Their reasoning is simple: investors are keeping prices high even as demand from non-investors is cratering.

Take gold jewelry, which accounts for more than half of the world's gold market. Demand there fell 8% in the fourth quarter of 2009 and is likely to continue to fall amid high prices that turn off shoppers. For example, in India, the largest gold buying country, high gold prices this week kept Indians from purchasing metal for the gold-buying festival of Akshaya Tritiya, which in turn drove down prices.

Then there's price pressure from the supply side. Higher gold prices mean miners work overtime. The supply of mine gold around the world jumped 7% last year to 2,572 tons-the second largest increase in history.

Gold bullion dealer Kitco says places like China and Russia will help boost the amount of gold from mining by 4% to 6% a year through 2014. Because it costs miners about $480 on average to extract an ounce of gold, they plow ahead when prices are high, eventually leading to an oversupply situation.

Gold as $1,200 also brings out the sellers and resellers. In 2009, scrap supply-all those gold pendants, necklaces and coins people have lying around-hit an all-time high of 1,700 tons. All those "we buy gold" signs, Internet advertisements and late night television commercials? Well, they're starting to work.