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“Sellers in the global gold market? As we have mentioned already, the recent sell-off of gold from $1,650 to $1,344 was the result of a well-coordinated, “bear-raid” by at least two leading U.S. banks and their hedge fund clients driving the gold price down. They were the only sellers in the global markets. By moving quickly and relentlessly against the gold price, they achieved their gold through massive short positions on COMEX (which does not need physical gold to be used) and sufficient physical gold to overwhelm the physical gold market (an 11 tonne a day market) over just a few days. Sales from the SPDR gold ETF supported their attack. These increased as the gold price fell. Then as their price objectives were achieved and signs of buying from other facets of the gold market stirred to life, the selling by the ‘raiders’ stopped. Selling still persists from the SPDR gold ETF, but we believe will soon stop.
Buyers’ global gold market?
The much slower reacting physical market sprang to life at the sight of the gold price below $1,400. In the developed world and the emerging world, the demand for physical coin and bar leapt as though they were given discounts consistent with Christmas sales.
We have no doubt that the invisible but ever-present central bank gold buyers swooped in too, but this can only be confirmed when their purchases are disclosed at the end of the month.
Thus, the attempt to label gold as a ‘disappointing Safe Haven’ seems only to be given credibility in the U.S. We see that as being so, only momentarily. The rest of the world, as it has for the last 5,000 years continues to believe it is a ‘Safe Haven’ as shown by their actions in buying gold in all parts of the globe after the ‘raid’.
So, let’s not confuse safe haven with profitable. The safe haven is always there when all else fails. The ‘extreme times’ that test such have not yet arrived. But history shows they will. Until then, wealth is protected by it in the long-term. The day that gold is tested as a safe haven will be when the monetary system buckles and currency values decay to the point where currencies will be valued by gold and not gold by currencies. “