Rumours of the demise of gold have been exaggerated so often in recent years that seizing on its recent slump smacks of recklessness. Taken at face value, its price drop is hardly catastrophic. Gold is down a little more than 16 per cent from the all-time nominal high it reached in September; it remains up nearly 12 per cent year-to-date. That may be less than it delivered in 2008 and 2009, when it rose 25 per cent and 29 per cent, respectively. But it beats nearly any broad equity or fixed income index over one or three years, with the notable exception of US Treasuries.

There is more to gold’s stumble than the fact that it is merely a good rather than amazing investment of late. Decade-long bull markets spark heavy turnover and much gold has not only changed hands but changed forms from physical to financial. Actual bullion backs the exchange traded funds that appeared on the scene a decade ago and they are held by many who do not wish, or are not able, to store gold privately. At about 2,000 tonnes, ETF’s have grown to multiples of yearly coin and bar demand from nothing.

Asset growth in these ETFs has been decelerating for months. What is more, gold’s behaviour relative to other investments has shifted. Its correlation with equities, which was negative during some of the scariest episodes of recent years, has turned positive lately. That has happened before, but previous episodes coincided with announcements of US quantitative easing as equities rallied and demand for inflation protection was at a premium. Gold had also typically rallied when sovereign default fears rose. That role has been filled in part by haven currencies, making gold move more in line with stock markets.