One of the most common pieces of investment advice of recent years is that you had to own gold.

Gold, some said, was the only true currency.

Gold would protect the value of your savings from the ravages of out-of-control government money printing.

Gold was a simple substance--free from the accounting shenanigans, corruption, fraud, and operational uncertainty of stocks and companies.

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As gold prices continued to rise, this logic was repeated so often that it came to be viewed as fact. And it appeared to explain not just why gold prices were rising, but why they would continue to rise--to $2,000 an ounce, $5,000 an ounce, and beyond.

Alas, the party now appears to be over.

This morning, gold prices crashed through $1,300 an ounce, hitting the lowest level in two years. At $1,300, gold is now down 30% from its peak. And all investors who finally bought into the gold mania over the past couple of years are now underwater.

If this were mere "volatility"--if gold had some fundamental value that it would likely eventually return to--then the price drop would be no big deal. But there's no solid theoretical way to "value" gold, so its price could do almost anything. Gold prices could fall another 50% to $650, for example, and still be 50% above their level for the prior couple of decades. (In case you needed any more evidence that gold prices don't always go up, from the late 1980s to the early 2000s, gold prices dropped by more than half.)

Yes, gold prices could also take off like a rocket again. Anything's possible. But speculating about what gold prices will do is speculating, not investing, and many of the folks who bought gold or gold funds over the past few years have assumed they were "investing."

What is now clear, moreover, is that the primary argument for buying gold--the argument that gold would protect you from the hyper-inflation that would surely follow the government's crazy money-printing--has been flat-out wrong.

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So far, there has been no hyper-inflation. There hasn't even been much regular inflation. Because, despite the government's efforts to reduce the cost of money, slack demand in the economy and high unemployment have kept prices from spiraling higher.

The only thing that determines the price of gold is what someone is willing to pay for it.

For a while, while gold prices were going nowhere but up, the next buyer was usually willing to pay a little more for it.