NEW YORK (TheStreet) -- The printing presses are running 24/7, the debt levels are unsustainable, China and India are showing growth, gold is a storehouse of value, _____ (insert the latest reasons here). The reasons for gold moving higher continue ad nauseam despite inflation's deafening silence.

Pundits of higher gold prices have called it correctly for so long; many have likely forgotten what it feels like to get it wrong. The $2,000 gold hysteria and subsequent price fall is déjà vu all over again (thanks Yogi Berra). If you're old enough to remember, the gold bubble song played in 1980 along with Diana Ross's hit "Upside Down," which is what gold investors quickly became if they bought and held. In the first weeks of 1980, most newspapers printed gold prices on the front page: $1,000 an ounce (and higher) was declared a "sure thing." Prices didn't bottom after until reaching lows under $300.

Fast forward to 2012, the music has changed as clearly as the ground has shifted. Surprisingly, gold bulls continued babble of "the deficits are coming, the deficits are coming," largely remains. A look at the most popular gold

SPDR Gold Trust ETF

(GLD) - Get Report

reveals lower highs and lower lows. Last week came within pennies of breaching the lows this year.

And, to a certain degree, they have a measured and valid point. Few will agree federal spending is under control. However, deficits are all that gold bulls have left to cling to as they dangle over a treacherous cliff, a vantage point many haven't experienced.

Unfamiliar with what a bear market is, gold bulls steadfastly view price drops as buying opportunities. Perceived as entirely reasonable, at least in their minds, the air below isn't filled with peril, while in truth, their grip slips away.

Gold's most attractive attribute is the ability to store value as an inflation hedge in U.S. dollar terms. But where is the inflation? It's not in oil, and when energy is cheap, all commodities tend to follow.

Consumer Reality

Take a look at the ETF

United States Oil Fund

(USO) - Get Report

price chart to see the direction of oil prices. On Friday, USO made a new 2012 low. The USO allows investors to position in oil through an equity product.

The direct relationship with energy and commodity prices comes from almost every product having a large energy cost component. The easiest relationship example is at the fuel pump with gas and diesel. The cost of oil has a very high correlation to the price of gas we put in our vehicles.

As the price of diesel falls, the cost of shipping, trucking and rail also falls. Lower transportation costs of products we buy, regardless if through mail order or off the shelf, result in lower sticker prices. Lower sales prices are by definition, deflationary. The same holds true for production costs of almost everything.

Plastics come to mind quickly; however, don't forget that fertilizer, medicine, tires, roofing, shampoo, dentures, artificial turf, soft contact lenses, lipstick, DVDs, toothpaste, pillows and even the monitor you're using to read this article is made with petroleum. All of it is dropping in price as oil moves lower. Inflation is not leaving today or tomorrow; inflation took an early flight out


and is nowhere to be found.

How can we be sure inflation won't decide to come back next week? No one can know for sure; however, we can look at facts to draw a logical conclusion.

In the hoopla of Facebook's xanadu IPO, you may have missed a significant change between Alaska and North Dakota this week. North Dakota pushed Alaska's ranking down to become the No. 2 oil-producing state. What makes this statistic particularly interesting is that North Dakota is only at the beginning of its potential production capacity.

The more capacity and transportation become available, the less oil will cost. The best is yet to come though, because as domestic sources increase in proportion of total needs, the less supply-risk premium is added. Taking on the risk of a problem in North Dakota is a whole lot cheaper than taking on the risk of a Middle East problem.

Natural Gas

Oil has greater competition than ever before in North America. Take a look at natural gas prices through the

US Natural Gas ETF

(UNG) - Get Report

. Last year around this time, UNG traded for more than double the current price. Natural gas prices are so low that trucks consuming natural gas instead of diesel are increasingly common. The low natural gas prices are lowering E&P, effectively putting the market on notice that prices are expected to remain relatively low indefinitely.

Long-haul trucks are just now joining in, while taxis, local delivery vehicles, busses and other traditional petroleum consumers have demonstrated reliability for years. It's just a matter of time before passenger vehicles are sold with natural gas as the energy source straight from the factory.

Aluminum, copper, lead and nickel prices are all also trading near 12-month lows. If the price of gold is directly related to non-existent inflation in U.S dollars, gold is not going to climb. It really doesn't get much simpler than that.

But . . . but . . . but . . . the Fed's printing press is working overtime and dollars are flooding the market! Inflationary money supply growth may be true and wisely monitored; however, the material importance is the relative lack of dollars exchanged for products. Remember, there are two sides to supply and demand. An increase in demand (more dollars) will not result in an increase in price as long as a relative increase in supply (like nat gas and oil) occurs.

The situation in Europe only builds the gold bear case as a result of gold priced in dollars. As the euro falls in value against the dollar, demand for gold decreases. The U.S. 10-year yield closed at a record low of 1.71% on Thursday. I am not attracted to locking in capital for 10 years at less than 2%, but obviously, enough believe it's a good idea to make it happen. 1.71% yields is the market equivalent to a neon sign flashing "no inflation."

As a result, gold bulls refusing to adapt may soon become reacquainted with another song of 1980: "You've Lost that Lovin' Feelin'" by Hall and Oates.

Author does not hold a position in any stock mentioned.