If gold were to end this year at its current price, it would be the first time in over 15 years that it would have seen two back to back years of annual price declines. And this is now being used by many of the (investment) commentators to further question the pricing power of gold. Ron Ensana of CNBC/MSNBC presents his commentary on gold as an investment and why it is under performing (video may auto run on the CNBC page). Ensana is of the view that the price of gold heads to $800 - same as ABN Amro - rather than $4,000 per ounce.
"While it's true the nation's money supply has ballooned, along with the Fed's balance sheet, and other broad measures of money, the velocity of money (the speed with which money circulates through the economy, continues to fall. That is a factor that restrains inflation and augurs poorly for gold going forward. While gold might be good for a trade, if the dollar pauses from its recent, and rapid, ascent … to me, the longer-term view remains bleak."
If nothing else, the comments section on the CNBC article is a fun read. Ensana does not have many fans amongst the gold bug crowd.