The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (

Bullion Bulls Canada

) -- After a full decade, how does the bull market in gold look in the first quarter of 2011? In a nutshell, better than ever.

Simply put, all of the fundamentals strengthened for the gold market in the first quarter of this year, completely rebutting all the nonsensical propaganda which has recently appeared in the media about "tops" or "bubbles." Skeptics will counter that these numbers only go to the end of March, while the price action (i.e.

manipulation ) which brought out the latest wave of "Chicken Littles" in this sector didn't hit until the beginning of May.

Sadly, this means I need to once again explain why price action is nearly totally irrelevant to any analysis of this sector. A large segment of the professional financial investment community remain so grossly under-educated that they still are incapable of grasping that price movement is not a "fundamental" upon which you can base an analysis. In the best case, it is merely a consequence (or "derivative") of those fundamentals.

Even in a perfect world, where price action is a direct derivative of fundamentals, such derivative-based analysis is inherently less reliable as it incorporates a much larger margin of error than genuine, fundamentals-based analysis. However, the world we live in is far from perfect.

In order for price to have any "fundamental" value at all as a tool of analysis, a long list of assumptions must all be true. It is an iron rule of statistics that where (any of) these assumptions are violated, the analysis is worthless. At the top of this long list are: "free and open markets" and "perfect information."

Is there anyone reading this who believes we have a

"free and open" gold market? Does anyone think the broad investment community has

"perfect information" on the gold market?

Now that we've all had a good laugh, I'll continue. Given the rampant manipulation of this sector, this makes price action meaningless as an indicator of anything, This allows us to focus 100% on the true "fundamentals": supply/demand analysis. Here the phrase "full speed ahead" immediately comes to mind.

To summarize the picture here, demand continues to strengthen (vigorously) while supply is getting tighter. It doesn't get any better than that. First-quarter numbers from the World Gold Council illustrate these very bullish supply/demand parameters.

Obviously we must begin our analysis here with Asia, since it is the (huge) twin markets of China and India which dominate the overall fundamentals. In China, the amount of (physical) bullion "delivered" at the Shanghai gold exchange in China increased by nearly 20% just from the fourth quarter. In India, the world's most "liquid" gold market, even with prices near record-highs (in nominal figures) supply continued to tighten, leading to higher premiums in the market.

This is nothing less than a fundamental change in attitude on the part of the Indian gold-buyer. Historically, Indians have been the world's most price-conscious gold buyers. Rising prices would always cool demand, and with India's previous dominance of the global gold market, that easing of demand would bring the price back down -- and then Indian buyers would re-enter the market.

Not so any more. Today, Indian demand is unwavering despite high prices. Clearly the Indian buyer has received (and understood) the "message" from the global gold market: they must now compete with other buyers for the (limited) supply of gold. With that "competition" inevitably leading to still higher prices, the Indian mantra in the gold market has changed from "wait for a better price" to "buy now."

In this respect, we can likely credit the government of India with helping to reshape the attitude of Indians toward price action in the gold market. It was only a year and a half ago that India's government

captured the attention of the entire gold market by swallowing up half the gold which the IMF had dangled in front of the market -- in one "gulp."

The entire purpose of the IMF dumping 400 tons of gold onto the market had been to create the impression of "over-supply" in the gold market, in the vain hope (of the bankers) that this would do what all of their other manipulations had failed to do: dampen investor sentiment. This was why the propaganda-machine "announced" (and

re-announced ) this one IMF sale on a at least a half-dozen occasions.

That strategy totally back-fired when India's big-buy clearly signaled to the market that the appetite for gold greatly exceeded whatever supply could be brought to the market -- and the gold sector has never looked back since. That attitude has now percolated down to the individual gold-buyer in India, providing rock-solid support for the gold market on the demand side.

What was possibly even more instructive were the numbers coming out of Vietnam. Though Vietnam isn't as important as either China or India, due to the large differences in population, on a per capita basis the Vietnam gold market is much like that of China and India. Ironically, the WGC wrote about "high inflation" and a "9% devaluation" of the Vietnamese "dong" versus the U.S. dollar.

