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Gold $1500: Buy? Sell? How About Ignore

First things first: Yeah, gold closed above $1,500 an ounce for the first time ever recently. But is was not -- repeat, not -- a "new record high!" for the precious metal.

Nope, sorry, no: it was just a nominal (meaning not-adjusted-for-inflation) high. And since gold is so fanatically touted as a hedge against inflation, shouldn't we, um, sort of consider it in such terms?

For the record, gold topped out at about $850 an ounce back in 1980. That's the equivalent of $2,305 in today's money (and even that counts only if the official CPI data is an accurate reflection of real prices). So gold has a long way to go before it really, truly hits a new all-time high -- and let us pray that it does not. Recall that back in 1980 the Federal Funds rate darn near hit 19 percent. Those were not good times.

But the larger point here is that commodities trading is a perfectly legitimate occupation for highly skilled professionals and professional suckers.

John Hussman, the justifiably well-regarded manager of the Hussman Funds, is no sucker. He's maintained a bit of exposure to silver and gold because the Fed's policy of quantitative easing (money printing) has caused pretty much all commodities to boom.

Boy, and how. Check out this chart from, below. Over the last year, silver, coffee and corn futures have more than doubled. Pork bellies -- we're talking bacon, people -- jumped by a third. Even orange juice is up by more than a fifth.

Here's the rub. In Hussman's view, "the commodity hoarding that predictably resulted from QE2 has increasingly taken on the earmarks of a bubble." It looks like what goes up must come down. The Fed's second round of quantitative easing is set to end in but a few scant weeks. (Today we'll hear from Ben Bernanke about how long that money printing policy will continue.) What that means for the prices of gold, silver, lean hogs, pork bellies or concentrated frozen orange juice is best left to pro speculators, who may end up looking like something out of the Eddie Murphy classic Trading Places, at any rate:

So let's ignore gold, shall we? It's as likely to lay a goose egg as the other way round. And oh what the Duke brothers (not to mention the Hunt brothers) would have given for a passive, patient, indexed and allocated asset strategy back then. By following that path today, you can watch gold climb without worrying whether to jump in or jump out. Just rebalance your way to a golden future.

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