With the price of gold again pulling back from its 18-month highs this morning, we start to see more cracks in the bullish $2000 an ounce gold argument. But that shouldn’t surprise. Gold is a two sided, two-faced coin that has very distinct personalities.

On one side, we have the hedge against inflation, a reserve currency and the only grail that gold bugs from around the world will believe in.

On the other, we have gold as a real commodity, used in jewelry, electronics, computers and space components.

But all that glitters isn’t golden, and gold investors can’t have it both ways.

The best question we’ve heard to date has been where will you spend you golden Krugerrands when the world comes to an end? The answer is you won’t be able to spend them, anywhere. And if that’s the case, then gold isn’t the currency that investors would believe it is, but rather a commodity like silver and copper.

As a commodity gold losses much of it’s allure.

Millions of Americans have been adding to their gold stockpiles during this downturn, yet the price hasn’t gone much above $1000 – Or in the case of SPDR Gold Trust (NYSE: GLD) $100. In hindsight, if gold was going to stage an apocalyptic rally, shouldn’t it have come during the meltdown of Bear Stearns and the rest of the financial infrastructure?

That it didn’t, should lead us to question whether gold will go significantly higher in the short term.

In the long-term precious metals like gold still represent sound asset allocation strategy, but in the near present, gold still looks overpriced. And we shouldn’t be too shocked to see gold continue pull back over the next few weeks.

View original at: Investment Advice and Investment Research with a Contrarian Point of View

1. ($ABX) Barrick Gold Corporation to Sell Silver StakeBarrick Gold Corp. (ABX), the world’s biggest gold producer, recently agreed to sell 25% interest...
2. (ABX) Barrick Gold Delays ConstructionRecently, the media reported that Canadian gold miner Barrick Gold Corporation (ABX) has delayed construction...
3. (GLD) The World of Commodities: The Future Of The Gold, Silver, Corn & Sugar Marketsby Lee Lowell, Advisory Panelist When you have a mix of bullish fundamental factors backed...
4. (GRS) Gammon Gold – more than a 400% earnings growth projectionGammon Gold, Inc. (GRS) has been rallying as investors brace for the impact of inflation...
5. (GLD) Gold Prices Creep Over $900It’s been no secret that gold prices have been creeping up lately. At just over...
6. (GLD) Picture du Jour: Gold or platinum?“Au” and “Pt” may be dull chemical elements, but gold and platinum have certainly played...

Search Posts by Tag: GLD | SPDR Gold Shares | ETF

RSS Feeds by Tag: GLD | SPDR Gold Shares | ETF |

Other Posts by: InvestmentU | RSS Feed for this author