk about gold, the analysis almost inevitably turns to a technical review of the charts. The reason for this is because gold is simply a piece of yellow metal, and beyond the highly subjective and difficult supply, demand and production cost analysis, there aren't many good ways to value gold other than what the market is willing to pay for it. How else can you explain the same item selling for over $700 in the late 70's, under $300 in the early 2000's, over $1,900 two years ago and under $1,400 today? Gold doesn't really get used up in making jewelry or other industrial processes, it mostly just sits in vaults and basements taking up space and "storing" an ever-changing value of wealth. Depending on which decade you visited your vault or basement stash, gold could have either made you rich, or sent you to the poorhouse. Some analysts will say there is only one way to value gold, and that is through quantifying "sentiment."

One of the best market technicians out there is Louise Yamada, and in this video she gives her technical review. Key points are:

1) The title of the video is "Time for Gold Bulls to Abandon Hope."

2) There is tremendous overhead supply. "Please just get me back to even and I'll never buy gold again."

3) Down 32%, it will take gold time to recover.

4) $1,539 is a resistance level that may be reached in a "bounce."

5) The chart is "broken."

6) The physiological urge to buy gold must return.

7) There are a lot of disappointed buyers that may be looking to just get out of their positions.

8) Yamada's firm had price targets above $1,900 that were not reached.

9) Silver has a been hit even more than gold, as represented by iShares Silver Trust (NYSEARCA:SLV).

10) "Hope" is never an investment philosophy.

11) "I think that one has to look at a possibility here as to whether or not we've got the end of the gold bull market."

In conclusion, most of the pillars that supported the elevated price of gold were purely based upon expectations that simply never materialized, and in my opinion are highly unlikely to develop anytime soon. The main drivers were the fear of a monetary collapse, hyperinflation and the demise of the US Dollar. Basically a bet on gold was a bet against Ben Bernanke, and it looks like Ben Bernanke is winning. If gold drops below $1,000 it will be at a level reached before all this "money was printed out of thin air." As the economy continues its slow recovery, gold will likely continue its decline as investors find better returns elsewhere.

Disclaimer: This article is not an investment recommendation. Any analysis presented in this article is illustrative in nature, is based on an incomplete set of information and has limitations to its accuracy, and is not meant to be relied upon for investment decisions. Please consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Gold Liquidation Now Accelerating