Gold Crash - Deflation

Gold will continue it's generally downward path as long as this deflationary macro-pattern continues.

Gold boomed in 2010 / 2011 on the logical expectation that all that stimulus and printing would be inflationary. What few realized then is that Western economies are in a deflationary period. Globalization has moved a large portion of the wealth creation / jobs outside those economies, and there simply isn't enough left to cover the promises government has made and continues to add to. Real wages continue to decline based on simple supply and demand, and governments have to keep taking more of the wealth created, wherever they can. If they stop living up to their impossible promises, they will lose power. So while private sector credit contracts, government credit keeps expanding. The role of the central banks is to try to fill the void with printed money. But since their printing just enables governments to make more promises, it seems the hole keeps getting deeper despite their efforts to pour dirt into it.

For the moment then, the central banks are fighting deflation, not creating inflation. At some point governments may have to devalue their currency (like Greece has done several times pre-Euro) to minimize the damage of their debt, but that would be a very politically dangerous thing for the US, Japan, or Germany to undertake. So the likelihood of it happening short-term is very very low.

Gold will continue it's generally downward path as long as this deflationary macro-pattern continues. There will be ups and down as Western currencies shift against one another, and there is always money to be made "trading", but the short- and intermediate-term outlook for gold has to be down.

Other reasons for the decline of Gold
The price of 'physical' gold STILL gets affected by the PRICE of paper gold. Trading of paper gold (and mining shares) is MORE lucrative and profitable BOTH WAYS (up and down!) than holding a commodity which gives NO dividend and cannot be eaten.

When there is a liquidity awash every where and CBers are printing like no tomorrow, why are the gold+commodities are falling? Indices of commodity producing countries including many developing countries are FALLING? All of these orchestrated by the Govts?

There is DISCONNECTION between the money supply and the money in circulation= NO VELOCITY of money in the Economy. Just goosed up markets but increase in DEBT on DEBT everywhere. 

DEBT implosion or the on going DEBT deleveraging is the ultimate result eventually, after ALL the 'kick the can' are exhausted.

DEBT has to be PAID, written off or Bkcy of borrowers leading to severe loss to Lenders/Sovereign funds!

Here's a prediction. The price of gold will never reach zero. At least it hasn't for the last three thousand years or during any form of government. How much is last year's auto insurance worth? As a physical object in a world of papers, derivatives, and computer based accounts gold is an insurance premium. It increases the likelihood that come what may you will have something on the other side making it an indispensable part of any portfolio. Today's price is irrelevant. Don't need the insurance thank God. Give it to your kids.