Assuming a decline in the gold price to only $1,300 per ounce, gold stocks probably have another 25% downside, at least, before this cyclical bear market in gold runs its course. For example, Market Vectors Gold Miners ETF ( GDX) can probably ultimately be bought for less than $25, whereas Market Vectors Junior Gold Miners ETF ( GDXJ) can probably be bought in the $11 range within the next three months. The reason is that many gold miners simply can't justify their current lofty market capitalizations on the basis of projected earnings and cash flow, even with gold prices at $1,300. And a few gold miners that have been caught wrong-footed in the midst of expensive capital expenditure projects will be shut out from capital markets and will face insolvency and/or the need to make highly dilutive secondary offerings. The distress of just two or three companies in the sector will typically set off panic selling in the whole group, as the majority of gold stock investors have no idea whether the stocks they own could become the next distress situation. I doubt the secular bull market in gold is actually over. But a cyclical bear market in gold is upon us now, and it will not have run its full course until it has inflicted maximum pain on the speculative holders of "paper gold," effectively running the weakest hands out of the market, properly setting the stage for a possible final leg in the secular bull market in gold. At the time of publication the author held no positions in any of the stocks mentioned. Follow @jameskostohryz This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.