Markets pulled back this week for a variety of reasons. None of them are more than short term concerns but when a market is ripe for a sell-off it doesn’t take much to tip it over.

The Marathon Massacre in Boston on Monday certainly shocked and soured investors’ moods (myself included), but markets were already declining when that news hit the wires late Monday afternoon. The market’s decline began with the collapse of gold prices. The precious metal, along with silver and other commodities, plummeted 13 % in just two days. It was the worst such decline in thirty years.

Rumors (still unsubstantiated) ranged from central bank selling to a forced liquidation by a troubled hedge fund. Gold, however, had been in decline for many months prior to this week’s selling crescendo. Investors have become increasingly disillusioned with bullion as both an inflation-hedge and a safe haven. For several years many investors have embraced the metal, convinced that the Federal Reserve Bank’s stimulus policies would eventually cause hyper-inflation. They have also been disappointed that, contrary to the promises of gold bulls, fewer and fewer investors have turned to gold in times of heightened risk.  Savvy investors have chosen U.S. Treasury bonds instead.

I have been investing in gold on and off since the Seventies. Over my career on Wall Street, I have visited every major gold mine in the world and analyzed dozens of gold and other precious metal companies. What I have learned about investing in the metal is two-fold. Do not become emotionally attached to gold (or any other investment). And two, gold in particular, moves in multi-year cycles so you should trade it.

The last bull market in gold started in 2002-2003 and has lasted for ten years. It is overdue for a period of consolidation. The required time period for this adjustment can vary from several months (doubtful)  to several years (more likely) Therefore, the opportunity cost of holding this asset could be considerable considering that gold doesn’t pay any dividends or interest. There will certainly be a time in the future when I will come back to gold, but not for a while.

As for the markets in general, readers are fully aware that I, along with many others, have been waiting for a stock market decline. It appears that one is upon us. This pullback, as I expected, has been somewhat benign. There is a good chance that in the coming week we could see the stock market rally back 20-30 points on the S&P 500 index before falling again. That would put the markets right on schedule for a further sell-off as May approaches.  So far this has been a textbook repeat of last year.

I would not pay much attention to the so-called reasons behind this decline. Slowing growth in China, recession in Europe, disappointing economic numbers out of the U.S. and quarterly earning misses will all be offered up as the cause of this sell-off. But the truth is that markets often times get ahead of themselves and this one did just that. It is not a reason to become concerned. This too will pass.