With the price of bullion at all-time highs, therersquo;s a raging debate on gold as an investment ndash; is it overbought or can it go still higher? Whatrsquo;s the inflation risk to the dollar? Should we be more worried about deflation?

Every Friday we try to address the factors affecting gold in our award-winning Investor Alert, which recaps the week just ended and also looks forward to provide insights on what might lie ahead. Along with gold, the Investor Alert covers energy and natural resources, global emerging markets, domestic equities and the bond market.
We encourage everyone with an interest in our key sectors to join the 23,000-plus individual investors who now subscribe to the Investor Alert and the 10,000 investment professionals who receive its sister publication, the Advisor Alert. Signup is free and easy ndash; just follow the appropriate link.
To give you an idea of the Investor/Advisor Alertrsquo;s value, here are a few of the gold-related items from the latest issue:

International Monetary Fund data shows that currency holdings among reporting central banks reduced the U.S. dollarrsquo;s weight to 62.8 percent as of June 30, the lowest on record. The shift in reserves to euros and yen confirm that world leaders are acting on threats to diversify out of the dollar based on lagging performance on U.S. assets and a weakening dollar.
According to UBS, investment growth is not coming from the worldrsquo;s largest bullion-backed exchange-traded fund, but rather from private purchases of bullion and Indian buying during the festival season. COMEX net long positions stood at a record high of 23.5 million ounces.
Macquarie Bank said exchange-traded funds backed by physical supplies of industrial metals may potentially drive prices higher than index funds that buy futures contracts because there are currently talks of regulatory measures being imposed in the futures markets.
An analysis by the Bank Credit Analyst shows gold and silver markets to be fairly overbought, but BCA expects that any correction should prove short-lived in the absence of a reversal in the dollar and/or deterioration in liquidity conditions. The Bureau of Labor Statistics says the consumer price index for jewelry in the U.S. rose to its highest level since January 1996.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The COMEX is a commodity exchange in New York City formed by the merger of four past exchanges. The exchange trades futures in sugar, coffee, petroleum, metals and financial instruments. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. #09-728

Last 5 posts by Frank Holmes

• Demand for Gold Rising in China - November 20th, 2009
• Gold on Your Gift List - November 19th, 2009
• Small Funds, Hidden Gems? - November 18th, 2009
• Gold ETFs - Big Surprise at Tax Time - November 17th, 2009
• Five Reasons China Is Not a Bubble - November 16th, 2009