King Report: Why Gold is Declining

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We received several inquiries about why gold is declining.
 Our view is gold is retrenching because:

• UK QE has ended (for now)
• US QE will end in three weeks (for now)
• The ECB did a massive €295B drain (can you imagine the market reaction if Bennie Mae drained
$500B in one shot?]
• China is signaling that it wants to rein in inflation by tightening credit, hiking real estate down
payments to 50% and allowing the yuan to appreciate
• Europe’s sovereign debt crisis has ebbed (for now)
• Food commodities have broken down
• Gold stocks have greatly underperformed gold since mid-January (gold stocks tend to lead)
S&P

S&P 500 Index, Gold and Gold Stocks (GDX) – Gold stocks out-performed gold until late October. Then they traded together until mid-January. Since then gold stocks have under-performed gold.

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