POG

This is my theory.  Mine.  Not based on anything other than my own suspicion and opinion.

When you need cash or need to shift cash urgently, the first thing you sell desperately is what you can get most of.  While the price of gold has fallen sharply, it was below USD$1000 per oz for a long time too.

However, because of its value as a hedge, a value standard, a currency and a precious metal, it can also be stored as hoard or worse, traded without any physical holding.

My suspicion is gold is sold without physical exchange of the metal.  An imaginary price.  Or a hoard has been sold, too.  In the long run, if gold cannot be materialized either through clever marketing or alchemy, then it has to be recycled or dug up from the ground.  Hence, at this kind of price today, the supply will dry up.  Not altogether but significantly.  And then the supply-demand equation will rule again.

If you read PIR's announcement yesterday, it was using USD$1300 per oz in its feasibility study.  But even at USD$1200 per oz, it is still profitable.  But in current sentiment, the market treats it as "so what?"