No substance has held as much allure over the centuries as gold. And that allure still seems to hold with gold prices going up to as much as $1000 an ounce in March. The price has dropped back since but it's still figuring prominently in investment reports.

One very good reason for that is that we are now seeing most severe financial crisis in the US and western banking system for decades. Gold is seen as a safe haven. And the fall in the US dollar relative to other leading currencies has propped up the gold price in dollars and gold's appeal to dollar-based investors. Some investment strategists, like the ones here, are forecasting a trading range of of $700/oz to $1,300/oz over the next 18 months.

But does it stack up? Not when you look at the fundamentals. What's been driving the price up of late is fear and greed but not much else.

As this Wharton discussion paper makes clear, gold is not a good long term investment. According to these analysts, a dollar invested in gold in 1801 would be worth $1.95 at the end of 2006, while a dollar put into a basket of stocks reflecting the entire market would be worth more than $755,000.

The big problem with gold is that it's not like other commodities. With for example something like oil, it will always run out which means you always need to resupply it. And that keeps the price high. But once gold is mined and turned into jewelry, it stays in the market. As a result, the supply is continually growing. That will always put a lid on gold prices.

For serious investors, gold does not stack up in any portfolio.