Gold has been described as an inflation hedge, with a long run real return of zero, says a new paper, The Golden Dilemma. Yet over short- and long-term investment horizons, the variation in the nominal and real returns of gold has not been driven by realized inflation.

In fact, the authors find the real price of gold is currently high compared to the past.

Read: Tough year for junior miners

The paper outlines several reasons people invest in gold, but suggests these reasons aren’t enough.

1. Gold is a currency hedge. The authors state this argument isn’t supported by data — the fluctuations in the real price of gold are much greater than foreign exchange rate changes.

Read: Commodity price index slumps

2. Gold is a safe haven. It’s not, say the authors. They examine data on hyperinflationary situations in both major and minor countries and find it’s possible for the purchasing power of gold to decline substantially during such periods. And when the price of gold is high in one country, it’s probably high in other countries.

3. Gold is underowned. The estimated value of all the world’s gold is about 9% of today’s stock and bond market capitalization. The authors say if we look at investable gold, the share is about 2%, and few investors hold that proportion. But a widespread move to increase gold in diversified portfolios would cause the nominal and real prices of gold to skyrocket. Thus, the metal wouldn’t necessarily be a good investment.

Read: Canadian equity stronger than it appears