As the great debate over inflation rages on, commodity prices have surged. With that in mind, one precious metal seems to be sitting out on this major melt-up. CNBC’s Seema Mody sat in as host on “ETF Edge” to discuss the state of gold with ETF Trends CEO Tom Lydon.

Lydon makes a couple of key distinctions. First, investors do not need gold currently, especially compared to everything else needed, such as base metals, oil, and gas. Things like agriculture, corn, and wheat, are key to what’s going on right now.

“We have problems in the pipeline,” Lydon explains. “Things are not arriving on time. So, it’s a demand issue for sure. And, we’re also in a situation where people are increasing prices. We’re seeing that at the supermarket and at the pumps.”

Those factors don’t sit well for gold. Gold has been flat this year. The largest commodity fund, the Invesco Optimum Yield Diversified Commodities Fund (PDBC), is up over 27% this year, stressing the lack of action going on when it comes to gold.

One also has to consider Bitcoin, which Lydon believes may have taken some of the luster out of gold.

Can Gold Rally?

Meanwhile, Andrew McOrmond, managing director of Wallachbeth Capital, chimed in to note how gold has caught a little bit of a rally in the last two weeks, which has been somewhat in lockstep with the correction with cryptocurrencies. Institutional investors getting may be getting their first taste of a 50% correction.

In looking at these extremes, cryptocurrency arguments seem to weaken when they are down and strengthen when things are good. On the other hand, when gold rallies, the concern becomes whether not it’s an inflation hedge. But when gold is down, people think it may be time to suddenly go after a precious metal that’s been around for decades.

Lydon agrees that there’s always been demand for gold. It makes sense as a means of diversifying a portfolio. That said, he notes how there’s a line around the block at the SEC with firms submitting applications for Bitcoin ETFs. If that happens, people will be able to buy Bitcoin and trade it through a brokerage account.

“That would be fantastic, and I think that’s going to be coming sometime soon,” Lydon states, with the knowledge that this would put pressure on gold.

For more market trends, visit ETF Trends.