Gold has proved to be the least volatile of investments since the global economic meltdown became an obvious reality in the second half of 2008.
Pessimists can justifiably argue that since gold peaked at over $1000 an ounce back in March and then dropped back more than 25% by November, it has not lived up to its reputation as a store of value of the last resort.
Looking forward to 2009 we should start by considering its behaviour during the last six weeks of 2008.
By the middle of November it seemed that the flight of redemptions from hedge funds through to the smallest investors in mutual funds and every other stock market sector had slowed.
Something has got to break sooner rather than later.
The long awaited expectation of a swooning dollar has now, according to the technicians, come to pass.
Lower highs, lower lows, and a developed 'head and shoulders' foretell the doom of the dollar. In the financial world as it used to be, the natural consequence would be good for gold.
Back to square one, well not quite. After last weeks long awaited break out gold has fallen back by over $40 an ounce dropping to below $765 before staging a slight recovery to just over $771 in mid Tuesday morning trading in Europe.
Gold's link with the price of oil comes forcefully back into the reckoning together with the latest strengthening of the dollar against the Euro and Sterling.
Treasury bonds are the flavour of the moment as they continue to prosper in the flight to safety that has traditionally been the prerequisite for gold.
A knowledge of the commercial uses of gold enables a savvy investor to make a judgement on the future demand for the metal and in conjunction with other criteria such as the erosion of the purchasing power of a currency, political factors, gold hoarding or selling off by governments, the technical picture, etc.etc., can make the decision to be long, short or stay out of the market until a more favorable opportunity occurs.
Gold Mutual Funds ( Known as Unit Trusts in UK & ors)
Buying exposure to gold through a mutual fund is a relatively simple way to buy gold and enter the market.
Particularly in these highly volatile times there are safety features not all present in the alternatives. Investors money is spread across the spectrum of major producers, junior miners and explorers that operate principally in Africa, North and South America, Canada and Australia.
A well managed gold mutual fund offers investors the safety of exposure to a basket of stocks that would be beyond the financial means of the average retail investor.
In these days of uncertainty, owning physical gold in the shape of bullion bars and coins and storing them at home, in a safe deposit box or secure vault gives many investors the confidence that they may lack in paper gold virtual promissory notes such as shares in gold investment or mutual funds.
Gold ETFs arguably also come into this category.
Gold bullion bars are available in various weights ranging from one troy ounce upwards as well as in metric sizes. For example a one kilo bar weighs 32.15 ounces.
We do not know when man first came into contact with gold or began to appreciate the unique qualities of the yellow metal as its origins are lost in the mists of antiquity.
Small fragments of gold have been found in the caves of Paleolithic Man who existed some 35-40000 BC. It is not known whether these primitive forebears of ours appreciated the value or properties of the yellow metal.
The Rosia Montana Project was expected to be Europe's largest open pit gold mine operation.
80% owned by Gabriel Resources (TSX:GBU) a Canadian (very) junior mining company with a major U.S. miner, Newmont Mining (NEM:NYSE) upping it's interest to 19.9% of Gabriel and American Electrum Strategic Holdings a further 17.85% of Gabriel, things looked rosy (no pun intended) for the project.
At 13.45 ET today (Monday) spot gold had risen to $867.90 an ounce, having leapt to over $874 in the previous six hours.
At the same time gold miners, in the shape of Market Vectors Gold Miners (GDX) managed a fall of $1.88 from its previous close.
The only logical conclusion is that the markets are in such panic mode that logic, or call it rational thinking, has entirely left the thought processes of market players.
Yesterday at last saw the re-emergence of confidence in both gold and silver in their role as stores of value in the face of the turmoil taking place in worldwide financial markets.
You may very well ask why this has taken so long. Previous posts on this site have expounded various theories, some reasonable and some fanciful, but at the end of the day no action that can affect the markets has become too far fetched to be discounted.
Despite this we have faith that the proven principles that have driven markets and financing throughout history will once again dictate their behavior.
Buying exposure to gold through a mutual fund is a relatively simple way to buy gold and enter the market. 
In these days of uncertainty, owning physical gold in the shape of bullion bars and coins and storing them at home, in a safe deposit box or secure vault gives many investors the confidence that they may lack in paper gold virtual promissory notes such as shares in gold investment or mutual funds.
