This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks

Asian central banker said that policy makers may take the opportunity to buy.  The decline in prices would give central banks an opportunity to buy, Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said in an interview on Bloomberg Television today.  The Bank of Korea said that bullion’s drop isn’t a big concern as the bank’s holdings are part of a long-term strategy for foreign-exchange reserves according to Bloomberg.
Korea did not say commodity reserves.. .they said foreign-exchange reserves.  Right?  Did I read it wrong? 

Whether anybody saw this sharp and deep a move coming in precious metals is now pretty much a moot point from a practical point of view.  Since the majority of us want and most likely require money (any good  that is widely used and accepted in transactions involving the transfer of goods and services from one person to another) in order to provide for our everyday existence with some degree of comfort, we all wrestle with the fundamental question:  "what is the proper balance of fiat money, currently the primary form of money used to conduct our transactions, and physical gold and/or silver that has been used in the past and may return to that role "sometime" in the future.  Hopefully, individuals had their "money" portfolio which I will just break into two buckets, a local paper fiat currency bucket and a commodity money bucket of gold and silver  (shells, rice, salt, etc have also been used in the past), balanced to meet what they perceived as their needs for money (to conduct day to day transactions) both short term and long term.  Without a crystal ball we can only guess what might be the proper balance of our "money" portfolio.  Many factors, not least of which, is our ability or inability to "earn" more money next week, next year or ten years from now, weigh heavily in that determination. 
If the preceding comments make sense to most, it may seem prudent to reevaluate one's need for money over whatever time horizon is deemed appropriate and rebalance, if necessary, one's "Money Portfolio".  This should be done carefully with the awareness that "waterfall" movements such as we have witnessed in the last few days, whether they be caused by nature or by "design", tend to prey on our very primal instinct to survive.  The associated fear that is generated may be more appropriate for surviving the attack of a carnivore than making an objective, unemotional, and thoughtful decision.  If you are contemplating rebalancing, give yourself a little time to get over the shock of what we have witnessed, and make a clear headed decision that you will feel comfortable with both today and a year from now.

I seem to detect a lot of Limbic activity in the posts. It would seem as though we are having a  little crisis with our models of how the world works. Let us not waste a good crisis. The salient points of Chris's hold firm. Exponential growth, money printing and we can see the bottom of the oil barrel. 
I for one think that all the money is smoke and mirrors. Logan's Yellow Brick Road  made a lot of sense to me. Who cares who gets to keep the gold if we The People get to control the printing press.

A)  Nobody with credibility on this site or others has referenced an "All-Powerful manipulative power".   As a Christian, I only believe one entity is all-powerful.
However, there is a rational possibility that there is a "very powerful" entity with legally-granted strong powers including to print money out of thin air (the Federal Reserve).

And it is very rational to me that such an entity would have access and influence on other powerful entities such as commercial banks with trillions of dollars of credit and reserves.

B)  If the Federal Reserve's stated main objectives are to preserve the U.S. economy- which by their publically-stated understanding means to keep unemployment low and inflation under control, means they must ultimately preserve the trust, both domestically and globally, in the U.S. Dollar.  That means the rest of the world must trust the U.S. Dollar, and by extension relatively distrust other 'money', most notably gold.  If the reverse happens, i.e. U.S. Dollars are withdrawn from "the system" into gold (or other commodities), this  means default and bankruptcy for the banks.  They (the Fed) are bankers first, thus their manipulation methods involve banks.  Thus the Fed openly acknowledges buying MBS and UST from banks, because they want other entities, both retail investors and institutions, to trust i.e. favor MBS and UST.  (One could reasonably question why the Fed doesn't just write checks to individual U.S. citizens if they what they want to do is stimulate 'aggregate demand' and reduce unemployment, but that's another discussion- who knows maybe that's the next Fed "First" to happen).  Ask the counter-question- why doesn't the Fed make a big show about buying gold?  Why isn't it because gold competes with the USD.

