It’s been rather entertaining watching the fear spread over the stock markets for the last couple weeks, and I’ve been rampantly sifting through daily data and charts trying to come up with a diamond in the rough. That strong company whose stock price has been dragged down by the falling markets for no better reason than peer pressure.

I find it interesting that Microsoft (MSFT: chart, web, Y!) wrote up an unsolicited take-over offer for Yahoo (YHOO: chart, web, Y!) to the tune of $45 billion (that Yahoo has now rejected). Obviously they saw Yahoo as way undervalued, and made an effort to steal the company amid fear and frenzy that the world is coming to an end, at least financially. Quite honestly, I think it’s an appropriate move at this point, as many are subject to irrational logic in times of immense fear.

But I digress.

In the back of my mind, I’m also thinking I should be recession proofing my portfolio. The most obvious way to do that is with gold or commodities, the later of which I’m already over weight by virtue of my direct involvement in the oil and gas industry. Less direct is overseas funds which may be leveraged less by the US dollar.

Gold has seen a drastic spike in price over the last several months, and looking back, I was a fool for selling my StreetTracks Gold Trust (GLD: chart, web). At the time it seemed like a good idea, but I was a bit short sighted in my move. I even called it in that very post in May:

“I still like the prospects of Gold for a hedge against a falling economy, which readers of this blog will know that I’m preparing for.”

I knew the pressure was building against economy, but I sold the GLD with a bearish near term outlook, and then more or less forgot about the initial plan to use the trust to hedge my bets against the falling economy, fueled by a waning housing market and increasing gas prices…

So I’ve learned a lesson. Stick with the game plan so long as you still believe in the game, and more importantly, timing is everything.

Enough with the cliches.

I’m still eying Gold as a hedge against a falling dollar, but the question remains: Am I now too late? I’d hate to fall into the trap of buying high and selling low.

Gold is flirting with a significant psychological barrier of $1,000 per ounce, and I’m not sure it has the strength to break through that resistance point or not. On the other hand, I don’t believe the economy has hit rock bottom yet, so there may be some fundamental upside left to GLD.

My gut tells me I’m too late, but my brain says buy.

Any thoughts?

Economics, Investing Economics, GLD, gold, precious metals, recession