The following is an excerpt from Saturday's International Forecaster written by James Corbett:

The fall in the price of gold suggests that there is something out there that the government fears more than deflation, something they desire even more than inflation and repudiation of the national debt.

So far, I can only think of two possibilities:

1) Foreign creditors. It’s possible that China and others holding US Treasuries have set President Obama down and told him in no uncertain terms that they will not accept any more debt devaluation by means of inflation. I.e., if the gov-co causes or allows the fiat dollar to fall below, say, 78, on the US Dollar Index, they will “pull the plug” and sell every US Treasury they own and thereby collapse the US dollar, the US economy and even the US government.

2) Washington Economists. It’s possible that the economists in Washington DC agree that the US economy is so fragile, that if the dollar’s value on the US Dollar Index fell below, say, 72, that the result would be total collapse of the US and global economies.

In either case, the dollar would have to be shored up to prevent an economic collapse. Thus, my notion of government’s “prime directive” (causing inflation to repudiate the national debt) might be now taking second place to government’s determination to avoid a total economic collapse.

I’m not saying that’s God’s truth. I’m simply saying that that hypothesis provides me with a plausible “Why” from which I derive some comfort and confidence in my ability to cope with the world. Armed with a “Why,” I don’t scream and flee when I hear the “thunder”.

In truth, a lot of our “explanations” are like four-leafed clovers or lucky rabbits’ feet. Our explanations may not be true, but we still rely on them to give us the confidence we need to participate in an increasingly incomprehensible world.

As part of my “Why,” I presume that the gold market is manipulated to control the price of gold. If that presumption is correct, the fall in the price of gold makes sense to me only as an intentional device to reduce inflation and shore up the value of the fiat dollar.

More, if the need to support the dollar is greater than the need to inflate the currency (and repudiate the debt), logic suggests that we may be close enough to a potential economic catastrophe to scare the bejesus out of our Chinese creditors and our fearless leaders in Washington.

Assuming that government has caused the dramatic fall in the price of gold, our economy may be more vulnerable than most people suspect. If so, the necessity for having physical gold and/or silver in your possession should also be growing.