The recent decline in the gold price and better-than-expected recovery in the US has led some investors to predict a turn in the gold cycle, which would break a 12-year run of gains for the precious metal.
"If you believe today's gold price is the manifestation of an anticipated reversion to the gold standard and collapse of fiat money, then continue to ready the vaults," he said.
However, if major disinflationary threats have receded, and the world enters a prolonged period of weak growth in which most major currencies are due to devalue against the dollar then gold should be far less attractive, Smith added.
Robin Hepworth, CIO at Ecclesiastical Investment Management, ditched all his gold holdings last November following the Bank of England's decision not to expand its quantitative easing programme.
"Gold prices have to a large extent discounted worries about a potential breakup of the eurozone and indefinite money printing by central banks, as well as the spectre of subsequent inflation," he said.
"Although these risks have not been eliminated completely, the overall financial environment and gold's significant past price appreciation do not justify maintaining a holding."
However, Angelos Damaskos, chief executive of Sector Investment Managers, said the consensus of lower gold prices in the years ahead fails to recognise the world's economic prospects have deteriorated in the last 12 months, and instability in the currency markets persists.
"The competitive devaluation of currencies is set to continue, prompting investors to seek the safety of alternatives, notably gold," he said.
Gold spot price
This article was first published on Investment Week