GordR, a few points:

1) San and the rest of the gold market are SHUNNED by most of bay and wall street. How many fund managers are pushing gold to clients? Not many - they are all Buffet wanna-be's and we all know what Buffet thinks of gold.

2) Liquidity - volumes are low across all asset classes since '08. There is a finite amount of capital that is flowing from sector to sector, and it's coming from the big boys (see point 1). The retail investor has been fleeing since '08 as indicated by fund outflows. Unless retail buys the gold story again, this will go on and on regardless of the "value proposition".

3) Margins - despite gold's huge rise, miner's are not translating that into increased profits. If you are an investor, you should be asking WTF? Well - CPI obviously does not represent the inflation around us and just like the Oil sector, margin compression through inflation is real and killing profits.

4) Gold is the enemy of the central banks - I don't discount for a second that manipulation is occuring, and what better way to stifle interest in gold than to hammer small cap stocks with low liquidity?

5) Velocity of money. Credit expansion and inflation only work when money moves. This means folks have to take on more debt and then spend it to allow the "multiplier effect" of fractional reserve banking to continue. This is NOT happening despite the fed pumping $85B a month into the system. We're witnessing cost push inflation but it's not nearly as effective as inflation driven by real economic activity (velocity). So, with no liquidity for retail to throw at this market, it's hard for high beta stocks like those on the TSXV to attact excess capital.

In summary, things are only worth what people are willing to pay for them. With so few dollars rolling around the sector needs some catalyst to attract that capital. IMHO the best hope is a real currency crisis - in Europe or Japan. It was encouraging to see gold rally allong with the USD in response to the Italy/EUR situation - we'll have to hope that correlation continues because I think we're on the cusp on something big in the maco context.