Why is gold dropping when it shouldn't?

Why is gold dropping right now when anyone in their sane mind would expect it to rise? The simple answer to this question is, " because Comex-gold isn't gold " - and because it deceptively pretends to be 'the' price-setter for real gold.

Gold is gold, paper is paper, and "Comex gold" is nothing but paper masquerading as gold while simultaneously pretending to be the price-setting medium for actual gold in the world. Now, finally, Comex-gold is in the process of being unmasked. The real supply and demand determinants for Comex gold are not actual gold investors but fund managers . Fund managers are inextricably intertwined with the world of contract-based credit instruments. They use bet on Comex gold contracts to hedge their other (currently horrendously losing) bets with something they all, in their in-bred belief in paper markets, believe will 'go up' in value while everything else is going down.
However, these very same fund managers and their paper-bound investment psychology are the exclusive reason why Comex gold is dropping in these times when everyone (including fund managers) expects gold to rise. As already stated, though, and as they now finally realize to their own dismay, Comex-gold just isn't gold - and that causes even further selling.
Fund managers' other bets are losing money fast, now, so they need to raise cash to keep up the overall value of their respective funds, so they can earn their management bonuses and avoid getting booted for lack of relative performance. Guess what they cash in on? The very same Comex paper-gold they mistakenly bought as a 'hedge', of course. Meanwhile, real investors in real gold are enjoying their shopping spree - except that the spree turned into a treasure hunt as the shelves and display cases of gold dealers look more and more like the supermarket shelves in the old Soviet Union - bare . This is the only 'bare-market' in real gold the world will see for a long, long time to come. With this split, this disconnect, between Comex illusion and gold reality, one thing or the other will have to give, and it won't be physical gold that gives. My reaction: I am certain the US is less than a month away from a currency collapse. The fed and treasury are not even taking the time to think at this point: they are just throwing money and guarantees at each new problem that pops up without worrying about the consequence. Since no one can imagine a currency collapse, there isn't the political will to take the painful steps needed to prevent it (reign in fed and let institutions fail). The forces and trends behind the financial collapse are too powerful to stop.
By Eric deCarbonnel http://www.marketskeptics.com