NEW YORK (CNN/Money) - Gold was flying high and your portfolio was barely moving. You were this close to getting in but figured it was too late. Now prices have pulled back and you're wondering if this is your chance.

Amid war concerns, a falling dollar and weak stocks, investors have been pouring money into gold and gold shares.

Gold hit a 6-year high of $385 an ounce in London earlier this week, but had fallen to $369 an ounce by late Friday afternoon.

But if these scary times have you dying to get into gold, you may be setting yourself up for some disappointment.

"If you're looking to buy gold right now because you're betting on the war premium, don't," said Thomas Winmill, the manager of the $54 million Midas gold fund, which is up 33 percent over the past 12 months.

Stocks have fallen for three years running. The economy is still struggling to break out of a recession. Add to that the threat of terrorism and the potential for war with Iraq or even North Korea and it's not surprising investors are feeling jittery. So jittery in fact, they've been dumping money into the so-called safer haven of commodities.

Amid this climate, the price of gold is trading near historic highs, with investors still eager to buy gold products like jewelry, and put money into a sector of the market that is seen as relatively low risk.

Hot Rocks Top performing gold stocks Company  Ticker  1-yr. return  Anglogold  AU  34.25%  Newmont Mining  NEW  28.72%  Royal Gold  RGLD  26.74%  Lihir Gold  LIHRY  18.02%  Meridian Gold  MDG  16.33%

Winmill says a long-term rise in gold has less to do with the current war focus and is more a response to the extremely low interest rate environment, the falling dollar and weak equities.

Due to the nature of how the gold market functions, when interest rates are lower, borrowing costs for gold producers are lower and prices can rise.

The weak earnings and corporate governance concerns that have plagued equities since the end of the bull market also make the commodity seem more attractive right now.

The "war" effect on gold right now stems from nervous investors who want to put money into something that feels safer than stocks, something that will remain stable even if the country should go to war.

War fears also tend to pressure the U.S. currency, which helps gold prices.

A weak dollar helps the price of gold, Midas' funds Winmill said, as it makes gold and gold products cheaper to buy in major gold-consuming countries like India, which then pushes the price up overall.

There is some war premium or terrorist premium built in to the price right now, but there have been occasions over the last decade where short-term rallies in gold have petered out after worries about war or a terrorist crisis get resolved, said Larry Krauss, a metals analyst at Griffiths, McBurney & Partners.

Gold funds on fire Fund  Ticker  1-year return  First Eagle Gold  SGGDX  65.5%  Van Eck Int'l Investors Gold  INIVX  52.4%  Tocqueville Gold  TGLDX  45.4%  American Century Global Gold  BGEIX  39.5%  Fidelity Select Gold  FSAGX  37.6%   *Returns through Feb. 5, 2003  Source: Morningstar, Inc.

For example, gold prices rallied more than $40 in the two months leading up to the start of the Persian Gulf war, going from an average trading price of $352.33 in June 1990 to an average of $394.73 in August 1990 amid the Iraqi invasion of Kuwait and the start of the war. It remained in a range near those highs for another 2 months, but started to slide as the war effort was winding down. By March 1991, when Iraq accepted a cease-fire, prices were trading back down at an average of $363.33.

If war is suddenly declared or some sort of military action taken, you'll see gold prices surge a lot higher on the action. Similarly, if peace or some other resolution happens, you'll see prices fall.

But, the gains based on the war premium are extremely short-term, Krauss added. If investors want to go into the metal right now, they should be aware it will be very choppy for a while.

Historically, gold has been very volatile, Midas Funds' Winmill said, and investors should only have a small portion of it in a balanced portfolio. Most financial planners suggest not committing more than 5 percent of your portfolio to gold.

Mutual funds First Eagle Gold, Monterey OCM Gold (MNTGX: Research, Estimates), Gabelli Gold (GOLDX: Research, Estimates), and Van Eck International Investors are all up at least 50 percent in the last 12 months.

Smaller stocks, like Glamis Gold (GLG: Research, Estimates) and Ashanti Goldfields (ASL: Research, Estimates) are at six and four-year highs, respectfully

In terms of individual stock investing, smaller names like Glamis may have already peaked in the current rush, Winmill said, but there's room for bigger gains with some of the older, more prominent names. His favorite stock in the sector is Meridian Gold (MDG: Research, Estimates), which he says is well managed and will still do well, even if the tide of gold changes. It is his fund's top holding.

He considers Newmont Mining (NEM: Research, Estimates) and Barrick Gold (ABX: Research, Estimates) staples in gold investing. He also really likes two smaller firms, Randgold Resources (GOLD: Research, Estimates), which trades in the U.S. and a Norwegian company called Kenor, which doesn't trade in the U.S.

Meridian Gold is the 5th-best performing gold stock over the last 12 months, while Newmont is the 2nd best performer. (For a list of the top 10 gold stocks and gold mutual funds, see the charts.)

For the short-term, the gold "bull market" should continue, Midas Funds' Winmill said, provided interest rates stay low and the dollar remains under pressure. "For now," he said, "the stars and moons are lining up for gold."