That's as good a description as any of the progression of the $US Gold price over the past month. Gold trades quietly at or slightly above the $US 280 level. Then "something happens" and Gold has a relapse. And then it trades quietly back to at or slightly above the $US 280 level.
Economic statistics, no matter how dire, don't disturb this pattern. Interest rate cuts don't disturb it. News of the progress (or lack of same) of the war in Afghanistan don't disturb it. Anthrax scares, or bridge demolition scares, or any other type of "scares" don't disturb it. For the past month, nothing has disturbed it.
We are in limbo. The Fed and the Treasury are hell bent on eliminating U.S. interest rates entirely. The Fed Funds rate is down to 2.0% - any lower and we enter Great Depression levels. The Treasury has decided to cease issuing long-term (30 year) bonds since the Fed can't cut THOSE interest rates. Questions are starting to be asked, even in the mainstream media, about whether the U.S. is on the same road that Japan took over a decade ago. But so far, the investment markets aren't buying it. They are holding as an article of faith to the idea that lower rates, lower taxes, and more government spending will revive what is now an absolutely moribund U.S. economy.
Speaking of "higher government spending", the official estimate of the cost of the war in Afghanistan is now being put at $US 1 Billion per month. Since this is the official estimate, you may be confident that the REAL figure is much higher.
Right now, Gold lease rates are a little over 1.00% lower than their equivalent Treasury yields. Both offer negative REAL returns. Right now, physical Gold exceeds newly mined supply, just as it has for more than a decade. Since 9/11, of course, the demand/supply imbalance has blown out hugely.
But the offical Gold prices, both in London and in New York, continue to languish in an ever tighter trading range. No one could find a good "reason" why Gold slipped $US $4.20 on November 8, so it was explained by pointing to the ECB's 0.50% rate cut and the subsequent fall of the Euro against the $US.
Asian banks' bad debts total the equivalent of $US 2 TRILLION (give or take the odd Billion) with their vital U.S. export market imploding. Europe's economy has stalled completely. The U.S. and the rest of North America is going backwards with increasing speed. South America, led by Argentina with Brazil not far behind, is staring straight at yet another debt default.
And, of course, the entire world and all the Central Banks therein is embarked on an orgy of new money creation. This is supposed to be borrowed and spent to boost the economy. What is actually happening is that the new money (and the lower rates) are allowing debt-burdened businesses and individuals to keep on servicing their debt for another week or month. It is fighting a slowly losing battle, as witness the ever increasing levels of corporate and individual bankruptcies almost everywhere.
The western world has been "combatting" recession by preparing for or actually engaging in war ever since Germany kicked off the process in the early 1930s. Since World War II, the Cold War provided a perpetual excuse for this credit expansion process. When the Cold War ended, it once again became "necessary" to engage in acutal wars (declared or otherwise). Hence, the Gulf War of early 1991, the Balkans War of early 1999 (which ended the "Asian Crisis"), and the present war in Afghanistan.
Meanwhile, every bad economic statistic, every "disappointing" earnings result, every new dollop of layoffs, in short - every piece of evidence of recession or worse - is being blamed on 9/11 and nothing but 9/11.
So far, this is all "working". The U.S. stock markets have had no serious bouts of weakness since late September, the U.S. Dollar has had no serious bouts of weakness since late September, Gold has had no serious bouts of strength since late September.
The situation in a nutshell is this. The biggest economy in the world, and the nation which supplies the world's reserve currency, is also the biggest external debtor in the world. The U.S., which owes the rest of the world TRILLIONS, has lowered its own interest rates to levels which afford all holders of U.S. debt paper a NEGATIVE rate of return. The only way to realise a profit on Treasury debt is either to use it as collateral to borrow something else or to actually SELL it. It does NOT afford a positive rate of return.
This amazing situation is, as yet, having no effect. The U.S. has a firm grip on the world, and is leading it on a "crusade against terrorism". How long will that firm grip last? It is impossible to know. But as long as it does, the "broken record" which is the trading history of $US Gold is set to continue.