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. However, for investors who are interested in the real long-term value of their assets, it might be instructive to consider research contained in Morningstar's authoritative Stocks, Bonds, Bills and Inflation yearbook. This year's edition covers the period 1926 to 2010 (and therefore doesn't show the more recent rise in the gold price). What it does show is that, without fail, large-cap stocks have outperformed all other asset classes by a wide margin for the entire period since the 1950s. This is an inflation-adjusted study that considers total returns - in the case of equities this includes dividend payments. The study shows that every US$1 invested in 1926 would be worth US$244 by the end of last year. Compare that with gold, which, in this 85-year long period, would have yielded a return of US$5.62. Long US government bonds are hardly more impressive, as their worth comes out at US$6.88, and T-bills are barely worth talking about because their value only inched up to US$1.68. As for cash, the dollar kept in cash from 1926 would only be worth 5 cents by the end of last year. Incidentally, other studies have shown that total returns for US small-cap stocks are even higher than those of the big caps. On the other side of the fence are arguments that gold - indeed, all precious metals - are investments that do not represent any other liability. They are, in other words, a 'pure' store of value and an asset with a finite source of supply. The gold buffs are also correct in stating that, in recent decades, even price falls from new peaks have tended to leave gold, and other precious metals, at higher levels than were seen previously. Less compelling as an argument, but not to be discounted, is the fact that precious metals are the only form of investment that can be employed for decorative purposes. A computer-generated printout of a share certificate has nothing like the lustre of a gold necklace. Moreover, there are clearly sound, opportunistic reasons to dabble in gold. The easiest way for individual investors to do this is via gold exchange-traded funds. The SPDR Gold Trust, the world's largest gold ETF, is listed in Hong Kong and easily accessible to local investors. All this raises the question of whether now is the time to invest in gold as it rejoices in its newly inflated price. Investors who really believe that a dabble in gold is better than the opportunities offered in bargain basement stocks of great companies with a consistent track record may be surprised by the result.