This has been a tough period for gold sceptics. The price of gold has risen again to new heights - yet this does not obscure the dismal long-term performance of gold as an investment.
The flight to gold happens because it is seen as a 'safe haven' during times of economic turmoil.
It is not entirely without logic to recommend an investment outside the turbulent world of equities, currencies and bonds when the word 'toxic' is attached to their titles. Yet does it really make sense to buy gold at a time when it is more expensive than at any other period in history?
Let's look at the time the gold frenzy drove the price to US$850 per ounce in 1980. That record was very short-lived and indeed has yet to be exceeded in inflation-adjusted terms. Although the nominal gold price is at record levels, if inflation is taken into account, gold remains something like 25 per cent 'cheaper' than it was in 1980. Gold bulls take this as a sign the price still has room to rise.
It's worth emphasising that even when the price of gold climbs to new highs, it's still extremely volatile. The experience of the last century shows those highs are hard to maintain.
This became evident in 2008, following the collapse of Lehman Brothers, when gold again burst into the limelight and the nominal record price set then was accompanied by an equally big fall. But this time, despite setbacks, especially in 2009, the overall trend of the gold market has been upwards to today's dizzying levels.