"Want to buy corn?" Phil Streible, a senior commodities broker at RJO Futures, asked after COMEX gold prices had fallen more than 4% on Friday, April 12.
It was the single largest one-day loss gold had suffered since February of 2012 and put the yellow metal down 15.3% since it had hit a high of $1,772.10 in September of 2012 on news that the Federal Reserve would begin open-ended monthly purchases of mortgage-backed securities.
Translation: Gold was in a damaging freefall that threatened to end its more than decade-long bull run.
Monday, April 15, the next open trading session, was even worse. Prices tumbled about $140, and when the dust settled that afternoon, analysts, brokers and traders were staring at a new market that had destroyed numerous levels of technical support and left gold down 13% in just two days.
Most observers and experts throughout the historic two-day event were wondering what was happening.
The catalysts that set off gold's implosion may have emerged a couple years ago.
"You had the big move up in 2011 when gold could kind of do no wrong, even times when it should have gone down it probably went up," said Sameer Samana, an advisor at Wells Fargo Advisors. "That had a lot to do with the marginal demand, which was from retail clients, emerging market consumers, central banks -- you just had kind of everybody at the margin adding gold to their portfolios."
Samana said he believed these players jumped into gold as an inflation hedge against the Federal Reserve's monetary stimulus programs.
But multiple events in the past month leading up to the collapse can help explain the carnage, coupled with some key technical analysis that allowed for large funds to wipe out tremendous value for the world's oldest currency.
The weekend the Cypriot crisis unfolded prompted bullish gold investors to say that it could lead to a big push higher for prices that had been languishing for months.
"I expect a push above $1,600 is certain now, after that I believe the battle begins," David Williams, director at Strategic Gold Corp., predicted on March 17.
Gold gained a little more than 0.1% after news spread that Cyprus would be seeking a bailout from the European Central Bank in order to keep its financial sector solvent. The fear trade that day assumed the proposed bailout plan -- which included a requirement to tax all savings accounts of the nation's banks -- would set a precedent and spread to other struggling European nations. Gold's reaction was muted.
The precious metal posted another small gain on March 19, but pulled back on profit taking by the middle of the week. It was a sign that buyers weren't flooding into gold as a safe-haven against uncertainties in Europe caused by Cyprus. The flat action for that week suggested the market was already moving past concerns of the small island nation, despite many predictions that the event would offer solid upside momentum to prices.
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