For the reasons pointed out in a previous post, a large fall in the dollar price of Gold would signify the point where the debt problem has become so pressing that people have had to use their Gold to buy dollars in order to stave off personal ruin for a while longer.
How perverse is that? At the very point where they most need the stability of Gold’s value, it has to be swapped for fiat. I spoke with a good friend in the US recently. He is in exactly that position right now. A Greek contact reached the same position a few years ago.
At the point when the bid on the dollar is going sky-high, the fall in the dollar price of Gold will be cascading. That will presage the real beginning of the end – imminent debt collapse. The actual end will be the point where the dollar note, the IOUs of that debt, changes from a rising trajectory to a straight line to zero. What is the function of a debt note when the underlying debt has collapsed? Which reminds me – the Australian government used to send me a monthly cheque simply because I had children. I had half of one lavatory wall papered before we sold the house.
It seems a reasonably sound prediction that backwardation will be immediately preceded by a steep decline in the dollar price of Gold. At the very point where the dollar is looking at its strongest will be when it is closest to collapse.
You must be debt free and able to weather a period of no income without parting with your Gold. You must also hope that those who are working to get Gold circulating again are successful.
If they are not, then none of it really matters. What good is Gold without a market for surplus goods?