Human beings are essentially pattern-recognition engines. We are hard-wired to recognise patterns, shapes and trends. Evolutionarily, this presumably yielded our ancestors benefits in the form of helping them to anticipate shifts in weather and the seasons, or to identify potential predators or sources of food. Human beings also have a longstanding appreciation of stories. So when we encounter moments of high drama, both of these evolutionary characteristics come to the fore: we associate the drama with the potential for crisis or threat; and we immediately start on a search for meaning. Who did it, and why ? Turning the drama into an engaging narrative may even be more satisfying to the human brain than striving for objective truth. Who cares if the story is nonsensical, illogical, or just plain wrong, as long as it's sufficiently enjoyable ? So when the gold price, in US dollars, fell by over 13% in the space of just two trading sessions a week ago, it was a natural reaction to start looking for significance (and to try and identify the protagonists). It was also a cue for legions of the misinformed, underinformed or chronically uninformed to start filling column inches with mindless drivel about what, if anything, it portended.

It helps the narrative when the instrument in question is so widely misunderstood. There are at least two wholly distinct participants in the market for gold. There are momentum-followers, who like to buy into rallies and sell into dips. These are speculators in paper gold, for want of a better turn of phrase. And there are those like us, tasked with the preservation of clients' capital in real terms, who favour gold as a form of sound money in the midst of a fraudulent global monetary landscape, in which inflationism is not just the norm but now explicit state policy. There are, indeed, other types of participant beyond these. There are also entities (states, and their economic agents) who have a vested interest in suppressing the gold price on the grounds that an elevated price for gold denotes a growing suspicion at the inherent soundness of fiat currency. Suffice to say that for us, the fact that the supply of gold cannot be suddenly or arbitrarily expanded simply by political whim is its defining characteristic, and one that trumps its perceived value as expressed in units of baseless fiat money.

David Fuller's view The gold price slump just over a week ago was at minimum, stale bull liquidation (weekly & daily) by bullion funds and leveraged traders, which triggered just about every stop in the market. However, it also resembled an organised bear raid. See the article immediately below for one possible explanation.