Losing its luster: the gold market may have reached its peak.

• Author: Pappas, Matthew D.
• Position: Money Talk

Gold has been on a tear over the past few years, with investors piling into the metal as it posted a total return of more than 150 percent from the end of 2008 through 2011. But recently its trajectory has shifted and the metal is now down roughly 14 percent just this year. Compare that to the booming equity markets, with the S&P 500 up 12 percent and the Dow Jones Industrial Average up 13 percent year to date.

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The data and trends show that gold and other precious metals may be in a longer-term downtrend based on our team's analysis, which could have a positive impact on other investment opportunities going forward.

Not-so-safe Haven

Gold had a great few years as investors sought a safe haven after the financial crisis in 2008 and a hedge against potential hyper-inflation. What's interesting, however, is that for 15 of the last 20 years, gold lagged inflation and only recently surpassed it during the Great Recession (see the chart).

If gold has lagged inflation for so long, why the sudden spike? The reason is fear. You certainly can't argue that gold prices shot up during the recession from higher industrial demand.

Look at the chart and consider the S&P 500 over the past 20 years--which would you rather own as an inflation hedge? This chart doesn't even calculate the dividend earnings that you would have received by holding those stocks over the past 20 years. Besides, where is the huge spike in inflation that everyone is worried about? When you look at wage inflation, price inflation or the velocity of new money being created in the economy, none suggest that we are in a hyper-inflationary environment.

The more extreme reasoning for hoarding gold is fear of the global economic system collapsing or even the world coming to an end. Look, things were bad in 2008 and, admittedly, our financial system nearly collapsed from the combination of many different factors. Since then, however, companies have rebounded dramatically, consumers are paying off their debts and the economy is pushing forward.

Whether you hate President Barack Obama or think the Tea 0 Party is crazy doesn't matter--each side has its reasons why the other is leading our country toward destruction. But antics are just that. The facts are what illustrate the direction that were heading in:

* U.S. household net worth is up $13 trillion from the low in 2008 and up $5.4 trillion from 2012. The total per-capita net worth level is now only 6.5 percent below...