Montreal (Kitco News) -- With gold prices having risen to within less than 3% of their all-time highs just this morning, questions have once again surfaced as to when, and if, the yellow metal's rally might come to an end.

Ned Schmidt, author of The Value View Gold Report, said that the recent gains simply reflect speculative trading and not due to doubts over Greece or other negative sentiments in Europe.

Gold, relative to US$dollar, is way ahead of itself, said Schmidt in an interview with Kitco News. “What gold is doing has no basis in news events or fundamentals, it is simply trading," he said. "As long as the chart is going up they are buying, if it goes down, they sell. It doesn’t make any difference what is going on in Greece, or Portugal or Washington.”

“It is being played by speculative traders in a classic model," Schmidt said. "You can see it every morning when the exchange opens in New York -- gold gaps up. That’s speculative trading; it is not investors. And we know from every past experience in every trading market that this type of experience always ends up in a disappointment."

Schmidt said at some point "these momentum traders depart and they go somewhere else and people can sit and own their gold, but no dollar-based investor should be buying gold today."

Speculative binges exhaust themselves and remain with no buyers left, only sellers, said Schmidt. “Gold is a very illiquid market – it is going to see some down days that are going to shock some people.” He said that he expects US$Gold to test lows of $970 this summer.

George Gero, vice-president of global futures at RBC Capital Market, echoed the same this morning, stating that gold is being pushed by momentum traders. “Momentum traders are purchasing December futures contracts and 1200 call options for gold are attracting buyers.”

The situation is a little different in Europe, however, said Schmidt. “You have a long-term case for the ECB being overly accommodating. The ECB’s primary mandate was to maintain the quality of the currency. The Greece, Spain, Portugal, Italy, Ireland, UK- situation means they are going to have to ignore that mandate,” said Schmidt. Gold, when denominated in Euros or British Pounds, is going to make repeated new highs, he said.

Schmidt said that the Euro will be in a multi-year bear market while the US dollar is getting ready to break to the upside and be in a multi-year bull market.

Contributing to this is the Federal Reserve reducing reserve availability in the US, he said. “They are making the dollar rarer – this is going to push the value of the dollar up and we will see the dollar at levels that no one expected, “Schmidt said.

Commenting on the International Monetary Fund, Schmidt said it will soon have a serious problem on their hands. “It has committed itself to writing a lot of cheques in Europe and they are going to have to accelerate the selling of their gold. I would not be surprised that they get authority to sell additional gold,” he said.