Davefairtex, your argument is not logical.  Can we at least agree to start from the assumption that dumping huge numbers of contracts into a futures market ensures that an institution will lose a lot a lot of money that it could have otherwise made if it had sold contracts just a bit more slowly and strategically?  Unless there is another actual motive (other than to maximize profit from contract sales), this is a nonsensical manuever.  The staff working at these entities are far from inexperienced or stupid.

So what is the motive?    First, what is the objective?  If we can reasonably agree the objective is not to maximize profit, then can we agree the objective is to lower the nominal price of gold (and silver et al)?  Ok, next question, why lower the price of gold?  What is your answer Dave?  Is it for fun, just to see if you can do it?  Given that this was the behavior that got the Hunt Brothers regulated out of existence (concentrating large positions in silver with the intent to artificially move the market price in their favor for profit-making), it seems very implausible.  There must be a strong reward for the entities involved.  So the next question- what is the reward?

Is it not reasonable that the contract-dumpers made lots of money by "betting" that price would be lower, and then guaranteeing that their bet would win by contract dumping (almost certainly unbacked "naked" contracts since the amount of gold and silver involved physically could not have suddenly "appeared" on planet earth over the weekend).  Is not making huge amounts of "sure-thing" money enough of a motive?  If you could bet on a racehorse and then, before the race, legally strap on a jet engine to the saddle of your chosen horse guaranteeing a victory, would you not place as much money as possible on said racehorse? 

The only problem with this strategy is that it is illegal (fraud) and against CFTC regulations.  So how and why would an entity as allegedly risk-averse as a commercial bank undertake it?  If you had assurances (/ encouragement) from the entities responsible for enforcing the above laws and regulations that you would not be prosecuted, would that not remove the issue?  Additionally, if some entity (the Fed) was willing to provide essentially free "seed money" for you to play with in the form of zero-interest loans, cash-for-trash payments for MBS's backed by the crap real estate loan instruments that the banks really don't want on their balance sheets, and UST's in the form of the tidy profit from the carry-trade of Treasury (buy low) to Primary Dealers (sell high, + transaction fees) to Fed, to carry out such highly profitable trades, why would you not do this (other than you had a moral compass and knew it was wrong- but the LIBOR and drug money laudering scandals seems to have indicated which direction the moral compass points with our friends at the commercial banks).

Davefairtex, you do understand that virtually all of what I (and Chris) just laid out are publically-known facts, except for the motivations and specific directives of the parties.  I agree with you in that we should try to remain skeptical about clinging to one theory or getting too deep into discussion about what is going on in someone's specific head (i.e. the Fed governors, and management at commercial banks) until more hard evidence (e.g. emails, testimony by witnesses, news reports from inside sources) is available.  We should look for and analyze counter-evidence.  We should assess whether counter-evidence is intentional disinformation (entities at war routinely use disinformation to gain an advantage) or is likely to be credible.

Rarely do we have complete datasets (I don't know about you, but I don't have access to all email servers or can tap the phone lines of the above entities, nor do I have inside sources).  However, I believe it is justifiable and proper to construct a belief system that is supported by the known facts and fits with my life experiences regarding human behavior.  FWIW, the folks at the Fed, and most economists do this on a a daily basis- its called "economic modeling".  You may call it religion or just sound judgement.  Whatever you call it, it doesn't change the reality of the situation nor should it change actions based on one's conclusions.

 Actually Goes, my comment wasn't directed toward the gold issue as much as to JAG whose self-imposed exile is occasionally broken long enough to pop in to give us an eye poke regarding gold/deflation.

How is the gold game influenced or will be influenced by held paper gold vs. held physical gold and how does this aspect correlate to the overall price and market fluctuations of gold? Is paper gold a control mechanism purposely built into this game for reasons of manipulation or at least it could be used this way?
Just like when the insiders in Cyprus saw what was coming and were able to get their money away from the banks. Won't the same story play out when the insiders holding paper gold see the divergence? What would one expect to see in the market if this where to happen?



I see this as a last ditch act of desperation to try and fix it before it all implodes.

