Gold has certainly received a lot more attention from investors since the beginning of 2009. Last Wednesday, with gold near its high for 2010, precious metals consultancy GFMS said in its annual report that the market "has moved out of kilter with its underlying fundamentals." George Soros, the wildly successful speculator, went as far as to call gold "the ultimate bubble" at Davos in January. But talk of a gold bubble is nonsense, and here's why.

When a master investor flops
In February, the Wall Street Journal reported that hedge fund manager John Paulson had only raised $90 million for a dedicated gold fund that he launched at the beginning of the year -- much less than the $250 million of his own wealth he's allocated to the fund. Paulson famously made cumulative gains of $20 billion in 2007 and 2008 with a macro-themed bet against subprime and financials. When an investor with Paulson's stature and recent track record can't quickly crack $100 million for a new gold-oriented fund, investors clearly aren't falling over themselves to own gold.

Paulson already had a significant allocation to gold-related investments prior to the new fund, including positions in the SPDR Gold Trust ETF (NYSE: GLD) and gold miners Anglogold Ashanti (NYSE: AU), Gold Fields (NYSE: GFI), and Kinross Gold (NYSE: KGC).

But there's more ...
The tepid reception for Paulson's new fund is anecdotal evidence against a gold bubble, but there is more evidence against the bubble hypothesis. Here are some elements that "bubble-spotters" may be overlooking:

Gold isn't even halfway to its all-time high price: Although gold achieved a nominal all-time high price of $1,226 per ounce in December 2009, it is still well below its 1980 price in real terms. Adjusted for inflation, the 1980 high of $873 per ounce is equivalent to over $2,200 today.

Investors likely remain underweight gold: The total value of all mined gold represented about 3% of the stock of global financial assets ($178 trillion) at the end of 2008. That "market weighting" for gold is probably higher than its weighting in the portfolios of institutional investors.

Consider the Teacher Retirement System of Texas (TRS): In October 2009, it launched a $250 million internal fund that invests in precious metals mining stocks and ETFs. Although the initiative suggests that TRS is one of the more pro-active pension funds with respect to gold investing, the $250 million allocation represents approximately a quarter of a percent of the $95 billion in assets TRS oversees. In fact, TRS's total allocation to commodities -- all commodities -- was less than 2% at the end of August 2009.

(If readers have any aggregate data on gold holdings at institutional investors, I'd be grateful for an email with the reference.)

The Greek canary in the sovereign coalmine: The current sovereign debt crisis in Greece is a foretaste of the reckoning that many advanced economies will face (including the U.S. and the U.K.). As maverick Societe Generale strategist Dylan Grice wrote in a note to clients at the end of March:

Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain... Until it does, the outlook will remain favorable for gold.

Overweight gold, underweight U.S. stocks
I have no idea where gold will trade next week, next month or even next year. However, I'm pretty confident that while the precious metal may no longer be a contrarian play, neither is it in bubble territory. Investors need not fear owning the yellow metal: With gold and the S&P 500 both trading near 1,200, I'd rather to be overweight the SPDR Gold Trust than the SPDR S&P 500 ETF (NYSE: SPY). (Let me be clear: "Overweight" and "underweight" are defined against benchmark weights -- I'm not implying that one's allocation to gold should exceed one's allocation to stocks.)

The Fed is creating a new set of risks for investors, but gold isn't the only way to hedge these risks. Tim Hanson highlights the top markets right now.

Fool contributor Alex Dumortier loves macro-themed investing. Alex has no beneficial interest in any of the shares mentioned in this article. The Fool owns shares of SPDRs. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy