Gold prices have been declining since trading at a peak in early February. The basis April Gold futures contract on the Chicago Board of Trade traded at $579.50 on February 2, but has since been on a decline, testing and holding at support at $540 on two occasions.

The intermediate price trend is negative, but the major price trend is bullish since reversing to the upside in March 2001 when the April contract was trading at around $260 an ounce. For you gold traders, if you take a look at the monthly chart, the current wave that began in August 2005 looks to be overextended based on the degree of the price appreciation. This is causing some hesitancy on the chart since the start of this year.

The daily price chart is also potentially showing a bearish descending triangle but this would only signal more weakness if the prices couldn't hold at the $540 support level.

Now while I'm suggesting there may be some more weakness or mixed trading in the near-term for gold, I continue to believe it is still the place to stash away some capital for safety.

 In times of uncertainty, gold remains an ideal place to have some of your capital. Some investors hold U.S. dollars, but in my view, this is counterproductive. Just take a look at the comparative price charts between gold and the U.S. dollar over the last five years. While the U.S. dollar has essentially done very little and in fact has declined against other major world currencies, holding gold would have paid huge dividends during this timeframe. The CBOE Gold Index is up 300% versus the U.S. dollar during this stretch as it has been the period for gold bugs.

 Holding the U.S. dollar is risky due to several factors. The U.S. debt currently sits at a massive $8.278 trillion and rising by $2.01 billion per day. The debt equates to $27,701 per U.S. citizen. Compare this to Canada, which is running a surplus, equating to around CDN$120 thousand per Canadian citizen.

 The U.S. deficit is also huge and rising and this has people worry. All you have to know is holding some gold and even silver makes a lot more sense than holding U.S. dollars.