Gold has symbolized wealth and financial security for centuries. But the precious metal isn't so precious anymore.
On Tuesday, gold tumbled to its lowest levels in almost six years--$337 an ounce--before moving back up to the $340 level. Since January, prices have ranged between $357 and $348, but in the past few days they have shown new signs of weakness.
The last time gold traded this low was June 24, 1986, when prices dropped to $342.09, said Fabian Joseph, who manages statistics at the New York Commodity Exchange.
To be sure, gold retains an underlying, globally accepted appeal, and its price may even rally somewhat in the immediate future. But the longer-term prognosis isn't considered good.
Tame inflation, increased investor sophistication and new investment alternatives in a global economy have made gold less attractive.
"The conditions of 20 to 30 years ago are not those of today," said Haskel Benishay, a professor at Northwestern University's J. L. Kellogg Graduate School of Management. "Then it was a good thing to have gold. Now there is nothing in it but the glory."
Unlike bonds, certificates of deposit and even some special checking accounts, gold pays no interest.
When interest rates rise above inflation, many investors prefer to rely on the constant returns from safe, interest-bearing investments rather than bet on the direction of gold prices.
Gold was long considered a hedge against inflation and the investment of choice when political or economic disaster loomed. Moreover, investors have always found a certain comfort in owning a commodity recognized through history for its inherent value.
Earlier this century in Europe, for example, many people believed that gold was a more stable, reliable asset than paper money, which lost worth from uncontrollable inflation.
Americans were prohibited from owning gold in forms other than jewelry and coins from 1933 until 1974, and its price was set by the government.
In the 1970s, many Americans made their first acquaintance with gold investments.
In 1980, with double-digit inflation, the hostage crisis in Iran and the Soviet invasion of Afghanistan, gold prices jumped as high as $875, then softened when interest rates also climbed.
Today, with domestic inflation at only 3.1%, few people consider gold a hedge, Benishay said.