The more you look at it, the more the Fed's big QE program announced in mid-September looks like a big fat nothingburger. The S&P 500 closed at 1465 two days after the Fed's announcement. It's now at 1440. By comparison, the All Ordinaries are up about 3.76% in the same time. Gold is down 2% since the 'golden cross' on September 20th, when the 50-day moving average crossed above the 200-day moving average.

We wish we'd had room for Murray in our suitcase. We'd ask him what the charts are telling him. If stocks barely budge on QE (and go down in the S&P's case), and gold doesn't move, then has QE lost its mojo? Murray writes today's Money Morning. We'll stay tuned to hear what he has to say.

In the meantime, let's look at gold from a more down-to-earth level. We're here in South Africa to speak at a conference and visit some gold mines with our old friend Byron King. But we won't be doing much visiting if the headlines are anything to go by. Gold output from the country has fallen by 50%, according to Bloomberg.

The strikes that hit the platinum miners in August and September have spread to gold, diamond, and coal mines. And according to our cab driver yesterday, you're starting to see sympathy strikes from port workers, truckers, and transportation workers. Byron and your editor may have to cross some picket lines just to go underground.

We're just getting our head around some of the issues. But it breaks down into political, wage, and supply issues. Politically, there are two major mining unions in South Africa, the National Union of Mineworkers (NUM) and the up-start Association of Mineworkers and Construction Union (AMCU). The NUM is closely-associates with South Africa's biggest political party, the Africa National Congress (ANC).

The wild-cat strikes by workers not affiliated with NUM may reflect a power struggle over who represents miners (and earns a fat union pay cheque). Regardless of the politics, some of the world's largest gold producers are seeing big hits to production. AngloGold, the world's third-largest producer of gold bullion, is losing about 32,000 ounces of gold per week. GoldFields, the world's fourth-largest producer, has also been affected, as has Harmony Gold.

If this had happened in 2007, you would have seen a much bigger impact on the gold price. But 2007 is the year China surpassed South Africa as the world's largest gold producer. In 2011, according the World Gold Council, China was the only country to produce more than 300 tonnes of gold for the year (355). Australia was second at 261 tonnes, with the US next at 237 tonnes, followed by Russia at 200 tonnes, and then South Africa at 191 tonnes.

To put that in perspective, South Africa produced over 1,000 metric tonnes of gold all by itself in 1970. This was the peak of gold production in the Witwatersrand (White Water Ridge) Basin. The gold in the basin was 'discovered' in March 1886. According to some sources it was an Australian named George Harrison who made the find. In the last 120 years, the basin has produced over 1.5 billion ounces of gold.

If this were a more pedantic version of the Daily Reckoning, or if we did not have a noon appointment with a currency trader, we'd get into a brief discussion of the geology of the Witwatersrand Basin. But maybe we'll have time to discuss that this evening with Byron, who is an actual geologist. For now, suffice it to say that the basin is a large ancient lake bed, into which rivers of gold flowed.

A lot of geologic time later, that gold is buried underground. That's what now makes South Africa such a high-cost place to mine gold. You need capable miners, lots of electricity, and refrigeration to mine gold from several kilometres beneath the Earth's surface. Compare to this the open pit mining of the Super Pit in WA, which, while heavy on capital equipment and low on ore grades per tonne, looks a lot easier.

In any event, wage pressures are clear and present in South Africa's mining industry. Official Consumer Price Inflation was measured at 5% in August. About a month later, platinum miner Lonmin agreed to a 22% wage hike with striking miners. It ended the strike and saw the stock rally.

Similar wage hikes are probably coming for the gold miners. Some of the factors behind rising wages are unique to South Africa. But it could also just be what you normally see at the end of a resource cycle: wages pushing up, along with capital costs. The increased production to benefit from higher prices pushes all your costs up.

But are prices still rising for gold? This questions always seems to come up when we're about to speak at the Gold Symposium. Each of the last few years, gold has made new highs in US dollar terms around the time of the show. This creates a lot of buzz, and leads all of us gold bugs to believe we're geniuses.

Yet as we mentioned at the top, gold prices aren't feeling the Bernanke love. Gold is still up year-to-date in US dollar terms. But if you were a psychic or a tarot card reader, you might say gold doesn't 'feel' like making new highs from here.

Luckily, we're neither a psychic nor a tarot card reader. But we did put together the chart below for your cogitation. The chart shows both gold and platinum spot prices going back five years. This time period encompasses most of the current stage of the monetary crisis. Is it telling us anything useful?

Click to enlarge Source: StockCharts

One thing you should know about platinum is that it's rarer than gold. Historically, that means platinum is more expensive than gold. But as you see on ye olden chart above, gold traded at a premium to platinum in late 2008 and in early 2009. Since July of 2011, gold has held its advantage over platinum. The spread between the two has remained fairly constant.

Theories abound on the cause of this spread. Platinum has more industrial uses than gold. If the world is in recession, that's bullish for fear and bearish for catalytic converters. A trader might go long gold and short platinum. On the other hand, if you wanted to make a bet on a global rebound, you'd make the opposite trade; short gold and long platinum.

Frankly, we wouldn't pair the two right now with much conviction. For starters, gold is having an identity crisis, at least when it comes to the mainstream press. You read claims that gold is bought because people think QE will work, and counter claims that gold should be bought because QE must fail. Which claim is correct?

The claim that gives you ownership of a real asset, or the earnings derived from that asset, is the only claim we're interested in these days. That's what we're going to be speaking about at the Gold Symposium next week. We'll also report what we find this week after our excursions.

If you haven't registered to attend by now than you were either unaware of the event or completely uninterested. It's also possible you are one of those people who puts things off until the last second. If that's case, you can still claim - via your status as a Daily Reckoning reader - an 'early bird' discount good for $100 off your registration fee.

Procrastination is generally not rewarded with a discount. But in this case you got lucky. Just make sure you enter your VIP code at Step 4 of the registration process. The code is...wait for it...gold.

Regards,

Dan Denning
for The Daily Reckoning Australia