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Ing:  “The US government shutdown has caused the US dollar to weaken even further.  In the last 17 days the US dollar is down 2.3%, and has now broken the critical psychological level of 80....

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People would have expected for gold to be trading higher in this environment, but with the Chinese away on holiday this has left the door open for some serious manipulation in the gold market.  This interference in the gold market is taking place at a time when we already have a government shutdown in the US, but the really serious discussions about the debt ceiling are still to come.

Both sides are digging in their heels and I am afraid that this game of chicken is going to have more dramatic implications for the US dollar, which in my opinion is still headed down.  In fact, the US dollar can go significantly lower from here.  I wouldn’t be surprised to the US Dollar Index quickly hit the next level of support at 76.  Of course that would have a positive effect on gold.  You will see a scramble for gold in that environment, and I believe that is going to be a catalyst for gold ultimately reaching new highs.”

Eric King:  “William Kaye was talking about the fact that government intervention took place in the gold market as the US dollar briefly broke 80 yesterday.  We then saw the intervention in gold with the massive sell order that triggered the plunge in gold.  This sale came out of nowhere, and it was interpreted as intervention by the US government in order to prop up the dollar.  But today we already have gold snapping back, and, as you mentioned, the dollar sank yet again and is trading below 80.  What are your thoughts on that action, especially with the Chinese away on holiday?”

Ing:  “Yesterday was classic manipulation.  This is the time for that type of manipulation.  But in these types of tug-of-war, the physical market speaks the truth.  My expectation is that when the Chinese come back you will see a dramatic increase in physical demand, and that will drive the gold price higher.

As I mentioned earlier, it is important to note that the US dollar has not only broken the 82 level, but now the 80 level.  Now the chart is pointing to another 5% decline, to the 76 level.  It’s been a long time since we have seen gold and the US dollar trading lower together.  Normally it’s the reverse.

So, my expectation is that given foreign offshore money holds something like half of the US debt, as that money seeks a safe haven, the default currency has been and will continue to be gold.  This will have a powerful effect on the price of gold in terms of moving it higher, particularly since this move will be reinforced by the massive physical buying.”

Eric King:  “As gold is retesting the lows, what do you expect to see in the future in terms of a bottom?”

Ing:  “One never knows with this coordinated selling (intervention).  You would think they would run out of bullets, but they seem to come up with more ammunition, especially in the quiet trading periods.  In this case the quiet trading period is ‘Golden Week.’

But as we saw today, the reality is these pullbacks are very short and turn out to be buying opportunities.  Looking at the coming days and weeks ahead, it’s going to be very hard for them to manipulate the price of gold lower, especially with the backdrop of all of the historic events that are currently unfolding.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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