This is going to cause all kinds of problems. We are already seeing the bond market breaking free of Fed manipulation. This will only get worse as bonds recognize the severity of the crisis ahead. Ironically the Fed is going to print harder and faster to try and tame the bond market. It will have the reverse effect. It will just accelerate the dollar collapse which, in turn, will intensify the selling in bonds.

This has already pricked the echo bubble in housing. In the chart below we see the same megaphone topping pattern in play as in the dollar index.

Smart money has known for months this was coming. I strongly suspect the manipulation in gold over the last 8 months was done to transfer physical metal from weak hands into strong hands in preparation for this event. Now it's time for gold to do its job of protecting wealth during a currency crisis. I told subscribers last night that we will see a war over the next several days and weeks as gold breaks free of the manipulation and gets busy discounting the coming currency crisis. 

The intervention is going to try hard to keep gold prices down, but ultimately gold is going to win and break free of the artificially low prices. Ultimately gold is going to protect wealth during an inflationary period of time, just as it always does. And ultimately all the manipulation will succeed in doing is to cause price to rise much further and faster than would have occurred if gold had been allowed to trade freely.

Batten down the hatches - the next Fed created catastrophe has already begun.

GoldScents is a financial blog focused on the analysis of the stock market and the secular gold bull market. Subscriptions to the premium service includes a daily and weekend market update emailed to subscribers. If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions, email Toby.

-- Posted Wednesday, 7 August 2013 | Digg This Article