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Why Gold Prices are Crashing

by John Galt
28.02.20 05:30 ET

The consensus is that the world is coming to an end, Bitcoin can not rally past 10,000, AAPL stock is in the crapper so gold should be the safest of havens to flee into as financial markets implode.

In “normal” times this is a perfectly logical assumption.

Until the phrases “Margin Call” or “redemption” creep into the market vocabulary.

Right now we are on pace for a strong rally in gold prices to roll over into a substantial weekly decline:

Image courtesy of Investijng.com

Believe it or not, the price activity is perfectly normal. Everything that is not nailed down to floor is being sold into this bear flash crash this week. Once margin calls become the norm, people will sell their most liquid assets to cover the call if they desire to hold certain positions. In the same ideal, hedge fund redemption requests spike also and while some funds will keep individuals locked, others will have to sell liquid assets to cover for equity losses.

Keeping that in mind, remember there is a reason for central banks and their members to suppress precious metals prices also, to prevent faith in “their” fiat funny money from flailing along with their efforts to re-stimulate the international economy.

As the intensity of the virus pandemic spreads throughout the West, look for the price of gold and other precious metals to fluctuate wildly. In the end however, once this wave of selling passes, it should return back on course to much higher prices as faith in the globalist financial system craters with economic activity.

$2000 per ounce is not out of the question by phase two of this pandemic.