Why it's not such bad news that gold was a terrible investment this year

12 straight years of growth came to an end for gold this year.

Today, the yellow metal fell one per cent in trading, and it's heading for its biggest annual loss in 32 years - a drop of almost 30 per cent.

A growing appetite for risk, and the prospect of a global recovery and stabilising growth in 2014 have seen investors desert the long-assumed safe asset.

Most recently, prices were hit by the US Fed's decision to begin tapering, which upped the opportunity cost of holding the non-yielding asset.

But whilst this isn't great news for gold bugs, it does demonstrate that government responses to the economic crisis are fulfilling conventional economic understanding, and trust is returning.

Rather than ending up with hyperinflation, with gold prices rocketing skywards, prices have been pushed down.

And, although quantitative easing could have diluted the dollar, over the past decade, the Dollar Index has decreased only 8.7 per cent.

Gold's calamitous year means 'panic' mode is on the way out. Investors are trusting paper again - gold's tangibility is no longer so important.

Gold is currently trading at $1,202.5, down 0.96 per cent.