Gold dropped from $915 to $859 on Friday. That's not supposed to happen while the market is crashing. What's going on?

It's not that gold has lost its luster. But institutional investors were forced to sell gold on Friday to meet margin calls.

If equity and hard assets continue to lose value anywhere near the rate of last week, margin liquidation will continue. And gold could go down even more.

But make no mistake about it. With the market crashing and dozens of governments printing money like there's no tomorrow, investors want to be in gold.

Before the sell-off on Friday, the price of gold was up more than 20 percent following Lehman's collapse.

The demand for physical gold this month has surged to what one trader calls "unprecedented" levels. The U.S. Mint has doubled its gold-coin production but it hasn't been enough.

Gold dealers have had to turn away customers wanting to buy coins and bars.

But it's the physical demand (for jewelry) that ultimately decides the price of gold. Jewelry demand accounts for 60 percent of total gold demand and it's down so far this year.

Will it pick up? The world's biggest gold consumer is India and Diwali – the festival of lights –begins October 28th. Gold sales usually surge with the approach of this festival.  

Then there's this: Gold production today is lower than it was in 2000.

Gold is rarer than ever. The markets are going to hell. It's gold's time.

INTERNAL ENDORSEMENT

The Coming Gold Rush of 2009 Could Hand You Safe Gains of 408%

If you think it's too late to make big money in the precious metals bull market, it's time to think again. The financial crisis has caused tremendous pain… but the "solutions" are likely to make the situation even worse in the long run. But there is a way to protect and grow your wealth… with inflation proof, depression proof gold!

Click here to learn how to turn the gold rush of 2009 into safe gains of 408%

NULL
NULL