Gold and silver may be struggling for direction at the moment, but palladium continues to move higher: bursting above the $760/oz mark yesterday. Platinum enjoyed a solid up day – though its bullish progress has slowed slightly over the last week.

Copper and crude oil as well as general equities had strong sessions, encouraged by the (initially) soothing noises coming from G7 countries about currency tensions. This backfired however, with confusion about attitudes towards the Japanese yen: comments from an American official initially seemed to suggest US acquiescence to Japan’s push for a weaker yen; but a remark from an unidentified G7 official spoilt the mood (and risk rally) later, with the source noting “concern about excess moves in the yen.”

Given these simmering tensions and the still very obvious problems affecting western economies (and Japan), the disconnect between the strong performance seen in equities at the moment – supported by a wall of newly-printed central bank money – and economic fundamentals seems perplexing. Over at the always-informative Cobden Centre blog, Tim Price gives the equity sceptics’ case, including this chart, courtesy of BestMinds Inc.

He also included the following chart from Erste Bank, which shows gains in the size of ECB and Fed balance sheets versus the gold price:

Of course, you may well ask: “If money printing is boosting stocks and industrial commodities, why isn’t it pushing gold and silver higher?” To which we’d say, it has pushed these metals higher – as can be seen by the chart above – but that doesn’t preclude periods of consolidation and sideways price movements. It took gold the best part of two years to work through a consolidation period after first hitting $1,000/oz in early 2008. Then as now, there was a chorus of mainstream negativity about the metal, with many proclaiming it a “bubble”, and that the price would soon fall below $1,000 again. They were wrong then, and they’re wrong now.