NEW YORK (TheStreet) -- Over the past several months, the markets have tested investors' conviction to gold. Since February, the price of the yellow metal has steadily stepped lower, rallying somewhat in May before falling again when Ben Bernanke disappointed by not providing the U.S. with more stimulus. Meanwhile, the dollar gained ground as global investors fled the euro.
The global easing binge from central banks around the world over recent months should have translated to higher commodity prices. This has not occurred: Not only has gold declined, but the price of oil has also decreased considerably, falling from a high of $110 to $78. Jefferies' David Zervos asked, "Shouldn't all this accommodative policy by the Fed, ECB, SNB, BoE and BOJ be sending commodities to the moon?" He believes the answer is straightforward: Lower commodity prices should be a signal to central banks that they are not doing enough. "There is a hefty disinflation trend developing and given the amount of debt in the system -- and the weakness of global aggregate demand -- any signs of significant disinflation should be cause for grave concern. We cannot mix a lot of debt with a lot of deflation -- that will be the end of us!" Zervos says. Zervos is betting central bankers will choose to stimulate the economy. I agree: As I've said before, when push comes to shove, central banks, especially in Europe, will forgo austerity in favor of the printing presses. In the meantime, hold tight to your convictions, gold investors. Review your allocation to gold and gold stocks to make sure it remains around 5% to 10% of your portfolio. That way the precious metal can act as a shock absorber to help protect from any unexpected bumps in the financial system. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. U.S. Global Investors (GROW) is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, based in San Antonio, Texas, manages 13 no-load mutual funds in the U.S. Global Investors fund family, as well as funds for international clients. For more updates on global investing from Frank and the rest of the U.S. Global Investors team, follow us on Twitter at www.twitter.com/USFunds or like us on Facebook at www.facebook.com/USFunds. You can also watch exclusive videos on what our research overseas has turned up on our YouTube channel at www.youtube.com/USFunds.