These days gold and silver seem to attract more attention than pretty much any other commodity, perhaps other than oil, and not a day goes by without numerous commentators:

• on one side extolling the ownership and prospective higher prices of both physical gold and physical silver; and,

• on the other side decrying the ownership of both physical gold and physical silver.

While these commentators may well believe strongly in the positions they take, many of them have either a declared or obvious vested interest in their 'side of the argument'. Further, it has always struck me that some of them have 'ridden the horse they ride' for so long that they very likely are attached to the saddles they are sitting in by crazy glue and couldn't get unstuck from their positions if they wanted to.

Some commentators, my observation being principally those on the 'long side' of the gold/silver debate, parade out comparative gold/silver, gold/dow, silver/dow, gold/historic inflation rate, silver/historic inflation rate ... you name it ... relationships as 'proof positive' that gold and/or silver inevitably will go materially upward or downward in price. My principal concern with these comparative approaches is that I think that generally the 'historic base times' were times of quite different macro-economic circumstance than the macro-economic circumstances that prevail today.

So where am I today with respect to the gold (and silver) price:

• first, in both theory and in the end in practice, the financial markets have to reflect the long-term macro-economic condition. By this I mean that while at any given time the financial markets may not reflect macro-economic conditions, over time the financial markets do reflect macro-economic conditions. Thus in 2007 one might say the financial markets were not reflecting macro-economic conditions, but adjusted in the fall of 2008 and again in March 2009 to changes in those conditions;

• second, I do not believe, irrespective of how many 'smart' traders and money managers there are on Bay Street, in The City, and on Wall and every other financial street in the world, that the financial markets today (which I believe predominantly to be trading markets) are reflecting the near-term, let alone the long-term macro-economic developed country condition;

• third, I am highly skeptical of those who actively participate in the gold and silver markets and who forecast gold and silver prices without stating their macro-economic assumptions;

• fourth, I am highly skeptical of 'vested interest' financial markets executives, money managers and pundits who would have us all believe in respect of the current stock market index records that 'you ain't seen nothing yet'; and,

• fifth, as I see things from a high level macro-economic point of view, very little has changed in the past year - other than a lot of rhetoric and postponement has gone under the proverbial bridge. If anything, I believe a good case can be made that things have deteriorated somewhat in the past twelve months, notwithstanding the 'good news' on unemployment, housing, and shale oil and gas coming from U.S. politicians and commentators.

In support of this, consider that:

• the U.S., the world's largest economy and critical to world macro-economics, has if anything become more politically polarized in the past year, has not solved its debt problems, has not materially improved its annual trade deficit, has not materially changed in its Main Street job opportunities, and 'continues to muddle along economically' while supporting what growth it is achieving largely through extraordinarily easy money policies;

• the United Kingdom, the world's seventh largest economy, likewise continues to muddle along;

• the 17 country Eurozone, led by Germany, France, Italy and Spain in declining order of economic size as a practical matter has done little in the last year to solve its country specific economic problems, and likewise continues to muddle along economically. This where circumstances and conditions in Spain and Italy seem to have declined in recent weeks;

• China saw a drop in its reported growth rate in 2012 (7.8%), perhaps with a further drop from that reported growth coming, and where there continues to be ongoing negative innuendo with respect to China's economy;

• Japan is in the process of introducing further quantitative easing;

• talk of 'currency wars' ebbs and flows; and,

• in past days when 'little Cyprus burped', the financial markets also burped and the gold price advanced.

In the past two months (on January 15, and again on February 21) Jeffrey Christian of New York's CPM Group commented in this Newsletter on what he saw as a 'risk premium' of (by interpolation) about $625 in the gold price (see Gold: The risk premium inherent in gold prices, and Gold: More on the risk free gold price).

Given how I see the comparative macro-economic climate one year ago (when the physical gold price was about $1,675) against how I see it now (when the physical gold price has hovered around $1,600 of late) I currently think that:

• barring one or more near-term material (i.e. significant) unexpected negative or positive macro-economic events which could in turn materially impact the price of gold in a 'safe-haven context', the price of physical gold is likely to fluctuate in the near-term in a 'knee-jerk' manner as what are becoming 'normal course' macro-economic events unfold for better or worse; and,

• most of what is said about the ongoing gold (and silver) price that suggest highly negative or highly positive near-term price prognostications typically strikes me as being mostly 'noise'.

Then again, if you read this Newsletter you know I see physical gold as a protector of purchasing power in good and bad times, not something (at least for me) to trade for short-term profit or loss, and hence I am not as concerned about near-term price changes in either gold or silver that many others seem to be.

All that said, a report yesterday says that Mr. Christian's CPM Group has now forecast that:

• physical gold investment demand will fall 3% in 2013;

• gold fabrication and Central Bank demand will increase in 2013;

• the price of physical gold will fall this year, without suggesting an amount; and,

• there will be "muddle-through economic growth for the next few years", the global financial system is not going to collapse, and that monetary accommodation seen to date (read 'quantitative easing') won't lead to hyperinflation.

That latter article is titled CPM Group sees 3% fall in Gold investment demand this year. I suggest you read it if you hold or are thinking of holding physical gold. You ought also to discuss the various views set out herein with your investment advisor and 'smart trader/investor' friends.

Topical References: CPM Group sees 3% fall in Gold investment demand this year, from BullionStreet, March 27, 2013 - reading time 3 minutes. Also read New gold discoveries declining at accelerating rate - IntierraRMG, from Mineweb, Lawrence Williams, March 25, 2013 - reading time 3 minutes.