A scientific mind constantly looks for evidence to disprove its hypothesis.  The absence of such self criticism leads to cult like herd behavior.  Here are some of the ways that the editorializing on this site fall short of the ideal and yes, I do take responsibility for my decisions. 1.  Gold is Money.  This needs to be thoroughly questioned and is often assumed here to be an axiom, a self evident truth.  Money is first an agreement between people.  There is no guarantee that presently or in the future that gold will be commonly accepted as money.  
2.  Gold is the ideal store of value.  If the drop of the last two days wasn't evidence against this, I don't know what is.  It is high time that this belief is thoroughly examined. 
3.  Gold is manipulated.  Yes, as Chris M says, if the equivalent volume of grain had been sold short, it would have led to similar consequences.  Yet, the analogy does not go far enough.  The difference is that consumption demand for grain and its supply would lead to grain prices recovering their true value quite quickly and the shorts would need to scramble to square their positions.  This is unfortunately not the case for gold which could remain in the lower trading range for a long time since it is not consumed in its use.  Also, if gold is so manipulated, then it contradicts the belief in 1 and 2.  How can gold then be good money and a trust worthy store of value ifs price can be so thoroughly manipulated?  
4.  Limiting conversation to believers.  This site is at a big risk of confirmation bias, inviting and speaking only to other true believers.  I would recommend that at least one conversation a month be devoted to economists and other researchers like Krugman who hold contrary opinions on gold and the thesis of the three E's.  Please look actively for evidence that disproves your thesis.  Has anyone else noticed how often Mish Shedlock resorts to ad hominem attacks calling people stupid or dumb?  That is often a sign that the arguments are weak and I experience them as a big turn off.
In full disclosure, I have allowed my enrollment to lapse, because this site has stopped putting careful emphasis on disconnecting the dots that it has so carefully connected.  It can be painful, but questioning our thesis when evidence arises to the contrary is a sign of integrity and intellectual courage which needs to be sustained throughout. I would like to see more evidence of this type of inquiry and will gladly rejoin then. 

