The gold price is down more than 20 per cent year-to-date, and almost 30 per cent since it reached its peak of more than $1,920 in late 2011. Bullion is valued at $1,227 at the time of writing. Cockerill (pictured), head of research at Rowan Dartington, fears that this is just the beginning of the sell-off in gold, and expects formerly bullish investors to make a swift exit.
Rather than being a "safe haven", as it has been touted in the past, he thinks it is one of the riskiest assets available right now.
"I’m sticking my neck out a bit here, which I don’t usually do, but I think the gold story is probably over," he said.
"What really concerns me is to see who the really big holders are, as most in the top-10 are ETFs. The problem I see is that when people realise that gold hasn’t done so well, you could see very significant selling because they are so readily available."
Performance of gold over 2yrs
Source: FE Analytics
"The gold price goes up only when one person says they are willing to buy it for more than it is worth today. It has no intrinsic value, pays no income and does not have a lot of industrial use. With sentiment shifting, and the ETF market [as big as it is], it’s a real danger."
Among the largest gold ETFs are SSGA SPDR Gold Share, which at the end of last year was worth $72bn. Other notable players in the UK include the $9.3bn iShares Gold Trust and the $5.7bn ETFS Gold Bullion Securities fund.
Cockerill says a significant catastrophe – whether economic, social or natural – could see sentiment change in favour of gold, but adds that the chances of one in the first category have subsided.
"I think the days of there being big worries over an economic catastrophe have passed us by for now," he continued.
"The US economy is getting stronger along with the US dollar, which is never good for gold. I can see investors starting to lose interest."
Gold has been one of the best-performing asset classes of the last decade, with the price rising almost 300 per cent in spite of the recent sell-off.
Performance of gold over 10yrs
Source: FE Analytics
However, in the past, significant sell-offs like the one seen recently have been followed by significant bear markets.
"Gold priced in sterling has now dropped 24.5 per cent from where it stood three months ago," said Adrian Ash, head of research at BullionVault.
"That’s a remarkable and painful drop for investors seeking financial protection."
"In the last 45 years, we have only had three occasions where gold prices fell harder – in summer 1974, spring 1980 and early 1981."
"The last two of those three periods marked the early stages of gold's long-term bear market, which continued for two decades as the 1970s’ inflation receded and bond markets rose with equities. It culminated with Gordon Brown's infamous UK gold sales of 1999 to 2002."
Unlike Cockerill, Ash advises holders of gold not to exit just yet, because history points to a short-term bounce in the price.
"Whether or not this plunge marks a similar stage for a similar long-term decline, selling at today’s current levels doesn't look wise for UK investors," he said.
"The historical odds point to a sharp bounce ahead. Since April 1968, there have been 15 rolling three-month periods where gold in sterling has lost 24 per cent or more. After each of these three-month periods, gold prices rose again over the next three months, resulting in an average 20.7 per cent increase for UK investors."
