I have been neutral on gold but now turned negative. Because:
1) Gold has badly overshot vs other hard assets, trading 2+ standard deviations from historical mean vs oil, platinum, silver etc. that have real supply/demand;
2) While we eventually will see elevated levels of inflation, gold is not the way to play this precisely because it has overshot and ALSO because Gold is not and never really has been an inflation play. Rather it is a *crisis* play, and an excellent one. If gold is such a good inflation play it would be 2-3x the nominal price it was in 1980 Not the same friggn' price! What other hard asset is same price as 1980 ?(and please don't go back to the earlier periods pre-brenton woods...because that's the point: gold lost relevance when it ceased to become frictionless money)
Ask: IF gold couldn't rise into the teeth of the crisis in the past 12-months (peaked at $1000 last year - pre Lehman collapse! sad) how can it possibly rise in the face of...
3)OBama mania...which is taking root GLOBALLY, instilling confidence in your average person. Part of this is actually justified IMO, at least in a relative sense.It's astonishing. This is really the killer because the system: gold or fiat, is all about perception and what is in your mind. One has to admit that gold is exhibit A for this statement since it is truly a financial asset that only has value because it is in your mind (it does not grow, pay divy, create value, feed you, shelter you...).
Oil is only a little cheap against gold currently. Historic average ratio ~16:1. Current ratio ~17:1. It is pretty ridiculous to say it has lost it's relevance when you look at the run-up since 2001. The world says you are wrong IMO. People may have thought it was losing its relevance from 1981 to 2000 but they are realizing they were wrong.
the run-up since 2001 looks like it ended in 2007 and is the anomoly, not the trend over the past 30 years. best chance for gold is actually recovery of global economy and another prosperity cycle where indians and chinese increase their holdings substantially. that would restore gold relevance on some level. run gold platinum chart , it tells story of how overshot gold is on an intinsic level. re: motivation, just to bounce ideas off others who don't necessarily share my view. it's just a message board!