After a certain point, the federal reserve can no longer keep up its market manipulation of gold. This market manipulation has been so key to keeping people from thinking that the dollar has only suffered minimal collapse due to it’s massive money printing.
“At a price of $1,250, gold mining companies can no longer make a profit. Recent studies show their all in cash cost anywhere from $1,400 to as high as $1,700. Liquid fuels, human energy, and new exploration are costly in the mining process, so it is unlikely these costs can be cut to accommodate the low gold price.” – ZeroHedge.com
So either every gold mine will simply collapse (unlikely) or physical cold contracts will move to 1700-2000 while paper contracts remain at 1200. What happens then? The paper market becomes simply a fiction with no deliverables. At a certain point the paper market will take a big GULP and come out at 2000. Then all hell will break loose.