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If gold falls it will be for one of two possible reasons:

1. Manipulation by the ruling class (not just in this country).

2. Things get so bad and UNSTABLE (key word here) that gold, silver, and many other things for that matter loose their value.

Right now most mining companies that produce Gold and Silver exclusively (ie. they are not a by-product of other mining such as copper) are at break even or are in the red (loosing money). Production costs have skyrocketed and continue to do so. Its as bad if not worse for these companies as it was when gold was $255 and silver at around $4 in the late 90’s. It’s not hard to figure what is going to happen to the price in this kind of climate, though it may not rise to much this year (all depends on what happens).

Then we can look at the massive buying around the world as the price has dropped. Russia, China, India(which has done a lot to curtail imports but the smuggling is increasing as well and in the mean time China has picked up the slack), the middle east. Lets just say the economic picture out there isn’t all that rosy. High inflation in those areas is rampant, Chinese are buying up everything they can here in the U.S. (this is not like Japan and its good times, the smart money can see the writing on the wall back home and its not good). The U.S. exported more Gold this year than it has mined, there are a number of reports and article stating that some if not all the vaults in Europe are a bit lean when it comes to storage of gold. When you have these kind of situations at play the Dollar rising and falling has little to do with the price at this point as has been the case over the last 12 years with the price of gold rising sometimes with a falling dollar, rising dollar, stable dollar, as well as falling in price at times when the dollar was weaker, stronger, and yes stable.

Then we can get into the statistically unlikely hoods of the price of gold doing a water fall in 5-30 minutes on no news, bullish news for Gold in general, capping action prior to the FOMC meetings, around options expiration days (some of it heard mentality and similar trading psychogy as well or traders taking advantage of the manipulation), we can also talk about daily caps on the price of Gold at almost exactly at 1% and 2% moves to the upside on many of the up-days which rather defies logic and reason if you believe that this is a free market. We can talk about large selling orders in the after market between the Commex close and opening trading in Asia. Since this is the thinnest volume of the 24 hour period, small orders can move the market quicker and in larger numbers. So if your objective is to get the best price for what your selling, then you would try to avoid those kind of conditions since it will work against you.

We can also talk about the manipulation of LIBOR, the FOREX market (which came to light this year), and the Mortgage market where many governments have turned a blind eye to for many years. One does have to wonder why. If it can be done here and they are far bigger markets than anything gold or silver can be, then why gold and silver cannot be manipulated?

The shale oil play helps to lower costs and make us more attractive for companies to move some of the manufacturing options back here, but they have been looking at this for a while mainly because rising material and labor costs have made it less desirable to continue to do business as it has been done. Cheaper energy has just helped pushed it along at a faster rate. If anything that means a more robust economy and more buying of everything including gold.