Gold hit a record high of around $2,500 per ounce, when measured in 2008 dollars and adjusted for inflation, compared to its level of around $1,700 now when measured on the same basis, Cheviot says in a note by Ned Naylor-Leyland, a portfolio advisor.

Fears that central banks have printed vast amounts of fresh money, coupled with supply constraints on gold and its attractions as a safe-haven asset, conspire to make this a still attractive asset, Mr Naylor-Leyland says.

“In the current environment, a 'currency' that isn’t subject to the behaviour of governments or their printing presses, and is no-one else’s liability, merits a great deal more focus from the overall investment community,” he said.

“Should inflation hit the real economy or people perceive it as being inevitable, then investment demand at the individual and governmental level will likely expand significantly as increased velocity of money would traditionally see investors switching their cash for tangible assets of all types,” he said.

There remains debate on how much diversification gold can bring to a portfolio – in the short term, gold prices can move in step with equities, for example, as happened in the summer of 2007 when investors sold gold to pay for higher margin requirements.