Maybe gold isn't the hedge you think it is. Hong Kong research firm GaveKal clearly thinks so.

FT: "We have long argued that gold is actually a lousy inflation hedge, but a reasonable hedge against a financial meltdown. Perhaps the upcoming anniversary of the Lehman bankruptcy is making the market a bit edgy-with financial stocks selling down hard recently, and with rumors floating through the market of a pending bank or hedge-fund collapse. Such fears may explain why gold is rising even as the other popular “inflation plays”, such as oil, are falling."

Thus gold to them is protection against financial meltdown, not inflation. Yet financial meltdown may now be the wrong issue to hedge against.

While current momentum may favor gold due to gold-fund demand, they think China and other countries will never dump the dollar any time soon. The US is too important an economy to the world.

Goldbugs take note.