For all the fireworks in the gold price last month, including a 25-year high, the metal that drives men mad ended down by slightly less than two per cent from the end of April. To me, and to some of the more sober chartwatchers, the bell has been rung. Last month’s highs ($728 on the June Comex contract on May 12) probably won’t be exceeded for a year or so. The hyperbolic frenzy that seized the metals people has to be worked off.

That doesn’t mean the long-term bull market in gold – what the technicians call the “secular” trend – is over. That’s a multi-decade trend, and this bull market really only started in 1999; about the time of the IMF meetings in September and October of that year. The four-figure dollar numbers that are now only a gleam in the goldbugs’ eyes could well be hit. But just not yet. The uptrend in gold was a byproduct of simultaneously strong economies in the developed and the emerging economies, and the commodities price rises that followed. The commodities price increases formed by real world activity were then levered up by investment managers looking for one more asset play . . . just one more before the next carried interest was calculated.

It may not entirely be a coincidence that the cyclical gold peak was just past when Hank Paulson was appointed Treasury Secretary. This, one can be sure, was not the president’s idea. There is a range of opinions of Mr Paulson, but nobody thinks of him as only another front man, which is what the political world was expecting. Someone – or, rather, a lot of people – grimly informed the White House that it was time to get serious. Forget the cheerleaders.

A fiscally more conservative, militarily less adventurous, monetarily tight world is not conducive to a higher gold price, and, for now, that is what we’re probably going to get.

How can we be sure this isn’t a long-term peak for gold? Well, the public really didn’t get as caught up in this gold frenzy as it did in the dot-com stock boom, or anywhere near as involved as it did in real estate speculation.

For example, take the reception that John Hathaway, the manager of the Tocqueville Gold Fund, had at the Money Show in Las Vegas this month. Hathaway’s fund was up more than 45 per cent when he gave his pitch to a roomful of investors at the show on May 16. The fund’s assets under management had risen to more than $1bn. It was, Hathaway recalls, somewhat painful. “I had 50 people or so in the room, which could have held four times that number. We’d been given one of the smaller rooms. It had emptied out after the previous speaker.” And this was at his all-time high point.

Actually, to someone with a long term interest in gold, that was a good sign. Clearly, there are a lot of potential buyers left to be found out there, which can’t be said, for example, about Phoenix or Las Vegas real estate. As Hathaway says: “At least we know that this time, it wasn’t the public (pushing up prices). It was the momentum guys and the trend players. After Las Vegas I flew to Geneva to see potential clients for our offshore fund. They were better than the (American) retail (investors) in Las Vegas, but not much better. It was a very hard sell.”

If this were a long-term peak in gold, Hathaway would have at least $50bn in his fund. He would have had investors throwing their room keys at him on the stage.

Martin Pring, of the eponymous technical analysis firm, is fairly certain that May’s price action in gold means that “for all intents and purposes the game is over for now. There could be a sharp downside and then a trading range, or we could work off (the overexcitement) with a slow Chinese torture. I think $490 is the logical retracement level. When it gets there, I’ll start thinking about what the new secular highs will be.

“For me the proof that we’d passed a top was the story in a weekly financial newspaper about gold going to $8,000 an ounce.”

The man interviewed in that story is James Turk, author of The Coming Collapse of the Dollar, and founder of I had a chance to talk to Mr Turk last week when he passed through New York. He’s much lower key in person than in his press releases, appearing more like the banker he once was rather than what you think of when you hear the word “goldbug”.

It’s hard to pinpoint the difference between someone who is just bullish about gold and a goldbug, since both share a high level of scepticism about most countries’ monetary policy and the markets’ present valuation of financial assets.

The most significant difference would be the goldbugs’ firm conviction that the gold price has been manipulated by a cabal of western governments, gold dealers, and bankers.

I’ve heard and read their arguments, and I don’t buy it. But Jim Turk does. He and his confreres believe that through the 1990s and up to the present time, western governments have used the gold leasing market, along with central bank gold sales, to push the price below where it should be by all rights. As he says: “Manipulation of the gold price is done to maintain the illusion that the dollar is worthy of being the world’s reserve currency.”

Mr Turk and the other goldbugs have an alternative reserve currency in mind, of course.

You don’t, however, need to believe in the resurrection of the gold standard to conclude that gold is a very useful investment – or at least savings – medium.

There are too many over-leveraged financial markets in the important currencies, and the prices of these currencies need to be marked down to meet people’s ability to support them with real income.

That doesn’t mean timing isn’t still very important. And you probably have $100- or $150-worth of correction to go before you should go back into gold. And I’ll be examining one of the goldbugs’ theories about the Clinton administration and gold market manipulation in a future column.

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