Gold is often seen as the ultimate safe haven investment, traditionally a store of value when all else fails, including cash created by governments which can have its real value rapidly eroded by inflation.
How has it held up since the start of the credit crunch? Since the beginning of August 2007 gold has moved in lockstep with the dollar-euro exchange rate, a quite obvious association as this is an indicator of dollar inflation fears relative to other currencies, which then feeds through into a dollar-priced inflation safe haven such as gold. Through this period, forty per cent of daily movements in the gold price can be explained in statistical terms by daily movements in the dollar-euro exchange rate, an incredibly high correlation for a single variable. Moreover this is a highly-leveraged relationship - for each daily percentage point shift in the dollar-euro exchange rate, the price of gold has shifted by 1.6 per cent on average. So in this sense, gold is doing what it should be doing.
But the yellow metal also has its own annual cycle, linked to festivals in the Indian subcontinent and the Far East, with the Hindu wedding seasons in particular dominating. The gold price traditionally declines from spring into a relatively subdued summer before spiking again from late summer into autumn as Indian jewellery fabricators start stocking up again.
And the way the cycle has played out this year raises questions about whether it is wise to jump into gold as a store of value right now. Many commentators think this is a good course of action, with some looking for gold to repeat the historic punch through $1000 per ounce it made in March this year compared to the current $870. But a clear story seems to have played out already with regard to the autumn price spike - Indian buyers of physical gold seemed happy to pile back in a few weeks ago when gold was around $750, but as financial markets have collapsed and investors have rushed to gold as well, this physical interest seems to have dried up. In short, gold now looks too expensive for its traditional end-of-year buyers, with investor demand cannibalising rather than augmenting jewellery demand.
So, if gold is unable to maintain a floor above $900 during what should be the period of maximum price-boosting physical demand even while stock markets collapse around the world, what could change that might send it higher again? Fresh dollar weakness in relation to other currencies is of course one answer, as the greenback has strengthened notably in recent weeks and must be holding gold back on this front. Yet whatever your views on the dollar's ultimate status as global reserve currency, it is likely to maintain this strength against other currencies in the near-term as the credit crunch has moved from being mostly an American problem to a global phenomenon. It is not the dollar getting hammered any more with each fresh bank bailout.
And as the global economy contracts, inflation fears should also subside - the oil price, a notable contributor to price rises in general over the past two years, is in retreat and employee wage bargaining power will evaporate as recession bites. Gold might already have had its day in the sun as far as this cycle goes.
