Thanks for visiting The Mortgage Reports. To stay absolutely current on mortgage markets and important guideline changes, be sure to take my free daily email alerts.

Friday, for the first time since February 1983, Gold touched $510.80 per ounce.  This caps a 16 percent rally dating back to September. 

In October, we talked about gold's status as an inflation hedge. 

As local currencies loses value, gold doesn't.  That makes it an attractive "safe haven" investment.

And it appears to work in the long-run:

• In 1895, the price of gold was $20.70 per ounce. 
• In 1995, the inflation-adjusted price of gold should have been $379 per ounce.
• In 1995, the actual price of gold was $387 per ounce.

But, across a smaller set of years, the price of atomic element 79 swings wildly from point to point.  In the short-term, gold appears to be as volatile as any other investment security.  The recent gold rally illustrates this point well.

The issue worth watching watch, though, is how much of gold is trading on speculation, and how much is trading on fundamentals?

As the price of gold continues to grab newspaper headlines, its allure may spill over to lay investors who may not understand that gold can lose value, too.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.