Why has gold dropped 27% during QE3 when the US Federal Reserve has increased its balance sheet by 23% during the same time frame?. During QE1 the Fed balance sheet increased 7% and gold rose 50%. During QE2 its balance sheet rose 23% and gold rose 25%. Something is out of whack. The answer lies in the great take down of 2013 when a massive short seller (one wonders who?) in the paper market sold 500 tonnes of paper contracts in less than an hour, crashing the mountain of stops stacked together at $1,500. The panic covering of positions killed gold prices. This in turn forced the giant Gold ETF to sell over 500tonnes of physical gold into the real market, further depressing prices. This self-feeding spiral has now run its course. The money printing-falling gold anomaly will violently reverse soon, taking gold back to around $2,000 where it would otherwise be given the history of QE1 and QE2.