Gold ended the year 2003 at just over $400 per ounce. It crossed the $400 mark for the first time since February 1996.

Expectations are running high and the number of investors bullish on gold has grown dramatically over the last one year. But, is gold a good buy today?

The graph above brings out an interesting fact. The rally in the price of gold is largely due to the fact that the value of the US dollar has been declining in recent months. This is underscored by the fact that if one were to look at the price of gold in Euro terms, there has been little gain!

Notes Ajit Dayal, an analyst and fund manager, who had been advising people invest in gold about two-three years back at $280, "Gold has moved up in dollar terms, but if you look at gold in Euro terms it has risen barely 3 per cent per annum over the past 3 years."

We asked whether gold is still a lucrative investment option (in a one to three year timeframe) to Dr Marc Faber, a noted investment manager (who has been bullish on gold for several years now) and author of The Great Money Illusion -- The Confusion of the Confusions.

He said: "I think gold may come under some more profit-taking, as a dollar rebound may be unfolding."

In other words, gold prices may decline.

This may not come as good news to many who had almost got used to the idea that gold prices will rise further from here on.

Ajit Dayal, too seems to have changed his view on the asset. His take on the price of gold: "Gold prices will be a function of strong dollar or weak dollar. If the dollar falls further, gold will rise in dollar terms; if the dollar rises and reverses its recent losses, then gold will fall. My view is that the dollar $ will strengthen over the next few years; the fall of the dollar is behind us."

In effect, Dayal supports the view that gold may weaken in future.

And what about gold as an investment avenue on a timeframe greater than three years?

Faber is in favour of gold. "Gold is the only currency whose supply cannot be increased by an irresponsible government, whose sole purpose is to get reelected in order to continue to rob hard working people and abuse its power."

Dayal on the other hand is not a big supporter of gold now. "Many people believe that central banks around the world are printing money and encouraging inflationary trends. Maybe they are, but their job is not only price stability but also job creation and movement in the economy."

"When a business cycle is negative -- as it has been until recently -- it is the role of the central banks to create liquidity, cheap money, and get the economy to move again. They have achieved that. At a point in the cycle, they will raise interest rates and suck the excess liquidity out of the system; gold should not be a major portion of any portfolio," he says.

The final question that we put to these experts was whether there is any reason for people to invest or not invest in gold today.

Faber suggests, "Maybe other hard assets will perform better, such as real estate in Asia; or sugar, coffee and orange juice." Although he continues to be a long-term supporter of gold, currently he prefers other hard assets.

Dayal is not much of a believer in gold as an investment avenue.

"Gold is, in many instances, a useless asset for most people with all the risks of any investment; buy some gold for your wife to wear or for your kids to wear one day, but not more than that; in the Indian context the nuclear family is breaking up, if you have spare money, buy some property for your children which they can use one day or pay up the loans on your own home and make it yours."

So what should you do now?

Gold must have a place in every portfolio. And there are several reasons for the same. Our Asset Allocator recommends that 5 per cent of an individual's assets should be in gold.

If you are overweight on gold, it may be time to get your asset allocation in line. And if you are yet to reach your portfolio limit for gold, maybe you should wait for a while till gold prices correct before buying some more.