Some guys are trying to brush this off as a forced unwinding of positions from the Lehman and AIG failures. Just trading action.
This is a classic 'flight to quality' and anyone who doesn't recognize that has no clue about the macro moves behind this.
"We think that gold is also being used as a carry trade 'currency' as well,
as the central banks lease their gold bullion cheaply to the commercial banks,
similar to the low interest rates carried by the yen and Swiss franc.The gold is sold off, probably to the ETFs and the metals markets, and is largely not
returnable to the central banks in many cases.This is one of the reasons why the gold price is becoming so volatile; the 'printing'
of gold by central bank leasing does not really create anything, it only distorts the market longer term.Some day that volatility may become breath-taking."
Jesse's Cafe Americain The Carry Trade Currencies 15 Sept 2008
