For an inert metal, sitting there at No.79 in the periodic table and useless for pretty much everything but ownership, gold sure is a busy lump these days.

”[Gold Bullion] is the most positive defining instrument of the global appetite for risk and reward,” reckons Barry Sergeant at MineWeb in Jo’burg, South Africa.  Indeed, it “thrives on economic uncertainty,” according to his colleague Lawrence Williams.  Yet for Steven Barrow at Standard Bank here in London, gold offers “the best indicator of liquidity,” with the recent recovery in gold prices implying that “liquidity has been better restored.”

They cannot all be right.  Not at the same time, at least.  But Barrow and MineWeb might both be wrong.  Because for Nouriel Roubini, writing in The New York Times,  “Gold is still a barbaric relic whose value rises only when inflation is high.”  Whereas for Michael Lewis, global head of commodities research at Deutsche Bank, “Gold is probably the most richly priced commodity in the world at the moment: in real terms, it;s trading at around 65% above its long-run historical average.”

Again, that cannot all prove true.  Not with inflation in the cost of living averaging a five-decade low since 2001, back when gold cost less than one-third today's price and finally turned higher from a two-decade bear market.  And, not with the gold price standing 95% above its 20th century average when measured against U.S. consumer prices.

This is an excerpt from June 2009 issue of Trader's Journal.