Gold bugs are a cynical lot.

In the battle of asset classes, gold investors can laugh at the real-estate bust, global stock-market implosions, and the deterioration of bond and money market yields.

Why aren't they cynical enough to stay away from the yellow stuff?

Gold futures peaked on Friday, temporarily poking above the $1,000-an-ounce mark. Since then, gold prices have fallen every single day this week.

I'm not nearsighted enough to call last week's highs a top. Gold may very well revisit those highs and keep rolling. However, anyone who has lived through the bursts of other asset classes in recent years can probably see this one coming, too.

Let's go over a few things that will find gold bugs smacking their foreheads the way others have once this all plays out:

  • My wife was invited to a gold party last week, where friends bring in unwanted gold jewelry and swap it for cash. Tupperware (NYSE:TUP) and TASER (NASDAQ:TASR) parties didn't necessarily spell the top for those products, but we're talking about asset swap parties here.
  • Did you see the Cash4Gold ad during the Super Bowl? Wasn't the dot-com bubble popped shortly after a ton of cash-rich Internet upstarts paid dearly for Super Bowl commercials?   
  • A year ago, the argument for gold stemmed mostly from jewelry demand and China's newfound prosperity. These days China is dusting off its own stimulus package to get its economy back on track. As for jewelry demand, Tiffany (NYSE:TIF) posted a 24% decline in worldwide comps this past quarter. Blue Nile (NASDAQ:NILE) posted a week-adjusted 27% dip in new sales over the holidays, and it claims it actually gained market share.
  • On Monday, State Street (NYSE:STT) issued a press release, claiming that its SPDR Gold Trust ETF is now the world's second-largest ETF with $30 billion in assets. "Assets in the trust have increased by more than 60 percent in the last six months," reads the release. "This growth underscores gold’s safe haven appeal and its recognition as an excellent portfolio diversifier among a wide array of financial advisors and investors." Anyone who interprets a 60% spike in assets as the hallmark of a safe haven obviously missed the memo on how oil prices spiked last summer before shedding more than two-thirds of their value. Since many ETFs physically buy the metal, this is going to get ugly when sentiment turns.

There is still a good argument to be made for gold as an inflation hedge -- the government can’t print more of it. Gold has also established itself as a worthy asset for diversification, within reason. However, with so many other bubbly catalysts popping, let's hope the cynics are cynical enough to catch on and cash out if they are overexposed to gold.

If you think I'm wrong -- and I know you probably do -- let me know why in the comment box at the bottom of this page.

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Tupperware Brands is a Motley Fool Income Investor selection. TASER International and Blue Nile are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't consider himself to be a gold bug, though he can bug people and ruin a golden moment. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.