The price of something is suppose to be a reflection of the balance of supply and demand… that is until manipulation enters the equation. Gold is hovering around $1,775 and silver has been staying in the $35 range for awhile. This is clearly not reflecting the physical demand. These prices are the manipulated paper market price levels. The paper market is a derivative of the physical market. The paper market will ultimately be pulled up to the true demand like a rubber band relieving tension. The manipulators want the weak investors to jump out of the market from frustration. Once this occurs, they will change their short positions to long positions and ride the price up to the next plateau. They assume that the weak players will provide enough supply at current levels for them to close their positions with a profit. However when there is a paradigm shift, the manipulators can get wacked by their own greediness. When their plan fails, they must go into the market and cover their short positions at a substantial loss. This causes the price to go up even quicker.
For those of us who believe the shadowstats.com statistics of inflation and GDP, hard assets are the primary vehicle to protect existing value. As more fiat money is printed, the gold price will ultimately reflect the depreciation of the currencies. As central banks get more desperate to keep the current system afloat, the price of gold and silver will shoot up higher. When Joe Sixpack figures out he is losing value in his pension (assuming he still has one), he will begin to focus on hard assets as well. This is when the price will go parabolic.