Plenty of indicators suggest the metal has seen its peak

World stock markets are down on renewed worries of a Greek default. Adding fuel to the fire, President Barack Obama��s proposal to levy a new tax on millionaires — dubbed the ��Buffett Rule�� after it was suggested by billionaire superinvestor Warren Buffett — has drawn a sharp rebuke from Congressional Republicans and threatens to unleash more political instability on a crisis-weary public. And U.S. homebuilders, citing the effects of never-ending foreclosures, are even more despondent than feared, according to the latest edition of the National Association of Home Builders/Wells Fargo Housing Market Index, which was released on Monday.

With the finance world appearing to teeter on the edge of disaster, one might expect that standby crisis hedge — gold — to rise.

Yet a funny thing happened. The price of gold actually fell sharply.

The spot price of gold has continued to drift lower after surging to new, all-time highs above $1,900. As this article is being written, the price has fallen to $1,778 and appears to have lost all momentum.

Gold��s recent weakness comes even as competing crisis hedges have lost their luster. The Swiss National Bank took a sledgehammer to the Swiss franc two weeks ago, pledging to lower its value against the euro. The tactic worked, sending the franc down nearly 10%. U.S. Treasuries — considered by many to be the ultimate safe haven for their liquidity — now yield far too little to be attractive for most investors. The 10-year T-Note yields a miniscule 1.95%.

Gold��s recent action should be deeply disturbing to gold bugs or to anyone using gold as a refuge from the market��s volatility.

While I hesitate to definitely say the gold bubble has burst (the market gods tend to punish those who would be so vain), it is becoming increasingly likely that this is the case. You can never say with certainty until after the fact, but the anecdotal evide! nce sugg ests the peak — if we haven��t seen it already — is near. Let��s take a look at a few indications that that��s the case:

1. ?European central banks are buying gold again. The Financial Times reported on Monday morning that European central banks have become net buyers of gold again for the first time in more than two decades. These bankers buying gold near its all-time highs above $1,900 were the same people who couldn��t get rid of their gold fast enough when it was trading below $300 per ounce. This shocks even me. While I��m not surprised to see emerging-market central banks go down this route — Mexico, South Korea and Thailand have all been big buyers this year — even a cynic like myself expected the Europeans to have learned their lessons. In any event, given central bankers�� record of dismal timing, investors should use this as a contrarian indicator to bet the other way.
2. Gold appears to be overvalued relative to other precious metals. The price of platinum will generally trade at a significant premium to that of gold; as recently as five years ago, the platinum price was nearly double the gold price. This makes sense, as platinum is far rarer and has far more industrial uses in addition to its role as jewelry. Yet today, gold is more expensive than platinum. Why? Because platinum is not being aggressively hoarded by speculators and by investors searching desperately for a safe haven. Gold��s traditional use as jewelry has been in steep decline for years, even while record amounts of it are being salted away in bank vaults for ��investment purposes.�� This doesn��t mean that the price will fall tomorrow, but it should raise questions about the durability of a bull market in gold.
3. The smart money has started to lose interest. George Soros made quite a splash earlier this year when he exited his rather large position in gold.?While no one should mindlessly ape the trading moves of another inve! stor  212; even one as talented as Soros — it still can pay to take note of what the all-time greats are doing. If Soros no longer sees value in gold, it is fair to ask: Why should we?
4. It��s all about The Donald. I include this one more for comic appeal than anything else. Donald Trump made headlines last week by accepting $176,000 in gold bullion as a security deposit from a new tenant. In his comments to The Wall Street Journal, Trump said, ��It��s a sad day when a large property owner starts accepting gold instead of the dollar. �� If I do this, other people are going to start doing it, and maybe we’ll see some changes.��

While Mr. Trump has made billions as a property developer, he also has a habit of putting his foot in his rather large mouth. It would only be appropriate if this blustery political rant marked the top of the bubble. Add Trump��s little publicity stunt to the ��bear�� column for gold.

The gold bubble appears to have sprung a small leak. It could still be patched, of course, and we could see the bubble expand a little more before it pops. But given gold��s recent lackluster performance in the face of continued crisis, I wouldn��t bet on it. Once the bubble begins to deflate in earnest, the gold bugs are not likely to fare any better than Miami condo speculators or dot-com true believers.

Charles Lewis Sizemore, CFA is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. Sign up for a FREE copy of his new Special Report: ��3 Safe Emerging Market Stocks for a Shaky Market.��