To put the pieces together, we need to pay attention to both the announcement and the setup that frequently predates it. Case in point is the recent announcement from China that the US dollar risks losing its reserve status due to excessive money printing. It warns of an imminent crisis in the US dollar.
Since the announcement is part of China's political spin, we can assume that China has already taken a proactive stance. The setup is already in place. The announcement has been made, and the action may or may not be executed, depending on reactions from the US.
As to the nature of the setup, we must look at what sort of unusual activities have recently transpired in the gold and currency markets. What comes to mind is the strange disconnect between the US futures prices and the London spot prices for gold back in March and April. Predictably, it resulted in a massive export of gold from London which can at times refuse delivery, to New York where failure to deliver would signal a systemic crisis.
The situation at the moment is that some 500 tonnes of gold is ready for delivery from New York at the end of this month. China is likely to be in a position to call on this option, and that's what their announcement is about. The concern expressed by the Chinese government is not merely a statement regarding the health of the US dollar, it's a threat. The Chinese are in a position to drain New York of 500 tonnes of gold, and they will do so if US politicians don't stop the Fed's current money printing.
The odds are now heavily in favor of gold. There's massive pressure on the US to make changes that they are unlikely to implement. As the US fails to stop their current money printing, gold will go up.
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