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The price of gold has risen to 17-year highs lately, conjuring giddy dreams among the bunker-and-canned-beans crowd that Armageddon is just around the corner.

Yet among most investors, the ascent of gold to levels not seen since the Reagan administration has been a big yawn. The ore is widely considered an artifact of another era, a crock at the end of their grandpa's rainbow. Let's just say that the radio talk shows aren't exactly lit up with angry callers calling for a tax on the windfall profits of gold miners.

If gold goes much higher, though, it's going to start making the nightly news, and maybe even the cover of a news magazine. Then it will begin to dawn on equity investors that something really important is happening, and that it might just be worth the effort to branch out from the straightforward earnings-and-economics world of stocks and into the supply-and-monetary-policy world of precious-metals trading.

By the time most arrive, it will be time for gold to reverse, of course, by as much as 15%, in step with higher U.S. interest rates and the dollar. Over the next 12 to 36 months, though, after the Federal Reserve is done raising rates, it could go much, much higher. With so much rootless capital roaming the world in search of the next big trade, in fact, it wouldn't take much of a spark of love from the world's new legion of momentum-oriented hedge funds to push this thinly traded market to levels well beyond the $800 bogey of the early '80s if inflation, sentiment and consumer demand harmonize.

In Gold We (Sometimes) Trust

Gold is as much about investors' state of mind as it is about the status of mines. It is a set of beliefs and a world-view as much as it is a shiny, malleable metal to wear around your neck, or pound into coins or stow away in a safe-deposit box. When the stock market and real estate are performing well, gold seems too abstract to bother with. It is only when sentiment for equities and the dollar turns more bearish that precious metals begin to shine.

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