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When you find yourself sold on a stock or a concept, it's time to sit back and look at all the counter points to your theory. Once those have been exhausted and you still feel confident in your investment, you are probably on the right track.

The problem with the theories of the demise of the USD are simply that there is not currently any replacement for it other than Gold. The USD is measured against a basket of currencies worldwide and as such, it will probably rise in relation to them in the short term. Furthermore, the amount of money that they've been printing has not shown up to be extremely out of line compared to GDP.

Main while, gold has risen dramatically over the past ten years. Almost a five fold increase. All this has been directly in relation to the dollars continued downward trend vs the worldwide basket of currencies. Now we must ask ourselves, is that trend coming to a reversal.

When I look at the main factors driving gold, I consider fear and uncertainty the main one at the moment. Inflation is not a factor. Geopolitical uncertainty is not currently a factor but of course, as things get ugly in a global recession, so do people and that could change on a dime. A heart attack here, a religious fanatic beauty pageant contestant with her hand on the button with a hate on for Russia there and suddenly well... you know.

None the less, we are left with inflation as the only realistic driving factor in gold and that is no certainty at the moment. Yes they are pumping oodles into the system but it has to come out of the system to cause inflation. At the same time, commodities are falling... which generally precedes deflation. We have tightening credit, which is not inflationary and though the object of the bailout is to loosen the credit strings, it's unlikely to do so in a meaningful way in the next few months.

As such, I have to think that there is a strong likelihood that the dollar will rise in the near term, leading to a decline in Gold. Gold stocks which have been decimated by the credit squeeze are probably going to reacte negatively to the dollar but favorably to loosening of credit and there downside is likely limited by virtue of the fact that they're already so damn low that they don't have much further to fall.

So my conclusion is that the arguments for and against this sector in the near term are totally uncertain. On the other hand, I think there's considerable certainty in the long run that gold will run way up, but perhaps only after a big pullback first. I think there is more certainty that US stocks will take a final spike upwards before nosediving to levels no one ever thought possible.

The only certainty I have is that things will not remain where they are. Not even close to where they are. This is not stagnflation. It's either going to be massive inflation or deflation. No trading range to be found here. So how do you play it? Either you can put all your chips on one bet or the other or you can play for both through option and hedging strategies, which is my preferred course at the moment.