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Gold is a "slam dunk sell," is the message from Goldman Sack's head of commodities Jeffery Currie, and I can't agree more. I've written many articles highlighting the solid bear market that defines the gold market, and recent events make that argument even more convincing.

Two recent events have occurred that should have driven gold higher, but instead investors have used them as opportunities to exit their positions instead of adding to them. When good news doesn't drive gold higher, what will?

The first event is the debt ceiling stalemate, and the threats to default on the US Debt. If the credibility of the US Government is thrown into question, gold should be the natural substitute. A default on the US Debt would validate all the claims and fears that the gold bugs have been making for years. The economic Armageddon would finally have arrived. As I write this on October 10, 2013, 7 days before the US Treasury claims it can no longer "guarantee" payments, gold is selling off over $25, and is trading below $1,300.

The second event is that uber-dove Janet Yellen has been named as Ben Bernanke's replacement. The headline "Rejoice: the Yellen Fed will print money forever to create jobs," says it all and should have sent gold higher, but it didn't. Almost guaranteeing that the taper will be longer and more moderate than originally expected. The printing of money, the foundational support on which the price of gold is based, is almost 100% certain to continue. The impact on gold is a drop by over $25. Once again, if good news for gold doesn't drive it higher, what will.

In conclusion; two very bullish events have occurred that should have driven gold/SPDR Gold Trust (NYSEARCA:GLD) and its close cousin Silver/iShares Silver Trust (NYSEARCA:SLV) higher, but they didn't. When good news doesn't drive an investment higher, investors need to ask themselves what will drive it higher if good news won't. Gold clearly isn't functioning as a safe haven, and the printing money argument simply isn't convincing. The real bad news for gold investors however is likely to occur within the next few weeks when the Republicans will eventually cave to President Obama's demands and lift the debt ceiling. Once resolution is reached, and any uncertainty about the full faith and credit of the US Government is erased, gold is almost certain to sell off on the news. If good news isn't supporting gold, bad news is almost a "slam dunk" to send it lower.

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.

Source: Gold Is A Slam Dunk Sell