Baltimore — (TFN): I stuck to my word and bought gold. If you follow the markets long enough, you earn a full grasp of the psychology behind it all. After a while, you notice the tiny quivers and false starts that signify a move in either direction.

I used this insight and logic to warn investors about an imminent downturn in gold prices earlier this month. I got a lot of “feedback” from disappointed gold bugs. But it didn’t take long for them to eat their words as the price of an ounce of gold fell by nearly 10% in the last month.

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…

Bill Bonner, venerable voice of reason (with a touch of doom), at The Daily Recokoning, looks long term at gold, the markets, and the end of the depression.

“I’m Brazilian. I have gold. And I’ve just arrived from Rio richer than anyone…” Thus sang one of the characters in an operetta by Jacques Offenbach. But that was in the mid-19 th century. But hey… what goes around…

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.

The price of gold has had a solid triple since about 2001, when an ounce would set you back a mere $300 or so. (Remember that? Oh, the good old days!) For the past year or so, however, gold has been stuck, trading in the $900-980 range. It goes up a bit, down a bit.

The first thing I do when I sit down at my desk in the morning is check the price of gold. The second thing I do is check the price of oil.  Sure, the price for gold and oil changes all the time. Prices go up and down, for good and bad reasons. Heck, sometimes prices fluctuate and the reasoning defies logic.

Another sure sign that inflation is a clear and present danger is the recent rise in oil prices. Wednesday, crude oil set its 2009 high at $54.83 in New York intraday trading.

In the gold business, there are two kinds of companies, says mining guru Doug Casey. First, there are the companies that dig gold out of the ground after it has been discovered. These are the “producers.” These companies have done well during the current gold bull market – up as much as 200% during that period.

Karim Rahemtulla from the Smart Profits Report says that putting your money in gold mining companies will help you milk your investments, not physical gold.