Chris -Never said you were implying that the Fed (or other authority) controlled every tick of gold's price.  Didn't mean to imply it either.  In fact, I've never heard you say any such thing.  And your summary you put here fits pretty well within my world view also, so I'm certainly in agreement with you also.  I'm also in agreement that the bullion banks "pulled a fast one".  But then again, in most markets there are the moral equivalent of "bullion banks" and they are almost daily "pulling fast ones" both large and small.  So in some sense gold really isn't being singled out - most of the time.
Sometimes, I get the feeling gold IS singled out, for the political reasons you describe.  But most of the time I think it is just normal market activity - big boys playing games because the regulators look the other way, as they do in most every market.  Likely too the banks are constrained to play on the short side most of the time.  But there is this one event recently - 8:30 on 2013-04-05 - when gold jumped $22 bucks on 15k contracts on a one-minute bar that makes me wonder.  Is that "the Fed" running the short-side stops?  Why would they do this?  My gut says its the big banks gaming things on both sides.  "Too many people are leaning short, let's clean them out."
I do think there is a group-think both here, and in other places, that holds the Fed itself personally responsible whenever gold moves in a direction they don't expect - I suspect from ignorance of how downright cranky the market can be most of the time, and how adept it is at disappointing the largest possible number of participants.  Anyone who has had their stops run on the various other instruments knows what I'm talking about.  The market is a vicious place designed to manipulate people emotionally and siphon off as much money as possible.  That's just how it works, at least in my experience.  (If "the market" behaved in an easily understood way, we'd all be zillionaires sitting on a beach somewhere, and money would be as easy to make in the market as most imagine it should be.  Alas, its not.  Given your experience, I'm sure you know this.)
I also believe this same group generally holds The Fed solely responsible for the fact gold isn't rising steadily to $3000/ounce, like they expect it should.  Again - market acts to disappoint the largest number possible.  Not just the gold market does this - every market does this.  But that's my belief system, based on my experience.
Both my agreement with you, AND the previous set of beliefs can sit comfortably within my brain.
That's because I think sometimes there ARE monsters under the bed - just not every time the floor creaks.    I think there IS officially sanctioned manipulation that does occasionally occur, but mostly its about big banks playing games to make money - normal market stuff that happens in every other instrument out there.
Is it possible Goldman, Soc Gen, and a few others got together and said "Hmm, gold is close to support and we've got deflation eating away at the buyers - we could make billions if we broke support and ran it down to $1300…lets release some reports, get some stories going, and then hit it Friday."  You bet its possible.  It probably even happened.  On orders from FRBNY?  Possible, but not required.
Most importantly to the point we're on now, I think there are times when games/manipulations - by whomever - are much more easily accomplished, and there are times when its practically impossible.  Deflationary conditions are just such a time.  We deliberately blind ourselves if we ignore the effects of deflation of the price movements of gold, silver, oil, copper, palladium & platinum, and the other commodities.  I'm not claiming you blind yourself - I honestly don't know what you do.  You tell me.  But I do get the sense some people do, and that is the audience I'm addressing.
Which brings me to
Jim, Hrunner -
Yes, gold is a commodity.  Its also "my precious" for a large number of people too.  It can be both at the same time.  The market is comprised of a large number of participants, many of whom aren't buying gold to hide it under the mattress, and who use that 20:1 leverage to lethal effect.  With $6000 down I can affect the gold market just as strongly as you can plunking down $139,260 for your 100 ounces of My Precious.  Many see gold as a commodity, and they trade it that way.  As a result, it behaves that way.  Other participants are central banks like Russia and Turkey that buy and hold.  A third group - well you get the idea.  The market behaves in a way that reflects the combined belief systems of all of its participants.
I am not looking at this from a faith-based perspective.  I've watched intraday price movements for years.  Gold price often moves like a commodity.  Sometimes it doesn't, but often it does.  So - I lump it in there with the other commodities.  Silver behaves like gold, but is more sensitive to economic situations.  It races ahead of gold in a bull market, and tanks faster than gold in a bear market.  That's not some theory - thats how the prices move.  Don't ask me why this is - its just how it works.
I'm really less concerned with labels and ideas of "how stuff should work with gold" and the various stories people have about it, and more about what actually occurs out there.  That's because money is made and lost based on how prices actually move, not how we think they should behave.
In Nick Taleb land, that would be the difference between Fat Tony and Dr. John.
And yes, there are all sorts of games played with gold.  But unfortunately, if you look at enough markets, you'll see this in almost every one of them.  I do think there are special games played occasionally with gold at opportunistic moments, but usually its just the big banks looking to make money.  My opinion.
Last point.  Sometimes, its mathematically reasonable to run stops, if the amount of selling you have to do to break support is exceeded by the number stops that will be triggered by the break of support.
Let's say gold is sitting at 1525.  There are 1000 bids at 1525, and 10,000 stop orders at 1520.  So, Big Guy knowing this, sells 2,000 contracts, which easily blows through the 1000 bids at 1525, and triggers the 10,000 orders to sell at 1520.  Suddenly, those triggered stops are "doing his work for him", and he starts buying back the 2000 contracts he sold at 1525 - now at a price much lower than 1520, since those 10,000 sell orders have likely dropped the price another $10.  Big Guy covers at $1500, collects 2000 x $25 x $1000 and walks away with a big fat bonus check, his day's work done.
Conditions don't arise for this all the time, but the Big Guys have Big Computers that pretty much know where stuff is because they've spent billions figuring it out.  Once their computers tell them the time is ripe, they pull the trigger, and off things go to the races.
Breaking 1525 support most likely ran a huge number of stops.  Was it profitable?  I have no idea.  But it could have been.  Certainly once they got gold down $200, it most likely was profitable, because of all the forced selling from margin calls.  But that's just my guess.
Now, for those who have slogged through this far, I'll tie it all together.  My claim is that "monetary deflation" reduces the number of bids out there, so that the existing stops can be run with less risk and a higher degree of profit for the big players.  It takes buyers out of the marketplace, leaving things more vulnerable to those big downside moves.
And perhaps, without monetary deflation, this latest assault might not have even been tried, because there would have been too many bidders willing to buy at 1525.

