STOCK MARKET WATCH, Thursday, December 15, 2011

[Ghost Dog]

82. This article re. Gold appears to have been widely read and commented:

I'll just quote the last paragraph and first comment...

...How to explain the fact that gold prices have fallen 13% in dollar terms, 16% in yen terms, and 11% in euro terms since gold hit its all-time highs last September? I'm going to guess that the across-the-board selloff in gold may be an indication that the market was priced to Armageddon last September - a global depression and massive monetary and fiscal policy uncertainty - and is now seeing that while things are still bad, the end-of-the-world-as-we-know-it is not inevitable (e.g., the U.S. economy is slowly improving, the political winds are moving in the direction of less profligacy, even in Europe). Others might say we are simply seeing the forced unwinding of massive and leveraged gold speculation, but I think there is a fundamental explanation in addition to a technical one...

--

The more likely explanation is that the selloff in gold is directly related to the falling real estate prices in China. Gold prices had pushed so high not because of what was happening in the US or Europe; but because of China's attempts to artificially devalue its currency in order to gain an exporting advantage.

The end result was that Chinese consumers flocked towards hard assets like real estate and gold. With China's real estate market moving downwards, it should be no surprise that gold is likewise moving downwards --- implying that the Yuan is less undervalued than it was before. The more the Yuan falls relative to the Dollar, the more gold will fall.

/... http://seekingalpha.com/article/313930-the-message-gold-is-delivering-to-the-market