China Rate Cut and now Spain Bailout - Massive BackStop Operation is in place, watch out the US Treasuries Sell Off and Risk On trade now - Commodities should follow Gold.
As with our recent Call on Apple, nothing here will be scientifically proven - all our markets are rigged and are pure Esoteric Fiction now. Our feeling tells us that recent carnage in Gold and Gold miners, particularly, is the preparation to the Massive Liquidity Back Stop Operation.
Any such operation means the QE up to the infinity whatever it will be called. The action will be coordinated and must be unleashed on a truly huge scale in order to attempt to save the insolvent financial system from "the run on the banks". Battle Field will be in Europe - now Europe threatens to push all world economy into another recession. UK - the land of the brave, where all experiments with QE were started first - is already in recession technically. Austerity will be dying hard, but the Paul Krugman is now the bedside book.
What form this operation will take is not so important: there are rumors about Silver Bullet with banking super guarantee in Europe or it could be another LTRO spiced with World Wide Coordinated FED and Central Banks swap operations - the end result is that the liquidity will be flooding the system with record low Treasury Yields. The magnitude of the action will be very important - European banking system is under capitalised by 2.9 Trillion Euros now, according to UBS.
Gold smells any currency debasement - here we are talking about worldwide phenomena - so it will be killed first. Panic in the sector has already shaken all weak hands and once the public has realised what is coming gold will resume its uptrend.