The price of gold has surged this year, taking gold shares upwards with it. Readers of my Xcelerated Profits Report have rung the register with 45% profits on Goldcorp (NYSE: GG) and a triple-digit winner on Golden Star Resources (NYSE: GSS). We’re also up big on Yamana Gold (NYSE: AUY) at the moment.

All is good, right?

On the surface, perhaps. But not if you believe what the options market is saying…

In the spirit of not suffering from confirmation bias, in today’s Notes we will try to make the bearish case against gold. So before you storm Notes HQ in Buenos Aires craving blood, hear us out. Many of our staff here love gold and have long term holdings.

What if deflation wins?   While we think the odds are strongly stacked against it, particularly given the government’s furious pace of money printing, the prudent investor understands – and respects – the time-tested adage, “Nothing is guaranteed.” So while our chips sit squarely on the spot marked “inflation,” what will happen to gold stocks if we’re wrong?

Gold Bug Ted Peroulakis of Investors Daily Edge suggests that “you should own some gold in your portfolio as an insurance policy…” He recommends this Gold EFT as a safe haven during the global financial crisis, because no matter what happens with the markets, gold will always shine.

In case you were wondering, China actually kicked our American butt a long time ago, as China ’surpassed the United States as the world’s second largest gold producer in 2007 with 270.491 tons of output.’

Gold shares are unique. Most indexes have followed pretty much the same pattern. Not gold. We thought today we’d have a look at something out of the norm, to see if there are some gains brewing.

You likely know that my specialty niche is Canadian resource exploration stocks. These small cap companies are notoriously volatile. They aren’t quite free these days but they are ridiculously cheap.