What the story misses is that in economic terms China is the equivalent of the "Shoeshine Boy" when it comes to picking tops. The US has by far the greatest economic sophistication and control over its ownership of the worlds reserve currency which it will not give up easily.
It has paid the US to have a weak dollar for the last forty years. Yes we have exported manufacturing and yes we have now lost a lot of jobs. Instead, we have had bountifully cheap imports that have allowed US Citizens to live fat off the hog for years. Losing manufacturing jobs was OK when we could replace them with service, Internet , government and financial jobs. All that has gone away now and the US has to embark on a new plan.
How could people possibly think that the most powerful nation in the world would just casually lie back and let its currency go to hell and a hand basket UNLESS it suited it ?
The only place for the US to "grow" is to bring back manufacturing. The current theory is that it takes a weak currency to allow us to compete in the export market BUT there isn't going to be an export market. The one market with the single biggest potential for growth is the US domestic market - this assumes full employment - AND how do we get full employment ?
It is called protectionism. If the US suddenly went into the manufacturing business with manufacturers protected by import restrictions we would soon start employing people and in turn domestic demand would pick up. I think the US could survive for several years on an economy focused just on domestic demand.
As a part of that comes a strong dollar policy. This enables the US to buy raw materials "on the cheap" and it trashes the Asian manufacturers whose economies are dependent on exports.
When you read stories like the link above that say that not only has China been a big buyer of gold but that the US has been fully aware of this you know we cannot be too far from an interim top. So yes .. gold may rally on Monday and Tuesday but sometime in the very near future all these gold bulls, hedge funds AND Shoeshine boys are walking into a giant trap.
P.S. I am NOT an investment advisor and you should use my comments only as a source of ideas. I am going to liquidate the rest of my physical PM position this week and I have , in addition to being long EUO, started to do some paired trades of long ZSL and EUO. I am not sure about this last traded so I will watch it carefully because potentially a QE 3 etc. could be bad for the dollar and good for silver so I am not sure that a plain EUO trade wouldn't be better . Somehow, I think there is a good chance for silver to go below $ 30 which is a good move if it happens.. so perhaps it would be better to just go long ZSL - I will look at that on Tuesday and probably buy ZSL if it looks as if the market is under pressure rather than fight the tape on the upside. Long term Gold is still good and I do not think it will be as weak as silver but I certainly think it will have a limited upside for a while.