I don't have to remind regular readers of PROFIT CONFIDENTIAL where Lombardi Financial stands on gold. Michael Lombardi called it right in 2003 when he predicted a secular bullish trend in bullion; four years later, the bullish gold trend hasn't changed. With a bullish trend, however, also comes volatility.

So, how do you weigh gold's potential returns against its equally high risks? This is where "little learning is [indeed] a dangerous thing," to quote Alexander Pope. The reality is that most investors know precious little about the gold market, what drives the bullion's supply and demand, or what can trigger price surges and/or plunges.

Thankfully, there is one precious thing that comes in plentiful: publicly available information! The bounty of gold-oriented web sites and blogs is huge, and worth taking advantage of.

Back to the issue at hand: What do I think about gold at the moment? When I prepared this article, gold lost about $10.00 to hit the two-month low in response to declining crude oil prices and rising greenback prices after shorts got squeezed in the spot FX market. Reacting to recent prices, traders agreed: Gold is having a tougher time gaining back lost ground than it did in the past.

Now, these are short-term factors and imbalances that have the temporary power to throw off gold prices. More fundamental reasons can be found in counterproductive economic data (relative to gold, of course), such as an increase in new orders for U.S.- made durables, sales of new homes, or strong employment data.

Investors' faith in the economy takes a positive spin; meaning fears of inflation subside a little, and gold appears to lose some of its luster. As prices decline, mining companies get on the whining wagon, saying that they are having trouble balancing capital costs with market prices.

In contrast on the supply side, gold inventories have fallen about 514 troy ounces to the current level of approximately 7.66 million troy ounces. The same inventory decline scenario applies to copper and silver. Decreasing supply, however slight, typically spells good news for gold.

Calling a trend is such an ungrateful job, but here are my two cents anyway. After gold bottomed in January at a $610.00-per-ounce price level, the bullion's chart appeared to be mimicking the Elliot Wave Theory. You know that technical analysis is often in the eye of the beholder. Nonetheless, I will venture and take the Elliot Wave Theory as a probable assumption, and call for one last surge (the last leg of the five advancing waves) before there is another correction, similar to what happened to gold earlier in the year.