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Here's why gold could be headed to $800

Over the last several years, gold has been simultaneously regarded as a crisis hedge, a currency hedge, an inflation hedge and a deflation hedge. Gold's beauty, it seemed, was in the eye of the holder. But in the absence of a full-scale geopolitical crisis, economic collapse, or other "black swan" event, there is no good reason to hold gold — at least here in the U.S.

One-hundred-gram gold bars sit on a one-kilogram gold bar, center, at Gold Investments Ltd. bullion dealers in London, July 15, 2014.
Chris Ratcliffe | Bloomberg | Getty Images
One-hundred-gram gold bars sit on a one-kilogram gold bar, center, at Gold Investments Ltd. bullion dealers in London, July 15, 2014.

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Since 2011, gold topped out and has fallen almost 40 percent from its all-time highs, failing to meet the bulls most aggressive targets. Silver, too, has crashed, as have many base metals, used in manufacturing around the world, reflecting much slower than expected growth in both developed, and developing, economies.

So what happened?

A couple things.

* Inflation never materialized in a way that would drive gold, or silver, ever higher. Indeed, on an inflation-adjusted basis, gold never even took out its 1980 high that would equate to $2,300 today. Nor did silver, where the inflation-adjusted peak was around $110 per ounce.

* The dollar did not crash, as some had expected, despite the massive easing by the Federal Reserve.

* The stock market didn't crash again, either. Instead, it currently sits at all time highs.

The gold bulls suggest gold could be headed to $4,000, given the policies undertaken by the Fed and other central banks in the wake of the financial crisis. The logic goes that "money printing," particularly by the Fed, would devalue the dollar and lead to inflation and, ultimately, hyperinflation over the ensuing years.

However, even a cursory look at inflation indicators, be they the level of global interest rates, inflation expectations as measured by TIPS (Treasury Inflation Protected Securities) and the direction of inflation, itself, do not suggest that gold, in dollar terms, can, or will, go meaningfully higher in the days ahead.

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While it's true the nation's money supply has ballooned, along with the Fed's balance sheet, and other broad measures of money, the velocity of money (the speed with which money circulates through the economy, continues to fall. That is a factor that restrains inflation and augurs poorly for gold going forward.

While gold might be good for a trade, if the dollar pauses from its recent, and rapid, ascent … to me, the longer-term view remains bleak.

There has been some talk that Russia may increase its gold holdings in an effort to stabilize the ruble, which has crashed, causing the Russian central bank to intervene in support of its currency. That could be a source of unanticipated, incremental, demand for gold, but that's more of a Russian problem than an American one.

In fact, quite the opposite is true here at home.

The dollar, given growth and interest-rate differentials between the U.S. and the rest of the world, is likely to continue its rally, putting downward pressure on gold and silver, and on all commodity prices, for that matter.

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If I were a betting man, and sometimes I am, the long-term chart of gold suggests that the old high in gold of $800 an ounce, could be its new low.

Technicians like to say, "what was resistance, is now support."

I would support an $800 price for gold before I would support the notion that gold is going to $4,000 anytime soon.

If you're still looking for a safe-haven investment, a better option would be large-cap stocks with lots of cash and good management like Disney, Apple or Microsoft.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. He also editor of "Insana's Market Intellgence," available at Marketfy.com. He delivers a daily podcast, "Insana Insights," and a long-form weekly version, both available on iTunes and at roninsana.com. Follow him on Twitter @rinsana.

Disclosure: Ron Insana doesn't own any of the stocks or commodities mentioned in this article.