You make a plea for more open dialogue, yet you lay out no arguments yourself.  The only argument I actually see you making is to use the most recent Gold smash to argue that Gold is not a good store of value, which is precisely what I think the intended propaganda vaue of the smash has been… so this gets kind of circular, doesn't it?  Anyway, regardless of this very short term event, going back to the formation of the FED in 1913… taking the really long term view, which has been a better store of wealth, dollars, or Gold?  One of these two has lost about 95% of it's buying power… which one?
On the confirmation bias question… I think that is kind of absurd to make that claim when you are talking about views that are held by a tiny minority of the population.  How many people actually own Gold and Silver?  How many people know what (debt-based) fiat money even is?  How many people understand the implications of peak (cheap) oil?  We all know the counterarguments.  I read Krugman's piece in the Times over the weekend, making fun of Gold.  This idea that Chris, or any of us, somehow need to be more open to what I consider the propaganda coming from the Kenyesian majority is silly. 

I for one am here to seek the truth.  I have studied this for 12 years, and have chosen to accept certain tenants as settled truth so that I can move on to the issues that are in fact undetermined, such as what form our collapse will take.  You are welcome to go back several steps and decide whether you think more debt will help solve a debt crisis (Krugman approach), but please, don't come here and suggest that I, or anyone else here is being intellectually dishonest by not stepping back along with you.   

[quote=Jim H]I for one am here to seek the truth.  I have studied this for 12 years, and have chosen to accept certain tenants as settled truth so that I can move on to the issues that are in fact undetermined, such as what form our collapse will take.  You are welcome to go back several steps and decide whether you think more debt will help solve a debt crisis (Krugman approach), but please, don't come here and suggest that I, or anyone else here is being intellectually dishonest by not stepping back along with you.   
I hate to say it but at least to me on this thread, it feels less like you are seeking the truth, and more like you have already found it.   If you don't find it informative to consider opposing points of view, I guess there is always the ignore button.  I personally find I learn more from those that I disagree with than those that I don't.  
I guess I agree with Ravi in that I fear this site is becoming less interested in opposing viewpoints and this risks this sites value and legacy.


Larry Edelson on Gold:

I’ll get right to the point …

First, gold’s historic collapse — losing as much as $233 in just the last four trading days, a whopping 14.7 percent … and $565, or 29.44 percent since its high in 2011 — is NOT over.

Second, expect a bounce to soon occur, but don’t buy into it. If you do, you will likely lose a bundle of money as gold heads even lower.

The same advice applies to silver, to copper, to platinum, to palladium, to crude oil and more. Their interim-bear markets are not over, not by a long shot. Ditto for natural resource stocks.

For now, I’ll confine this update largely to gold. I want you to have the important system support levels for gold from my trading models. That way, you will have a road map.

I’ll cover these technical levels first, then I’ll briefly review the fundamental forces driving gold lower.

Gold’s major support levels now lay at …

— $1,380. Gold is currently below that level. — 1298.70 — 1244.90 — 1160.90 — 1028.40 — 993.90

Each of the above levels should temporarily hold once they are hit. But the operative word is “temporarily.” Based on my system models, gold will likely not bottom until it hits major long-term support at $1,028.

As for overhead resistance, there is plenty. For any bounce that soon comes into play, expect resistance to form at the $1,380 … $1,412 … and $1,458 levels.

As for the fundamentals driving gold (and other commodities) lower, they are the same forces I’ve been telling you about for many months now …

First, central bank money-printing has lost its impact on the markets. Why? Very simply put, there’s too much bad debt floating around the globe and there’s simply no way central bank money-printing can offset it.

Second, austerity measures in Europe and the United States are also overpowering the inflationary impact of money-printing.

Third, and most importantly in my view, the Cyprus confiscation of uninsured depositor money has completely turned the world upside down. Money is no longer safe in a bank in Europe.

