Gold took a bath last week. It’s not supposed to work that way.

The precious metal has always been viewed as a safe haven in this world, a place to hide financial assets during political upset, wars or economic catastrophy. You can imagine the scenarios.

The Japanese stock market collapses and folks rush to the world’s storehouse of wealth before everything trickles down. I’ve read a lot about how gold should go up when Japan finally comes down.

In the political arena, imagine the Soviets on the brink of economic chaos and at war with their own people. Or maybe a few high-tech weapons find their way into the wrong hands. Once again, gold would go up.

Then, too, a banking crisis could hit the West with banks becoming insolvent and gold going for the stratosphere.

All are — or rather were — remote possibilities that would surely send gold to record prices. But that’s not how it worked last week.

Gold plunged to $366 on Monday, a loss of more than $23 in a matter of moments.

The problems were all there: western banks, eastern conflict, nuclear triggers and the Tokyo Nikkei. All the right things went wrong, and yet gold still went down.

The reasons? A Middle East oil producer sold three million ounces of the metal to raise a little cash for domestic purposes at home. Buyers, as well, were a little short of cash.

The bottom line is that gold again went down, not up and continued the trend that has prevailed since the $880 peak in the early 1980s. Surely, many investors have been burned in that time.

My own feeling is that the market — that’s us — has finally recognized that turmoil is indeed bullish for gold over the longer haul of years, but not over months. For the short term, these same problems tend to be deflationary in nature, which means the price goes down.

Gold sales to service debts by individuals or to service social programs or debt by countries often create an abundance of supply that forces the price lower.

Short term then, it seems the very things that are bullish in price over the long term are today technically forcing gold to go down in price. That’s only an opinion of course because no one knows the future price of anything.

Especially the stock market. Best bets a week ago ran to either a big plunge or a record rally for last week. Again, all were sadly disappointed.

Stocks waffled sideways to a three point gain to 2702.21 on the Dow. This was a respectable showing considering the continued slide in the Japanese market.

If there is a reason for this, it would be two-fold. One is that everyone is so negative about stocks that it’s time for a good rally.

The other is the surprising strength of the economy. Overall, GNP for the final quarter of 1989 was again revised upward to a 1.1% rate from the 0.9% expected. It’s slow, but it’s not down.

Neither are some of the current indicators. New home sales rose 3.1% in February and factory orders rose 1.8%. There may be a recession out there somewhere, but this is not it.

That’s why the betting half of the Street thinks odds are better than 50-50 the Dow can soar to a new high beyond the 2810.15 of January of this year.