Right now, gold prices are sky high. But that could easily change once the economy improves and it has everything to do with the strength of the dollar. The simple explanation is that the stronger the dollar is, the smaller the gold prices are. It is a simple dance with complex consequences, if you make too much of an investment in gold at the wrong time. The problem is that once the economy improves as every one wants it to, you will lose money in gold. This is why most investors recommend that only a part of your portfolio be invested in gold.
In a sense, it is all centers around the concept of supply and demand. As the dollar weakens, the demand for commodities like gold increase. There was no more evidence of this then the last recession when gold was hitting all time high numbers. The price has come down a little since then and will probably continue to drop as improvements in the economy are made.
Soon, the investors will be selling gold to prevent against a significant loss. As the supply of gold increases, the prices will drop to accommodate the fact that there is more in the system. Thus, the price drops. As more gold floods the market, the price will keep decreasing until it stabilizes at a much lower number. For those who still have gold, it shows a loss on a once lucrative investment. A strong dollar means that investors are going to shift their investments into something that will give them more of a profit and away from things that are decreasing in value.
The price of gold is very dependent on how well the dollar is doing. The track of dollar versus gold value has been proven over time. It is not wise to place everything in gold even though the prices are sky high. Because eventually, those prices will fall as the economy strengths.