How the Gold Price has gone nowhere – fast and aggressively – ahead of 2013...

WHAT A FUSS over nothing! writes Adrian Ash at BullionVault.

Gold crept back Friday morning to right where it stood before last Friday's sudden 1.4% jump, trading at $1730 the ounce.

That meant it also unwound half of this week's sharp 2.0% plunge from Wednesday. It also puts the gold price in US Dollars right back where it stood a month ago. Which is also where gold stood 12 months ago, at the start of December last year.

And then it went and slumped $15 again, taking gold pretty much right back to its monthly average for November.

Hey-ho. Many people are surprised both by this volatility, and by the lack of action it actually leaves behind when the shouting is done. Because the long-term crisis in money has only grown worse this year, flattening Greece and squashing savers and retirees beneath the wheels of zero interest rates. And the looming fiscal cliff in the United States – followed immediately by a fresh "debt ceiling" row in Feb. 2013, plus urgent debt repayments for Spain and Italy all through next year – must surely be good for Gold Investing. Which leaves analysts scratching their heads.

The gold market is "nervous" says one today. It's becoming "increasingly confused" says another, mistaking his own confusion for the millions of savers, investors and traders who make up the bid and offer in bullion.

Unlike the last 5 years, however, there has been no panic or crash in the broader financial markets in 2012. Indeed, stock markets globally have risen almost as well as gold since New Year.

That breaks a 7-year run of gold beating the US stock market hands down. Gold has only underperformed the S&P500 twice since 1999. It has risen 19.1% per year on average since 2004, versus the US stock market's 3.8% average rise.

Now, extending that run in 2013 might look a big ask. This year's return-to-date on gold – some 12.0% according to most data providers – is also flattered by end-2011's own volatility. (Contrast the PM London Fix from Dec. 29 with the AM Fix on Dec. 30th.) But while the absence of an immediate panic this year has left gold little changed so far, the background rumble of crisis and monetary stress has grown louder. Because the bald fact, like the gold price, remains unchanged too. The fact that countries which cannot repay their debts have only two options – either default or devalue.

The developed world is pushing ahead with trying to inflate away its obligations. This week Greece was given leave by its lenders to start writing off 20% of its debt. Yet if you're looking for an over-extended bull market, look no further than government debt.

Buying US Treasury bonds has delivered negative returns in only 4 of the last 31 years. That relentless rise has taken down interest rates worldwide. Because bond payments are a fixed sum, whereas the interest they pay shows that sum as a percentage of their market price. So the higher the price, the lower the interest rate. Now they stand next-to-zero.

Unless interest rates go negative – as a small band of central-bank policy wonks would like – then bond prices really can't rise much further again. Gold of course already pays nothing in interest. It's been way ahead of the curve during this depression so far. It remains uninflatable and undefaultable as 2013 beckons. No one's to print, and no one's to destroy, gold is still the opposite of debt.