Perhaps the only thing as startling as gold’s epic charge to $1900+ per ounce earlier this year is how fast it has corrected back down over the last several weeks. It seems like the summer months were peppered with talk of $2500 gold by year’s end. Now the metal sits just below $1600 per ounce and looks for the moment to be waiting for cracks to appear in the high-flying dollar. As of yet, none have.

So what have we learned about this market over the second half of 2011? First and foremost, that like any other hyper-bull market, this one will probably be defined by increasing volatility as it progresses. While this is not necessarily a bad thing for long-term investors, it certainly makes picking entry points a little more difficult.

Second we have learned that gold is not yet ready to decouple itself from the dollar. At this point, we would have “expected” gold to be trading significantly higher as a risk hedge in and of itself. Instead, we are seeing that gold still needs a generally weakening dollar to continue its climb. Though the dollar is strong at the moment, there is little doubt that these levels are not sustainable over the long term with the mounting deficits here in the US. Still, this year’s correction has raised a lot of questions about the long-term direction of the gold market. Some pundits and analysts are even readying gold’s swan song, eager to jump back into the stock market with vigor.

Aside from the fact that the future of the dollar is no brighter today than it was at the beginning of the crisis in 2008 (and probably much less so), there is another point worth making regarding the role gold will play in the coming years.

Over the last few decades, there has been an astonishing “electronification” of money and financial assets. Whereas a generation ago, stocks, bonds, and currencies actually existed in a physical form (think bearer bonds, certificates, etc.) the vast majority of today’s assets only exist in the digital form. The entire net worth of many investors now exists only as ones and zeros on some hard drive somewhere in…somewhere.

What’s even more startling is the fact that time and time again, those ones and zeros seem to just disappear. Most recently we have the case of MF Global. This was a securities firm actually picked by the federal government to help distribute stimulus and other funds into the economy, based on their strength, stability and supposed security. Then, virtually overnight, the entire firm dissolved and it’s now come to light that over $1.2 billion of customers’ money has just disappeared. It’s just gone. Then again, in a sense, it never really existed in the first place. It was all just ones and zeros.

Of course MF Global is not the only example. Think about the flash crash in 2009. Trillions of dollars in global wealth evaporated in 8 minutes when one trader entered a single faulty transaction. Then there were the other major meltdowns: Bear Sterns, Lehman, Wamu, Countrywide, Merrill Lynch, AIG, and many, many more. In this world of money that doesn’t really exist, the concept of financial security is changing quickly.

This is where gold comes in. In 2008, there was a marked change in the type of investors entering the gold market. Whereas before the financial crisis, most people buying gold were doing so for profit and returns. After the whirlwind of financial meltdowns, gold buyers became much more concerned with wealth preservation and financial security. This change now appears to be a permanent fixture of the gold market. Many more of our clients come to us each day looking for protection than profit.

At the end of the day, we can tell you exactly what the gold market is going to do. It’s going to go up, and it’s going to go down. The swings will be big and fast. The talking heads will sing gold’s praise one day and condemn it the next. Some investors will pick corrections as entry points and turn strong profits. Others will buy high, only to get scared and sell low. Some will win, and some will lose. There is only one thing we can guarantee, and that is that no computer glitch, poor decision, bankruptcy, failure, crash, meltdown or other calamity will ever erase the gold in your safe. The rest of the financial world may be ones and zeros, but gold will always be there to reach out and touch. This may not have been terribly important ten years ago, but in today’s world, it means everything.

Mike Getlin is Executive Vice President of Merit Financial, home to America's fastest growing physical gold IRA company. Please send comments or questions to