Gold Price

By my indicators, the recovery in the gold price this year to date primarily reflects upturns in
the various cyclical pressure gauges or "boom / bust" measures. The monetary measures I follow
in connection with gold have been flat so far in 2012. So the betting for gold currently favors an
expectation for improved commercial demand.

As expected, the gold price did bounce off the oversold condition described late last year. It
did not test support at 1500, but has instead maintained a strong positive trajectory which led
the price to break out of the sharp downtrend line in force over the Sep. - Dec. 2011 period.
That is a positive technical development. The metal is overbought in the short term but not looking
out several months. $Gold

The speculative demand for gold continues to rise when I measure its price against the economics
for the industry ( all in cost + cash flow ). It is currently about 83% over this measure compared to
peaks of 40% in 2006 and 60% in 2008. Gold is down from the 100% premium over economic
value recorded in Sep. 2011. Gold can be expected to return down to economic value in the next
global recession.

Gold price volatility is showing preliminary signs of settling down after a tumultuous Half 2 ' 11.
If the current rally extends up toward the $1800 oz. level in the next month or two, I will look
to start shorting it again (a move not recommended for most folks). $Gold -- Shorter Term