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What's gold trying to tell us?

I did my usual gold check this morning and saw a price of $923. There is nothing remarkable about either the price or the continuation of my morning habit of checking up on it.

That’s just it. It has gotten – dare I write this – boring.

Since the record price of just over $1,000 was set in March 2008, the price has basically been going sideways at the $900 level. When the price goes over that amount, sellers seem to come in and dump a little. When the price dips under that figure, buyers come in and take a little.

It adds up to a scoreless tie in the 11th inning of a baseball game. Unless you appreciate the finer points of pitching and perhaps good defensive plays, the game is kind of dull.

That’s where we are with gold. For 14 months we have been going sideways.

The bulls are betting on inflation taking the price higher. They cite a rapid increase in the balance sheet of the Federal Reserve, which has indeed more than doubled to around $2 trillion. They cite the $787 billion bank bailout and the $1.8 trillion U.S. budget deficit for the coming year. They also cite Chinese buying.

With all that, why isn’t gold higher?

On the other hand, some believe gold will fall because deflation is sweeping through the world. The prices of U.S. houses have dropped by 30 percent, drastically impairing the ability of many Americans to spend. The price of oil is down 60 percent from its $147 peak. The U.S. Consumer Price Index has fallen year-to-year for the first time since 1955.

OK, so why isn’t gold lower then?

Both sides cite plausible facts to support their case, but the price of gold doesn’t seem to be reacting to either.

So what is the gold market trying to tell us? What if it is saying economic forces are evenly balanced: catastrophe isn’t coming but neither is recovery?

What then? What then, indeed.