The long term gold bull market remains firmly intact, driven by an investment landscape defined by negative real interest rates, fiscal profligacy, generous liquidity conditions, global currency debasement and mounting inflationary pressures.

Although the long term dynamics underpinning the gold market are as relevant as ever, gold price action has been relatively soft as of late.

Given the tremendous run that gold has had, even moderate pullbacks are typically met with a heightened degree of trepidation, as investors fear that the gold bull market has run its course.

In light of recent gold price weakness, we are cautioning our clients against becoming overly pessimistic towards the gold space. Intermittent pauses within a long term uptrend should be expected and we believe that recent gold price action makes intuitive sense in the context of the broad market.

Risk is back in vogue as global policy makers have earned the confidence of the market that they will do whatever it takes to stave off a sizeable contraction in global asset prices. Furthermore, global economic data has been relatively strong, as the US economy has been showing signs of life, European sovereign spreads have come in from crisis levels and the Chinese economy appears to be on a cyclical upswing.

These developments have resulted in renewed optimism in the market, driving equity prices significantly higher, as underinvested investment managers chase the market higher after years of poor performance.

David Fuller's view I think Verdmont has produced a good report on the overall outlook for gold bullion. The yellow metal has lost some safe haven appeal as investor confidence improves. However, they also list numerous reasons why gold should remain generally firm and probably surprise on the upside over the medium term. First among these is the "renewed vigor in global currency debasement of late, which [is] a strong tailwind for gold prices."

They also like a number of gold mining companies, which have significantly underperformed bullion. Yes, but for good reasons, from costs to political problems and dwindling supplies for many of the better known gold miners. I continue to regard them as highly speculative and would not participate until they show better chart patterns and some relative outperformance.