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The only explanation that makes sense to us is that gold, gold stocks and all the other investments that are perceived to benefit from higher inflation got caught up in the leveraged trades that were entered on the basis that short-term interest rates were going to remain at generational lows for a long time to come. In other words, large amounts of US Dollars were borrowed at very low short-term rates and used to buy things -- including gold -- that were likely to appreciate as a result of the Fed's pro-inflation stance. The Fed's pro-inflation stance hasn't changed, but when it became clear that short-term rates were headed higher with or without the Fed the trades had to be unwound even though the inflation problem wasn't likely to diminish in the foreseeable future.

Further to the above, we doubt that gold is weak because it is being manipulated lower. Rather, the weakness is most likely the result of a lot of highly-leveraged speculators desperately trying to squeeze through a narrow doorway at the same time.



Steve Saville
Hong Kong

(long, longer am longsten bezieht sich dieses Mal auf Minen-Aktien und nicht
physisches Gold, weil hier der Hebel ein Vielfaches vis-a-vis des POG* aus-
machen dürfte). *Price-of-Gold