Gold SPDR

I'm frequently asked about gold.

Over the years, it's been a great investment, but lately… (sigh).

Let's just say the shiny stuff has hardly lived up to expectations.

Part of that is due to the dynamics of the gold market itself, and part of that is due to the fascination with cryptocurrencies.

Let's talk about each of those things, then move onto a great way – perhaps even the only way – to play gold today.

Gold has historically been driven by its relationship to inflationary expectations, to interest rates, and to physical supply. Generally speaking, gold prices move inversely to economic prosperity.

You can actually see that quite clearly when you compare the SPDR Gold Shares ETF to the S&P 500. Prices tracked almost in tandem from 2009 to mid-2012, then broke when investors finally decided that the post-financial crisis recovery had teeth.

Now, with geopolitical concerns rising and interest rates on the uptick, many investors are wondering if gold could "shine" again.

I wouldn't bet on it.

As of last November, The Wall Street Journal reported that retail gold sales were at the lowest levels in a decade. Mohamed El-Erian, chief economic advisor to Allianz SE, even went so far as to warn that cryptocurrencies could pose a serious long-term threat to gold.

My sentiments exactly.

The situation is so bad that even gold purchasers buying directly from the U.S. Mint are reportedly getting pinched as dealers stockpile coins they can't sell. Sales volumes have dropped off a cliff.

There are simply not a lot of buyers, nor are there likely to be. But that doesn't mean all is lost.