Gold and silver did decline a bit more on Monday and as of Wednesday both are back at resistance levels, roughly $1150 for gold and $18 for silver.

Here’s a CNBC interview that is interesting because some mainstream expert out of the blue references a super-spike in gold in the first half of 2010. This interview aired shortly after the peak in gold at its all-time high but by then gold was clearly declining as a dollar rally had started.

[1] http://pragcap.com/gold-is-going-to-super-spike-in-2010

Obviously this guy is not a gold bug and views the whole commodity complex as a trading arena. He may be basing his super-spike opinion on the reverse Head and Shoulders formation, but it’s hard to say. More likely he is going with the feel of the market at that time, which was in admiration of the new all-time high. Remember, some gold bugs were getting spooked before the peak and were predicting a C leg down. It looks more and more like the a consolidation will occur as opposed to a severe decline.

As a matter of contrast, here is an article by a well-known gold expert. He is not exactly a gold bug but his fund is a well-regarded participant in the gold market. His views tend to be balanced and long-term, though it is hard to avoid the fact that he is biased.

[2] http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103033&sn=Detail&pid=102055

The sovereign debt issue is something that is popping up in different places, and is the sort of analysis that tends to be astute but not exactly mainstream. Greece is a reminder that many nations, notably the US and UK, are running huge deficits and issuing massive amounts of new debt that has to be soaked up somehow. Quantitative easing, or the practice of a central bank to monetize the country’s debt, is a dangerous game. It basically means printing money at will.

Finally, James Turk of GoldMoney has written about the Havenstein moment. This references the head of the German Reichsbank during the Weimar Republic, who made the fateful decision to allow unlimited printing of money. What is interesting is how Turk compares the current observation that the US money supply is shrinking, with a comparable situation in Germany - namely that the money supply seemed to be shrinking just before hyper-inflation took hold.

Now, how could the money supply be shrinking if there are vasts amounts of new money being printed? I guess it depends on how the money is created, and the flow of money in the economy. Turk does not get into the intricate economic details, but simply makes the point that as price inflation picks up, it seems like there is less money available because everything is more expensive.

Actually, there is one more article I want to reference. This one makes the pojnt that deflation is good for gold mining stocks and that can be a leading indicator of a rise in gold prices, which in turn is a leading indicator of inflation. The logic is simple: deflation causes the cost of mining to go down. What the author sees now is a potential breakout in gold stocks, and speculates that even a small deflationary episode could be the trigger.

[3] http://pragcap.com/a-deflationary-impulse-would-be-a-catalyst-for-gold-stocks