The price of gold dropped from 1564 to 1477 today, a drop of 5.18%. Why? I have no idea. But I have some guesses.
Some people think that gold is a bubble that is collapsing. Other people think that gold prices are being manipulated. I think something else is going on.
Look at this gold price chart from October 2008:
Source: www.kitco.com
The price of gold dropped 20% between Oct. 10, 2008 and Oct. 24, 2008. Why? Because people were panicking and wanted their wealth in a "safe haven", the US dollar.
I think the same thing is going on now. People are panicking because of 1) Cyprus, 2) North Korea, and 3) fears of a recession. Even though the Fed continues to print money like mad, the velocity of M2 continues to drop. Real interest rates continue to be negative. "Friday's selling looked like a panic and was set off by a 0.4% fall in retail sales for March, a larger-than-expected decline." Gas prices have fallen about 4%.
I'm not saying that it is a recession, but that people are afraid that it will occur. I think people and businesses are hoarding cash, so much so that they don't even trust gold. So in other words, something big is happening or soon will happen. Has North Korea started WW3 yet?
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