Gold down almost 10% today!

Wow.  Now that is some volatility.  Why is gold valued at almost 15% less than it was a several days ago?

This is a buying opportunity for the long term.  Of course the opportunity may be even better tomorrow.  I am busy updating financial models to find the best investment opportunity for more of my fiat savings.  So not much time to write now.

I've read two theories regarding causes of the gold price crash that are very believable.  In summary:

1) Hedge funds are playing a momentum trade that started at the end of last year and shorting gold .  The core bullion banks (i.e. JP Morgan) have managed the price down to entice more hedge funds to go short.  The core bullion banks are close to having a long gold position (the other side of the hedge funds') that is equivalent to their long-rumored, legacy short position.  Once the core bullion banks are able to cover their gold derivative contracts, they will allow gold to appreciate and squeeze the now short hedge funds.

2) The paper or derivatives market for precious metals is becoming disconnected from the physical market.  The greater the perceived risk of delivery with a derivative contract the larger the disconnect.  The price of gold quoted in the press is the price for paper gold: a contract to receive the bullion.  However, purchasing physical or bullion at that price may be impossible.  A quick check of a couple retail internet  coin brokers shows that they do have bullion for sale with commissions that are similar to a week ago.  The real test is whether large physical purchases such as those made by central banks are being completed at these prices.  

Steady as she goes!  We knew that precious metals would be volatile.