THE ISSUE: In years past, gold often acted as a safe haven when stocks were falling, and it hit a record in August while equities struggled. Now, however, it's mired in its worst selloff in decades. What does it mean for investors who see gold as a core portfolio holding?

(Reuters) - Investors love hard assets like gold when financial markets are stressed. That should be true now since fear is running high, except for one factor: It's the wrong kind of stress.

For gold, a strong dollar is kryptonite. The Greek tragedy in Europe is slamming the euro and giving a lift to the dollar. As the U.S. currency crops, gold, which is priced in dollars, gains in value, and inflation fears also rise.

The phenomenon of falling stocks and rising dollar has not been seen since 2008's collapse, when a buying frenzy in safe T-bills fueled a dollars surge. The conditions may not be so dire now. But there are some similarities.

Still,the dollar has been on a long-term decline and with its new, less-than-AAA-rated government debt, the U.S. currency should soon resume its decline. That,in turn, would restore gold's appeal. Right?

Not so fast, say strategists. Investors need to be wary. The gold rush of 2011 is over for now. Here is why they think it's time to down picks and shovels:

REBALANCE GOLD, SEEK DIVIDENDS

The gold rally really got crazy. One strategist abides by former money manager Jim Rogers's axiom Sell euphoria, buy panic. When gold hit its record high in August, it had been on a virtually non-stop, decade-long 600 percent upswing. Its decline has been dramatic as well, with a 9 percent pullback in the past two days.

For the past seven weeks, I have been telling people to rebalance gold and sell partial positions on gold, said Jeffrey Saut, chief investment strategist at Raymond James Financial.

Stocks would hardly seem to be a safe alternative to gold bullion, especially after the recent volatility in equities. But strategists see unrecognized value in stocks. In place of suddenly shaky gold, Saut recommended buying conservative yields, specifically Health Care REIT and EV Energy Partners.

Another strategist, David Kotok, CIO of Cumberland Advisors,said The U.S. stock market is cheap. The dividend yield on the S&P 500 index exceeds the interest income on a 10-year riskless US treasury note, which is a very rare occurrence.

Kotok says to invest in dividend-paying stocks, and ETFs in the same vein. He cites Wisdom Tree Dividend ex-Financials Fund DTN.N.

LONG BOND, HIGH YIELD ETFS

The safe haven that replaced gold in 2008 was U.S. government debt. Strategist Michael Jones, CIO of Riverfront Investment Group thinks its time to go back to that safe place.

Fears could flip to financial system collapse and gold would be wiped out. Just look at how it performed after Lehman, said Michael Jones, CIO of Riverfront Investment Group.

Jones is in favor of long bond ETFs with high yield.A combination of high yield and long bonds give a risk profile similar to the Lehman aggregate, but with three times the yield.Jones mentioned iShares Barclays 20-Year Treasury Bond ETF TLT.N, SPDR Lehman High-Yield Bond ETF JNK.N and PowerShares High Yield Corporate Bond ETF PHB.N as high-yield ETFs worth looking at.

GOLD MINING FUNDS, AND STOCKS

Some argue that gold-mining stocks are a better long-term play, and a less volatile way to extract value from precious metals futures.

Certainly valuations are better for gold mining companies than gold directly, said Kate Warne, Edward Jones investment strategist. But gold mining is energy intensive, and the costs for mining have gone up. So, with production costs, if it's going up, you may not make as much money.

Al Abaroa, market strategist at Kingsview Financial, said that gold funds do not offer much protection: I don't think you can avoid the volatility.

GOLD'S INFLATION PROBLEM

As gold approached $2000 an ounce, it got as overvalued relative to inflation as it got in the late 1970s and early '80s. Jones said.

The problem, said Frank Cholly of MF Global, is that gold does not act like real commodities such as corn and wheat, which repel investors when their prices rise.

Gold bugs jump on board when the precious metal starts to heat up.

When gold gets expensive, it gets more attractive, and it should be the opposite.

Cholly advised investors to remain bearish on gold. At these levels, you have to be very careful. If you're not already long in gold, be careful when you buy it.

DOLLAR UP

Everyone wants to raise cash because there's a global panic, said Abaroa. It's not that the dollar has terrific merits in itself, but it is better than the euro.

That is bad for gold -- but not good for nothing. Some stocks will benefit from a stronger dollar. Retailers who sell important goods, for example. But strategists saw risks in trading currencies themselves.

I would recommend that investors not make currency bets, said Warne. Instead look for companies with solid cash flows, which pay dividends, and have potential for dividend increases in the future. Johnson and Johnson, Procter & Gamble, Intel, and United Technologies were her picks.

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