What's happening with gold should be no real surprise. Although I have stated many times that gold is money and gold should do well in deflation, and we are in deflation (see The Future Is Frugality and Implications of the Slowing Global Eonomy for the deflation case), in the initial stages of deflation, leverage in everything is reduced by force.



There are thousands of hedge funds, pension plans, and individuals over-leveraged in a massive bet against the US dollar and US assets in general. Many themes of the past 7 years are now being unwound. And one would expect leverage to be forced out in deflation as credit simply dries up. I call this the great unwind.



The Great Unwind





Short US Dollar - Long Commodities

Short US Dollar - Long Foreign Equities

Short Financials - Long Gold

Short US Equities - Long Foreign Equities

Gold and Silver Seasonality

Euro vs. Dollar Weekly

Manipulation Theories Debunked

Commodity Supercycle Intact

Gold Manipulation?

Great Unwind

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