Has the gold market given up the ghost?

That question is debated with increased intensity these days by analysts who have watched the price of gold barely budge through all the financial and political tumult since Iraq invaded Kuwait on Aug. 2.To some observers, this behavior is a sign that gold has suffered some permanent loss of luster as a haven from the ravages of economic and political upheaval.

"This is the first time in 30 years that gold has not bounced materially in value in the face of a confluence of difficult world problems," say analysts Clarence Morrison and Timothy Alch in a new report for Prudential-Bache Securities in New York.

"Although this may be a temporary situation, we need to rethink gold's historic role for the future."

A hard core of loyalists maintains that all the obituaries are unwarranted, or at least premature.

They say gold retains its time-honored status as a store of value - in effect, an international promise to pay that can't be broken by politicians or anybody else with the power to devalue currencies or default on debt.

"It constitutes a unique hedge against the world monetary establishment," says James Grant in the current edition of his newsletter Grant's Interest Rate Observer.

But even the "gold bugs" generally concede that the evidence on the market charts of late has been running against them.

While the price of oil has surged this year, for instance, gold has remained stuck between $350 an ounce and $400 an ounce, hovering lately in the middle of that narrow range.

That is less than half the peak of about $875 it reached in early 1980, the last time soaring oil prices set off a worldwide economic scare.

One bank analyst helped to heat up the debate recently by proposing "a decent burial for gold." He and others argue, in part, that sophisticated modern investment products and strategies allow investors more appealing ways to seek a combination of safety and a return on their money.

They focus on a drawback long cited by gold's detractors: its inability to produce any current income in the form of dividends or interest.

In fact, the effective "yield" on direct investments in gold is often negative, when costs of such things as storage, security and sales taxes are taken into account.

That consideration is especially important these days, analysts say, because current levels of interest rates produce generous "real" returns above the inflation rate.

A decade ago, when gold was hot, nominal interest rates ran well into double digits, but they were close to zero after subtracting for inflation.

Furthermore, points out the Value Line Investment Survey, "in contrast to 10 years ago, most world debt is floating rate rather than fixed rate. This means that interest rates will adjust quickly to changes in the rate of inflation, reducing the value of gold as a hedge."

Maybe so, says Grant, but trust in paper investments based on credit may well be tested further in the future.

His closing argument: "When the world decides to renounce its search for the highest available interest rate, and to search instead for the lowest available risk, it may remember gold."