Ok, so I have discovered another clue in the puzzle here, when I execute 'emerge --info', I get the following output at the top:
# emerge --info
!!! No gcc found. You probably need to 'source /etc/profile'
!!! to update the environment of this terminal and possibly
!!! other terminals also.
I also see the following in the FEATURES line:
FEATURES="autoconfig distlocks metadata-transfer sandbox sfperms strict"
I had no idea that all features were included if not explicitly excluded, so I added this line to my /etc/make.conf:
Now I need to hunt down the problem with the missing gcc. I believe that is why portage is failing to update itself. I test this theory by removing the downloaded package and trying to run the same command again:
# rm /usr/portage/distfiles/portage-2.1.2.tar.bz2
# emerge portage -v
Calculating dependencies... done!
>>> Emerging (1 of 1) sys-apps/portage-2.1.2-r9 to /
I am not so confident in this theory anymore, as I would have expected portage to be downloaded again, but I am going to continue to resolve the issue with the missing gcc.