As the price of gold has taken some lumps since it crashed back down through the psychologically significant $1,000-per-ounce mark back in March, those on Wall Street who had consistently underplayed its potential on its way up are now assuring its continued retreat.

According to these gold market spectators, prices have risen solely as a result of financial panic, and now that the fear has apparently subsided, the gold-price gains will evaporate as well.

I have been buying gold and gold stocks for myself - and for my clients - since 1999, and not once did I buy out of fear.  In fact, from my perspective, the only fear I’ve observed in the gold market is from those who have been too afraid to buy.

Fundamentals vs. the “Fear Factor”

While fear may from time to time play a role in creating price spikes in gold, the underlying bull market has been driven by solid fundamentals. Those who have been too afraid to buy simply do not understand the underlying dynamics and have instead decided that the market is irrational. As a result, gold continues to climb the classic wall of worry as any dip in its otherwise upward trajectory causes the speculative investors to jump ship. And that typically turns out to be a big mistake.

Take Friday’s trading action, for example. Gold for August delivery jumped $23.50 an ounce to close at $899 on the New York Mercantile Exchange (NMX) - the yellow metal’s strongest close since May 28. That means the price of gold was up 2.7% for the day.

Gold’s ascent from less than $300 an ounce to its current level was - and is - being driven by those who prefer the yellow metal as a store of value over the paper alternatives offered by governments [Check out Money Morning’s latest report on gold investments, published Friday as part of our ongoing “Cashing in on Commodities” series. The report - “Is Gold Headed for $1,500 an Ounce?” - is free of charge].

As the U.S.