Reports of Gold's Demise May Be Premature

Second to calling a bottom in the stock market, the favorite pastime of many market participants these days is calling the top in gold and related shares. Of course, there's a connection between the two calls, as gold's ascent has run counter to the slide in equities, a pattern particularly evident since February 2001. (The trend continued today as gold tempered its early gains as the stock market rebounded from midmorning losses at around 12 p.m. EDT.)

In the past week or so gold has lost its luster. After topping at around $330 per ounce on June 4, gold prices stumbled and traded at a three-week low near $316 intraday yesterday. In conjunction, the Philadelphia Stock Exchange Gold & Silver Index fell more than 10% in the week leading up to today's session. (Today, gold was trading around $320 per ounce while the XAU was recently down 1.1%.)

The recent dip, as others before them, got the "gold is topping" crowd in a lather early yesterday. Then, stocks came unglued and gold and related shares rallied back to close higher, generating cries of victory from the gold bulls. ...