...The truth was that Gold was chased up too fast with unbridled optimism backed by USD negativity, similar to BTC experience on expectations of an announced BTC strategic reserve upon Trump inauguration.
...Gold hitting $3,500 at the top end of its technical levels was like BTC hitting $100k (briefly surpassed it). Such round numbers proved psychological hurdles.
...Physical Gold will always be the safest Buy and Hold asset one could have in my view - no counterparty risk (other than the one you store your Gold in), no company specific risks and continues to be the go to asset in times of strife and adversity, making it a perfect hedge. This could not be a better time to begin a dollar cost averaging accumulation for long term hold in proportion to one's portfolio.
...Overnight, GDX fell -3.69%, GDXJ -4.35% after Alamos Gold declined sharply by -9.82% after missing EPS forecast by >30% on lower than expected reported revenues. Despite this, gold stocks are still doing relatively well with GDX having fallen just -1.89% the past week (including overnight losses) while US Gold have been down -3.88%- that is because over the past month, Gold had overshot gold stocks quite a bit.
...With physical Gold, I don't have to worry about analyst expectations
...As you may recall that I said that as soon as tech exuberance returns, the 'love' for gold stocks would diminish very quickly. Traders are moving back into tech on strong Meta and Microsoft results, though Apple and Amazon would likely dampen sentiment tonight.
(1/2) China’s Gold Liquidation: A Liquidity Flush, Not a Structural Exit ⸻ Signal Flash: Traders in China Aggressively Selling Gold A new chart from Goldman Sachs, shared by@Mayhem4Markets
, shows an extraordinary spike in gold outflows from China’s SGE and SHFE exchanges marking one of the largest liquidation events in years. On the surface, this appears bearish. But beneath the chart lies a more complex and strategic reality.
This is not the end of gold’s global bid it’s a liquidity event masquerading as a structural rejection.
⸻ What’s Actually Happening in China?
This move must be understood within China’s deteriorating internal financial landscape:
•Liquidity stress is intensifying: Credit growth has stalled, real estate liquidity is freezing, and consumers are hoarding cash, not spending.
•Yuan defense mechanisms are activating: The PBOC is tactically deploying tools to prevent a disorderly slide in USDCNH amid capital outflows.
•Domestic gold demand may be facing forced liquidation: Trust product redemption pressure, real estate investor cash crunches, and margin call dynamics could be triggering a wave of selling in physical and futures markets. Importantly, this selling appears to be concentrated in retail and commercial channels, not sovereign allocations.
⸻ Strategic Hypothesis: This Is a Flush Before a Reset
There are two high-probability interpretations that explain this outsized move:
1. FX Liquidity Pressure = Fire Sale of Gold Reserves China may be using domestic gold reserves via state-influenced brokers and financial institutions to:
•Create USD liquidity for trade settlement or FX defense
•Suppress domestic price volatility in gold (especially in yuan terms) to maintain confidence
•Front-run any G7 capital controls by moving out of retail-accessible stores of value
This mirrors patterns observed in prior periods of capital flight see 2015–16 and 2022 when retail gold flows were curtailed to shore up domestic financial system integrity.
2. Engineered Capitulation Before Strategic Accumulation A more adversarial hypothesis: this flush may be a state-sanctioned purge of speculative positioning ahead of stealth sovereign accumulation. The playbook is not new. In 2013, a massive gold futures dump triggered a 15% price collapse just months before record central bank accumulation began.
Beijing may be replaying that tactic:
•Drive down price
•Clean out speculators
•Accumulate in size through offshore or sovereign proxies China continues to buy gold for its national reserves through unreported channels (e.g., PBOC’s “state secrets” purchasing strategy).
(2/2) Why Global Gold Bulls Shouldn’t Flinch Despite this signal from Chinese traders, the global macro gold bid remains strong: •Central bank buying is still near record levels led by Singapore, Turkey, India, and Kazakhstan
•BRICS nations are actively working to increase non-dollar settlement mechanisms backed by gold
•Western ETFs are showing inflows, not outflows especially amid rising fiscal risk in the U.S. and eurozone Gold’s bull thesis is global, strategic, and sovereign in nature. A retail flush in China doesn’t change that.
⸻ Watch These Collapse Points Still, there are pressure points that, if breached, could turn this event into a more dangerous pivot:
•10Y TIPS yield breaking above 2.5%: Real rates rising too fast could cause gold to sell off globally.
•$3,000–$2,875 support break: A technical breakdown at these key zones could spark algorithmic and CTA-driven liquidations. •Shanghai gold premium flipping negative: That would signal a true collapse in domestic physical demand. So far, none of these are flashing red.
⸻ Final Synthesis
This is not the end of the gold bull market it’s a moment of forced deleveraging in a fragile financial system. Smart capital is watching this flush closely, not as a warning to exit, but as a signal to prepare for re-entry. In a world where trust in fiat is decaying, this selloff is a symptom of stress not of gold’s irrelevance. The more distressed the system becomes, the more gold becomes the counterparty of last resort.
This isn’t capitulation. It’s preparation. Watch what the central banks do next.
