“US academic, Dr Martenson, presents a convincing argument that Wall Street banks manipulated the Comex gold price. See: http://www.peakprosperity. com/blog/81535/gold-slam- massive-wealth-transfer-our- pockets-banks

“To Martenson's report one can add a few more items that tend to add weight to the case. For instance:

“London Bullion Exchange had a mysterious computer malfunction on Friday afternoon (AM in the US) that caused nervous sellers to rush to the US futures market.

“The Fed released information that it was considering a stop to QE

“Rumours about the need for Cyprus to sell gold.

“The Fed may have had good reason to be concerned about the BoJ increasing the risk of loss of confidence in paper money.

“I live in Western Australia near the Perth Mint which today featured, with a photo, in the local press reporting a massive increase in physical gold sales this week. This information was earlier reported in the Washington Post. (See below) Sales are continuing.

Eoin Treacy's view Thank you for this comprehensive email which I'm sure will be of interest to other subscribers. The argument that gold prices are manipulated has been one of the most widely held conspiracy theories over the last decade not least because aspects of the argument are at least partially credible. Rather than indulge in a convoluted attempt to rationalise the price action, at Fullermoney we prefer to try and deal with the reality provided by the market.

The fact that gold fell so abruptly, hit so many stops and damaged the confidence of many of the metal's most ardent supporters will have an impact on what market participants do next.

David mentioned on the 16th that it was likely at least some central banks would use this pullback as an opportunity to top-up their holdings of the metal. Sales from the Perth Mint would appear to support that view.

However, the question is whether these purchases will outweigh selling pressure from other sources. Gold has experienced significant deterioration in terms of its uptrend consistency. In order to offset a medium-term bearish scenario it will need to not only hold above this week's lows but find support above it on the next pullback, sustain a move back above the 200-day MA, break the six-month progression of lower rally highs, with a move above $1600, establish itself above that level and reaffirm the medium-term uptrend with a move back above $1800. From current levels that is a big ask.

When we consider these conditions, the fact that gold has steadied over the last few days raises potential for an unwind of the short-term oversold condition but considerably more is needed to suggest a return to medium-term demand dominance.

This report from Deutsche Bank kindly forwarded by a subscriber highlights some of the bearish arguments that are now being aried. Here is a section:

2013 will therefore most likely mark the first year gold has posted negative annual returns since the year 2000. In our view, what had been a reliable source of positive returns for the past 12 years has ended.

While we may see cyclical strength, for example if the US succumbs to a mid-year slowdown which reignites QE expectations, we believe we are witnessing a structural change in the gold market such that many of the forces that had powered gold higher over the past decade are fading and in some instances moving into reverse.