I am no fan of gold. I don't believe that gold is the only true form of money in the world any more than I believe paper, loadstones, salt or electronic entries into a ledger, are the only legitimate forms of money in local economies.
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That being said, I think gold is an attractive trade in the near term. The "reflation trade" appears to be on for a variety of reasons, not the least of which is negative interest rates in many countries around the world.
Negative interest rates reduce the cost of carrying gold and are, at least theoretically, inflationary. But it's the cost of carry that is most compelling as a reason to hold gold.
High interest rates and strong currencies are the typical constraints on owning gold, which offers no yield and tends to decline in value when paper currencies are appreciating.
Aside from the Japanese yen, there are few currencies surging in value and there are very few countries sporting interest rates high enough to offer attractive yields that appear enticing to investors. It's an environment that may continue to favor gold, both for domestic and international investors, at least for the time being.
There are also some positive technical signs that suggest that gold can extend its recent gains. The recent upward move in gold has been confirmed by rallies in other precious metals like silver and platinum and by rallies in economically-sensitive metals like copper.
From a purely chart-based perspective, gold has no meaningful upside resistance until about $1,350 per ounce, leaving about $100 of upside from current levels.
Add to that the increasing likelihood that the Federal Reserve, in my opinion, is unlikely to raise interest rates more than one more time this year — if that much.
With estimates of U.S. growth continuing to be downgraded, the Fed has little reason to raise rates in a global climate that remains quite weak, recent stock market action notwithstanding. Other market-based indicators, like a sagging dollar and depressed interest rates, suggest an economic environment that doesn't warrant further action from the Fed.
As long as those conditions, coupled with negative rates around the world persist, gold, gold stocks, or ETFs, appear attractive.
I love gold for a trade, but I still hate it as a long-term investment.
Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.
Disclosure: Ron Insana does not currently have any gold investments.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.
