After a legendary run culminating in a peak near $2,000 an ounce in August 2011 gold has been cooling its heels of late. The yellow metal has given back all of what were once impressive 2012 gains. More disquieting for those who regard it as the ultimate hedge, gold has loss twice as much as the S&P500 during the choppy markets in May to date.
Even gold bugs have to question whether the 11-year bull run is stalling out.
"It's not over," says Louis James, chief metals & mining strategist of Casey Research. James simply believes that markets fluctuate, and investors follow to find opportunity. Gold has been regarded as a currency for all of recorded time. To bet against it in favor of the printing press scrip being served up by global central banks is pure folly.
James suggests the run of thumb for at least the last 150 years has been "an ounce of gold would buy you a good suit." That remains a decent truth though the quality of tailoring has varied of late. The point is that gold isn't a speculative bet, but a store of value.
"To speculate you buy the gold stocks," he says, but if you want to own something you're sure will have absolute value regardless of the markets, keep your money in bullion. "If gold isn't working right now you need to look on it as a buying opportunity."
At the moment gold is sliding towards $1,550/oz. As James see it, buying at these levels will pay off, perhaps not in days, but within the next few years, not decades.