It was, once again, a fast and furious discussion on "Fast Money" on Friday night, as I discussed the possible impact of the Egyptian situation on the oil/gold markets and on other risk assets.

I continued to make the case for lower gold prices.

Friend/buddy/pal Sir Dennis Gartman started by stating (in a tape of his appearance on the "Fast Money Halftime Report") that he thought gold had made an important low on Thursday night at $1,311 an ounce.

I disagreed, saying that the current turmoil does not change my negative view of gold, and I suggested that gold should be sold/shorted into Friday's rally. (It has already lost three quarters of Friday's gain last night/this morning.)

I expressed the view that gold remains an "anxiety trade" that is deeply sentiment-driven. The commodity has dropped by $100 an ounce since I presented numerous fundamental and psychological reasons for the negative surprise case that would display uncharacteristic volatility in the year ahead, perhaps dropping to as low as $1,050 an ounce and closing out 2011 under $1,200 an ounce.

From my perch, gold's rally on Friday was a classic event-driven but one-time oversold rally.

I said that the consensus (especially on CNBC) is that the Egyptian chaos would put a floor under the price of gold but I am less certain. And I would sell/short into the rally in gold.

There might be numerous reasons to sell equities and buy gold, but, in my humble opinion, Egypt is not one of them. Egypt's riots and political unrest will not derail the overwhelming and consensus view of bulls on stocks and their notion of a moderate worldwide economic expansion. Moreover, Egypt is a small economic power, with a GDP of only about $200 billion, one-seventieth the size of the U.S. and less than 4% of world GDP. Aggregate U.S. exports to Egypt are a pittance ($6.5 billion). Most important, large international oil inventories and the ability to reroute oil around the Suez Canal (with a modest 10- to 15-day delay) should constrain oil prices even if the violence escalates.

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