For a month now, before any spike in gold, the Asian traders have been the ones to start the rally. I was examining the February AM/PM chart and I noticed that the bull runs happened the days after the PM session led the AM session. Asia are the ones spring the price higher. They are doing this because they are net buyers of gold, and this on the long end.
Understanding the dollar's relationship with gold and precious metals is simple, yet complex. Simply, gold trades well on a strong dollar and weak dollar. More complexly, gold trades well on a strong dollar, and strong Yuan. The Yuan does have higher elasticity in correlation with gold than the dollar was. This gives Asia more flexibility trading gold with the Yuan than the dollar. This is one reason the Yuan is poised to replace dollar assets in the SDR basket.
Asia has a lot of room to make up for after they continually invested in the fiat ponzi empire. Treasuries and cash reserves make up the bulk of their investments. The Middle East and even North Africa have more diverse reserves than Asia. Asia will have to make one last run at precious metals before the looming oil crisis.
Russia and China have brokered a deal for oil, but unless the Yuan can trade for oil, that deal may not matter. It would take years for China to accumulate enough gold from production to match their cash reserves. China has to strengthen their bank sheet and this means they have to buy gold on the open market. They and Japan will now begin to move away from Treasuries in a massive way, and begin to buy large quantities of gold.
Yet since the world banks are net buyers of gold, how will Asia get the gold? They may stage a raid on the COMEX, or on the LBMA. They may also raise their own miner shares to the point where international mining prices could raise spot. I say that because the opposite, that when miners are shorted it lowers spot, is true.
There are few solutions to the problems of governments collectively. Finance will try to thread the fiat needle of austerity combined with Keynesianism, and they are sure to fail. It may be that gold goes parabolic sooner than anyone thought. How soon the panic sets in after the global food riots will soon be found out.