Gold dropped nearly $7 in the first half of European trade today. The AM Fix in London priced one ounce at $636.75, unwinding much of gold's gains of late December.

Global stock markets, meantime, continue to push higher to multi-year highs. The FTSE in London has risen yet again this morning. The Singapore market closed earlier at a fresh record high.

"It appears gold is running out of steam," says one US analyst. According to Bloomberg, he was a gold bull on Dec. 4 but had turned bearish by Christmas Day.

"I'm not going to have another buy signal until it closes decisively above $665," he says. "There isn't a reason to drive the market higher at this point.''

Investors who bought gold instead of stocks lost out as 2006 ended, Bloomberg goes on. Investor who sold $1 million of shares on Dec.1 and bought gold were down around $37,000 by New Year's Day.

"We have been disappointed with gold's movement,'' says Christoph Eibl, a fund manager at Tiberius Asset Management AG in Zug, Switzerland. He sold gold from his $700 million holdings in November. "The arguments were around for a higher gold price and it didn't perform."

Will Herr Eibl come to regret his haste? Global stocks may have beaten gold in December. They may well beat gold this month, too.

But can the bull market in paper assets really keep running and running? Click here to read our 2007 forecast now...