Peter Brimelow Says Goldbugs Largely Unfazed By Friday Selloff

The group that Brimelow calls "radical gold bugs" simply took it as a sign that the gold market was being manipulated again. Other gold-watchers took it in stride, but not all of them:

Dow Theory Letters' Richard Russell shrugged it off: "The daily chart of gold ... shows a head-and-shoulders bottom. More recently, an upside breakout from the pattern. Today we have a pull-back to the breakout or resistance ... line. If gold can hold at 1,100 or above, it will be impressive."

Even the much-more-nervous Dan Norcini at JSMineset.com found some comfort: "Price collapsed down past the initial support line ... before finding some buying at the second level near $1,130. This level is strong support, and the fact that it held is encouraging."

But the new conventional Wall Street bear case against gold -- that now only the U.S. dollar is a hedge against financial-system risk -- was expressed with uncharacteristic forcefulness by the HSBC gold analyst on Friday:

"Further bullion liquidation likely as risk sentiment may drop more in the wake of the Goldman news. In the near term, we expect the developments surrounding Goldman to overshadow all other issues that previously dominated gold trading. Near-term market sentiment looks bearish, and further losses are likely, in our opinion."

So far, those losses were limited to the early-morning session. Gold crept up above $1,135 right after 10:00.