That, in turn, is causing hundreds of billions of dollars to essentially go into hiding. But not in gold, which is subject to confiscation, real or imagined.

Instead, capital is largely going into cash, which is also bullish for the U.S. dollar, since it’s still the world’s reserve currency.

Fourth, Japan’s new aggressive policy to devalue its currency is also not bullish for gold. Japanese investors are plowing their money instead into their own stock market, and my sources tell me loads of Japanese capital is also fleeing to our stock market.

In fact, much of the selling in gold originated in Japan. It was just a week ago that gold hit a record new high in yen terms, due to the depreciating Japanese currency.

But instead of lining up to buy gold, Japanese investors queued up at gold dealers around the country dumping every ounce of gold they could get their hands on, even melting down jewelry.

Why? Japanese investors don’t trust their own government, and if push comes to shove with North Korea, Japanese investors want their money liquid and mobile. That means cash, not gold.

In essence, we are seeing what I call “Money on the Run” and its momentum is picking up, in Europe and in Japan. Panicked capital is going into hiding, but in cash and equities in the U.S. and Japan, not in gold.

Later, when everyone realizes that Washington has many of the same problems that Europe and Japan has, all of the above fundamental forces will flip back to the bullish side for gold.

But that time is not here yet.

In my special Money and Markets issue of April 3, and in earlier columns, I suggested hedging any metals or mining shares you owned via purchases of the inverse ETFs, the ProShares UltraShort Gold ETF (GLL) and the Direxion Daily Gold Miners Bear 3x Shares (DUST).

I also recommended the ProShares UltraShort Silver ETF (ZSL) for a play on silver’s downside.

If you acted on any of those suggestions, you’re sitting pretty. Hold those positions and stay tuned for further updates.

I have to admit that some parts of this explanation I don't understand.  Anyone capable of clarifying?


You really confirm my belief that very, very few people will ever wake up from the martix-like environment we live in… the draw is just so strong… and I understand this… it would be so nice if everything really could just work out… and the dollar could continue on as it has been… and we don't have to worry about this stupid Gold stuff.  Look how it goes down!  All those Gold shills were wrong!  Come on… let's step back and reassess whether all this doom stuff is wrong…  maybe the dollar will actually increase in buying power and we will be able to buy up property on the coast of Spain cheap!      


Like many of you I have been listening to and reading about the markets extensively in the last 24 hours.  I am glad I don't have the responsibility of telling everyone "what happened, and what to do".  There are a few things that I know at this point:

  1.  Only a damn few people KNOW exactly what is going on.  Fewer still can "prove it".  Lots of voices are wrong.  Which ones?

  2.  Multiple complex dynamics are influencing the movement of all markets: manipulation, profiteering, HFT dynanmics, criminality, and good old fashioned supply and demand.  Hard to anticipate.

  3.  It will boil down to a simple decision for me: buy / hold PM's, or not.

I'm not particularly interested in a consensus here.  I cannot get anyone's assurance that my decision is 100% correct.  It's called a "crisis" and a "collapse" for a reason.  The system is breaking down.  The rules don't apply anymore.  I am going to do what I can and that's going to be good enough.

My plan.  Wait a week.  Hold what I have.  Reevaluate.  I will make one prediction - we will know who was right soon enough.



I am well aware of the matrix and I too believe that this ship is going down and there ain't anything we can do to save it.  What I question is your certainty of how this is going to happen.  
I remember a few years ago when silver went parabollic, you were in there heavy and if I remember correctly, claimed to have lost 6 figures when if got smacked down (if that is incorrect, I appologize in advance).  I don't know your situation, net worth, … but unless you were far better off than the average personal on this site (myself inclusive), you would have had to have had a very large (probably unhealthy) percentage of your net worth (or leverage) in silver.  I assume the majority of this position was accumulated at a much lower price and did not buy at the high and therefore only lost paper profits.  This reminded me of all the paper millionaires that did not cash out of in time during the internet bubble.

It has now been over 2 years and silver is < 1/2 of its peak price.  You can either believe that the only explaination to this is that the big players are surpressing its value or you can step back and have a moment of introspection to see if there are any other possibilities.

