India Has Set The New Gold Floor

When two months ago we discussed the IMF’s selling of one eighth of its gold reserves of which as most know by know half was recently acquired by India, we came to the conclusion that the IMF’s proposed naive and subjective purpose for this disposition which was framed as “safeguarding against disruption in the gold market” would instead end up with “rioting in goldbugland.” Based on gold price action over the past 3 days, we have been so far correct. And the concern for the IMF (and all Central Banks as well) is that India’s example will be promptly followed by China, Russia and other sovereigns who are seeking to flee from their dollar holdings courtesy of continued madman-like behaviour out of the 3rd sub-basement at the Federal Reserve where all the Heidelberger Druckmaschinen are kept.

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