Regular readers (and anyone with a basic understanding of economics) know that all inflation effectively represents a "currency devaluation" since that is the definition of inflation, thus inflation and currency-devaluation are just two sides of the same coin. When the price of oranges goes up by 20%, it doesn't mean that we're suddenly being treated to new-and-improved oranges, but rather that the paper we use to buy those oranges has lost (roughly) 20% of its value.

With the double-hit of a 13% inflation rate and a 9% official devaluation, this caused the price of gold to spike sharply higher in the Vietnamese market in the first quarter. How did Vietnam's domestic gold-buyers respond to this explosion in the price of gold? They bought just as much gold (on a quantity basis) as before that price-spike.

Collectively, the buyers of these Asian markets are signaling a sea-change in investor attitudes toward the price of gold. Instead of a rising price of gold triggering the sentiment that "gold is getting expensive", now what the rising price of gold is representing to investors/savers is

"our paper is losing its value."

This is nothing less than the worst nightmare for the banking cabal which has been ruthlessly suppressing this market for decades. The entire reason for suppressing the price of gold was that a rising price of gold has historically served as a "barometer" for high inflation -- a signal that the reckless money-printing of the bankers was destroying the value of our paper currencies.

Now, despite the three decades the bankers have spent trying to kill this 'canary in a coal mine', we see the gold buyers simply shrugging-off the lies and the fear-mongering of the propaganda-machine - and turning to gold (and silver), as the most reckless money-printing in global economic history can only lead to a complete collapse of all of this paper.

Turning to North America, the propaganda-machine will tell us there was a "mixed picture" in the gold market: sales of "physical" bullion (i.e. coins and bars) surged, while investors were dumping their paper-bullion products (most notably "GLD"). Indeed, what the WGC 'forgot' to add in its own analysis is that the plunge in holdings of "GLD" (by 5.4%) represented the largest liquidation of units in this bankster gold-scam since this fund was first created.

As I wrote a little over a month ago, I see nothing "mixed" in this picture. North American investors are signaling very clearly that their confidence in the paper-bullion products of the banksters is wavering (gee, I wonder why?) -- while their appetite for genuine, physical bullion continues to grow, irrespective of rising prices. As I said back then, I see this as nothing less than the

beginning of a "decoupling" between the "fractional reserve" Ponzi-schemes of the paper-bullion market and real gold.

The fundamentals for the gold market are just as favorable on the supply side. Total gold supply rose by an anemic 2% in 2010, despite a nearly 7% increase in mine-supply. This was largely offset by a plunge in "recycling" -- with the majority of that metal representing what the "We Buy Gold" vultures have been able to dupe consumers into selling.

The myth of the propaganda-machine has been that rising gold prices would "soon" cap the market - by causing gold-owners to dump more and more of their metal onto the market. The latest numbers from the WGC utterly refute that concept. On a long-term basis, there has been no appreciable increase in the quantities of "scrap" gold being recycled into the market, despite a six-fold increase in the price of gold.

When there is a sudden spike in the price of gold, we have seen a small and brief rise in scrap sales -- before volume falls right back to flat. What this empirical evidence indicates is that the small percentage of the investment public who hold gold (and silver) are not "speculators" buying a "commodity" (as the propaganda machine regularly claims).

Rather, we bullion-holders are simply savers who are insulating/protecting our wealth from the monetary depravity of the banksters' money-printing - with the only means available to us: converting our paper currency to "good money" (i.e. money which preserves the wealth of the holder).

Last but not least, we come to the final "piece of the puzzle" in our supply/demand analysis: the central banks. As is now widely known, 2010 marked the first year that the world's central banks clearly shifted from "sellers of gold" to "buyers of gold." For decades, these central banks represented the second-largest source of supply to the gold market (behind only mine production).

In 2010, central bank "sales" of gold totally evaporated, while these banks drained the supply of gold by nearly 90 tons. This year, that total was recently exceeded in a single transaction, when Mexico's central bank announced the purchase of more than 90 tons of gold, and along with the cumulative purchases of several other central banks, this new demand can now be expected to amount to hundreds of tons per year.

It is impossible to overstate the significance of this reversal in the trend of central bank behavior. The same financial institutions who print all of our paper money (and are thus presumed to understand

its true worth better than anyone else) now have an unequivocal preference for bullion over their own paper currencies.

Even with all the other bullish fundamentals for this sector, there is no better reason to swap our banker-paper for gold than that.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.