Believe it or not I don't see the end game much different than you do.  Someday in the not so distant future, most people are going to wish that they owned some (or more) gold and silver.  And by all means if you already own gold and silver, especially if you accumulated it many years ago, I would not consider selling it.  I personally don't consider gold and silver to be money but I do consider them to be assets that have embeded puts on the stupidity of central planners.  Basically I don't much care about their price, and generally perfer it to be lower than higher.  Why?  Because I have no intention of selling (what little I have) and hope to use any extended period of low prices to acquire more.  Moves like the past week have not changed the fundamentals, that is if PM's have fundamentals, so why be concerned?  If it is being surpressed that just means that when the surpression finally fails, there will be even more upside.

Basically I have no idea what is coming but I am pretty sure that if the game is rigged (as I assume it is), I am not going to be able to out guess TPTB.   Whatever happens, it will not be a straight line, so expect to get slapped around as this economic system gyrates back and forth.

I sold my remaining (paper) gold holdings during Friday and Monday.  I didn't have much.  I have tended to the "deflation" view over the last few years, and have focused on investing in myself/home and getting out of debt.  My savings have mainly been in cash and short-term Treasuries for a couple of years (doing nothing much) while I learned how to garden and focused on building my business.  So my gold was a sort of half hearted hedge on inflation.  Not that I have a deep theory of it, I've just tried to spread my assets across the inflation and deflation scenarios while trying to focus on practical things I can control. 
It seems to me that the financial markets are a) pretty broken and illogical and therefore do not align with anyone's logical theories as to how they should behave and b) can still be moved and manipulated by big players who want to shake their money makers.  I don't think there needs to be a conspiracy theory to explain the latter - just powerful players doing what powerful players do.  Since I'm not a powerful player, and I don't have the patience or brains to try to figure the markets out, it seems to me to be safest to sit it out right now.  Longer-term, I think it will be very important to hold only "real things" but am increasingly of the view that "real things" should be income-oriented (productive real estate, skills, food production infrastructure, viable local business, etc) rather than worrying too much about stores of value.  I'm pretty sure I'll be able to get more done with a dozen laying hens that a couple of gold bars.  Don't mean to be flip, but I just can't see myself feeling comfortable with a stash of physical gold if things get rough. So, we'll see.

I am certain that Davefairtex is correct in this paragraph from his second comment above;

I do think there is a group-think both here, and in other places, that holds the Fed itself personally responsible whenever gold moves in a direction they don't expect - I suspect from ignorance of how downright cranky the market can be most of the time, and how adept it is at disappointing the largest possible number of participants.  Anyone who has had their stops run on the various other instruments knows what I'm talking about.  The market is a vicious place designed to manipulate people emotionally and siphon off as much money as possible.  That's just how it works, at least in my experience.  (If "the market" behaved in an easily understood way, we'd all be zillionaires sitting on a beach somewhere, and money would be as easy to make in the market as most imagine it should be.  Alas, its not.
And all of us holding dollars, or dollar-denominated pensions, or dollar denominated bonds will, in the end, be the largest (possible) number of participants to ever be fleeced at once in any market in history.... remember.. not one man in a million.
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
- John Maynard Keynes

being bought by the Central Banks?  If not, then we should all understand that, Gold is money.  Central Banks only deal in debt (money) and Gold (money)…correct?  And don't give me the argument that the horrid assets that they've bought are something other than debt (bad money)…doesn't fly.Again I ask:  Is there another commodity that the Central Banks are known to have bought?

[quote=LogansRun]Again I ask:  Is there another commodity that the Central Banks are known to have bought?
I hate having to answer this. They buy all kinds of crap from the banks. They're recently into buying bad mortgages. Does that turn bad mortgages into money? (Hell NO!)
Gold has always been money. Gold has always been a metal. Metals are commodities. Gold is a commodity and the best money. Which is it? It all depends on your view. The price is variable, but the value is not. Economic theory suggests the highest and best use will triumph.