All that glitters….Is gold the most obvious buy in the market?

Gold has been one of the worst investments anyone could have made over the last four years.

Fuelled by central bank buying and a weak dollar, the world’s oldest store of value rocketed after the crisis in 2008 as investors, fearing the end of the financial world as we knew it, reverted to real assets to protect their wealth.

However, the tables turned in 2012 after the European Central Bank – lagging behind peers which had already launched numerous rescue plans – committed to saving the eurozone project, restoring faith in the single currency.

The clear signal that everything was (and indeed still is) being done to boost growth and generate some inflation has been a disaster for gold, its price near halving from a record peak above $1,900 to its current level of $1,070, a six-year low.

Everyone has exited en masse, and a survey of investors by Legg Mason at the turn of the year found that the average UK investor had just 2% of their portfolio invested in the asset class.

Only other commodities such as oil can top gold when it comes to losses in recent years, and with the US Federal Reserve set to raise rates in December – and thus boost the attractiveness of the dollar – gold could fall further still.

For financial trawlers like me who enjoy hunting out beaten-up opportunities, gold does look tempting. After all, the eurozone crisis certainly has the potential to flare up again, while economic growth globally has been fuelled by money-printing – a scenario which is ultimately expected to lead to inflation.

Inflation has historically been a friend to gold, and therefore with these factors lurking in the background, and the price so low, it certainly makes sense to consider gold.

However – and this is unusual for me – I’ve held back from buying. Why have I shown restraint? Partly because of a belief that inflation could well remain subdued for quite a while, and partly because the dollar shows no signs of weakening.

Stephen Jones, chief investment officer at Kames Capital, has been bearish on gold throughout 2015 for this very reason, and it is hard to argue that the safe haven asset is going to surge once more until inflation does return.

I’m not ready to commit to gold yet as I can’t see where inflation is going to come from, but nonetheless it is an asset class to keep monitoring, as 2016 could well be the year to get back into that most precious of metals.