Germans will soon be able to buy gold in vending machines across the country the same way most people purchase a chocolate bar or a soda. That’s not the sort of bullish development that’s conducive to new highs for the gold market – at least not for now.

Germans, however, don’t trust paper money and have a long-term relationship with gold stemming from the collapse of the economy under the Weimar Republic in the 1920s. During that decade, hyper-inflation crippled the German economy – compounded by expensive and unrealistic war reparations dictated by the Treaty of Versailles.

In addition to plunging jewelry demand since last fall in India, the latest news out of Germany to install “Gold to Go” vending machines casts a dark cloud on the short-term trend for the yellow metal. Though I remain an unfettered bull, too many people are coming aboard for the ride lately as inflation fears rise, government’s struggle to auction their debt financing and gold stocks skyrocket since October.

When too many investors join the same trade then the cliff isn’t far away. That’s exactly what’s happening now in the gold market as investors obsess with inflation fears.

The transition from a protracted cycle of debt destruction (since late 2007) to a period of rapidly rising inflation won’t happen overnight; deflation has already engulfed the economy with most companies reducing pricing, cutting employment and domestic consumption still tepid at best. The big picture remains a banking system that’s largely insolvent and still unwilling to lend amid a glut of toxic assets still sitting on their balance sheets. It’s a big mistake to believe deflation has left town this quickly.

In Germany, “Gold to Go” is a new project whereby vending machines will be installed across 500 locations, including train stations. Investors can purchase small increments of gold the same way they purchase a CD or an iPod. In Frankfurt airport, a dispenser now sells 1 gram gold wafers starting at EUR 30 ($42). I’ll be traveling through Frankfurt in two weeks and plan on buying a few grams along with my favorite German Ritter chocolate bar. Talk about convenient!

Gold, like most commodities, has already posted big gains since early March. Consequently, the dollar has been blasted and is now oversold. Combined with the traditional summer doldrums for commodities the odds favor a correction for raw materials, including gold. This view is consistent with deflation fears returning this summer following a big stock market rally off the March 9 lows and a bludgeoned Treasury bond market.

A decline in gold prices should be viewed as another opportunity to accumulate the metal. This bull market is soon entering its final phase whereby the gains will be enormous – probably north of $2,000 an ounce. But for now, gold is too popular and needs to correct lower. When entrepreneurs are selling gold in vending machines, it’s time for a pause.