A very pathetic result of a major coordinated attack on gold orchestrated by the Fed through COMEX and London Metal Exchange, produced a mere $80 per ounce total decline in gold price, but closing only about $60 down from prior day close.
The main goal of the coordinated attack is to prevent the inevitable collapse of the US dollar and to shake out the holders of futures contract who are planning to take physical delivery of the gold which the exchanges do not have.
Key point to remember as to why Gold smack-down occurred:
1. Both COMEX and London are running out of physical gold to meet the contract physical delivery obligations.
Otherwise there is no reason for the US to invade Libya who has 450 tons of gold reserve just enough to satisfy Venezuela's gold repatriation request, and invasion of Mali who produce just enough gold over a 7-year period, just enough quantity to satisfy Germany's repatriation request promised to be delivered over a 7-year period.
2. The attack on gold is to discredit gold as an alternative reserve asset to the USD.
Make no mistake, the sun has set on the US dollar as a reserve currency. Australia being the latest major country to abandoned US dollar as a reserve currency. Central banks are rapidly converting their US dollar holdings into gold. When the trillions of US dollar now being held at Central Banks around the world, unwanted and unloved, starts to come back to the US soil, the US dollar will collapse in a rapid fashion.
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The coordinated attack on gold started last week with:
1. The released of the FOMC minutes stating that the Fed may end their QE program soon.
2. The announcement by the EU that they are going to sell 400 tons of Cyprus gold reserve
3. The closing of the Physical Gold Trading Platform in London designed to trap the holders of long gold bullion contract, forcing them to go Short the Futures Contract, and to eliminate potential buyers of gold bullion.
4. The naked short-selling of 400 tons of gold by the Fed agents right at the open on Friday, designed to crash price below key gold support level $1,540, and triggers stop-losses sell orders propelling price decline.
It does not matter what the market manipulators are doing. My proprietary band is still telling me to stay on the sell side of the gold market. with the next downside target price of $1,450 to $1,410. Where and when gold price will stop falling only time will tell.
But a credit collapse like the 2008 has the ability to tank gold as well as every asset prices. This time, credit contraction will be much more severe than the 2008 collapse. The Fed and Western Central Banks are out of bullet. Interest rate is already zero, and debt level is already way too high.
The coming sequence of events will start with Sovereign (country collapse), banking collapse, credit collapse, asset price collapse, massive central banks QE response to "save" the collapsing financial system, then currencies collapse, then the new monetary system based on some form of gold standard, new prosperity.
