Gold has fallen further from favour. Credit ratings agency Moody's has warned several Canadian miners are in danger of having their credit rating downgraded thanks to the plummeting price of gold.
The value of gold has been on a steady decline since August 2012, when the price peaked at $1,775 an ounce. The previous summer it had hit a 20-year high of $1,838 but now languishes at $1,228 - a significant slice off the top.
If you had been clever enough to snap up gold exposure after the dot-com bubble burst in 2000 - when gold was valued at around $270 an ounce and sell up 12 years later, you would probably be able to retire.
Certainly the gold funds that invest in mining and gold related shares saw similar returns. Evy Hambro's BlackRock Gold and General fund (Morningstar analyst Gold Rated), and the World Mining Trust (BRMW) had stellar runs. An investment in Gold and General at the turn of the century would be worth 365% more by September 2011.
But along with the gold price, gold funds have lost huge proportions of the their value over the past 12 months.
CF Ruffer Baker Steel Gold has averaged losses of nearly 40% a year for the last three years.
Gold-related shares have disconnected entirely from other equities, which have experienced a significant rally over the past 18 months. Gold has just has its worst year for 30 years, so it is hardly surprising that gold funds, which are intrinsically linked to the gold price, have also fared poorly. What is worrying however is that when the gold price bounced last summer - moving from $1,256 in June to £1,381 in August, gold funds did not experience a similar uplift.
It is not just specialist funds that have lost out because of the fall in the gold price. Sebastian Lyon's Personal Assets Trust (PNL) lost 10% of its value last year thanks to its exposure to cash and gold.
Frederick G. Fromm from Franklin Templeton said that 2013 was a year of transition for the natural resources sector as commodity-related markets sought balance in an environment of slower global economic growth and growing supply for several key raw materials.
But he is more optimistic about this year.
“Looking to 2014, we have been tracking several trends we believe could translate into the potential for attractive equity performance for investors in the natural resources sector,” he said. “We think an improving global economic outlook has set the stage for potentially stronger commodity demand, particularly from the US and Europe, which have had little, and in some cases a negative, influence on commodity markets in the recent past.
"Although supplies have been expanding for some commodities, production disruptions and curtailments may help limit the impact on commodity prices, while what we think could be stronger-than-expected demand could absorb some additional capacity, as was the case for some commodities in 2013.”
Stephen Cohen, Chief Investment Strategist for iShares EMEA said that although it was unlikely, if Europe’s sentiment led recovery fades and there is an emerging market funding crunch as liquidity is withdrawn, gold could provide a good hedge.
"Minimum volatility equities could offer cushioned access to global equities in a risk off scenario," he said. "And hold could provide a crisis hedge despite a challenging 2013 for the metal so far."
Mark Dampier of Hargreaves Lansdown said that investors should not give up on the asset class.
"Investors should hold their nerve, I have some exposure gold mining shares and I am not considering selling," he said.
Gold was the worst performing sector of 2013, triggering some speculation that it could be a good time to buy the asset. But Dampier - among others - says that the price could fall further.
"While it is impossible to time the market accurately, I am waiting for a trigger before I buy gold," he said. "At the moment sentiment is positive, so I would advise investors against rushing in. Many economists have become bullish on the UK economy, but I worry there are many problems bubbling under the surface.
"We still have a lot of national debt, banks are still deleveraging and the Government could roll out harsher austerity measures. Positive economic news pushes down the gold price, negative sentiment often means a bounce."
The graphic in this article was generated by the free Fund Compare tool
