You can teach an old dog new tricks, or at least an old dog with an open mind, some understanding of markets and a desire to make money.

As an investment, I think gold has no fundamental underpinnings. I have written about my dislike of the shiny dirt as a means of investment and there are many reasons why I reckon it is still a dog. Here is my take on gold from a few years ago 

That said, even dirty dogs can get cheap and present a trading opportunity.

And so it appears with gold.

In July 2011, gold reached a record high of US$1,835 an ounce. It was a stunning rally from levels below US$300 an ounce around 2002. There was something of a herd mentality as the global economy teetered in the bring of a depression, interest rates were cut to zero, house prices collapsed and stock markets went into free-fall. “Buy gold” was the cry.

Since that peak, it has been a steady run lower – it ended 2016 at US$1,152 an ounce having bobbled lower for 5 years. That’s a loss of more than 30 per cent from the peak, plus the cost of carry.

But now is the time to look for something that is cheap, that people like to buy – like Barbie dolls in their original box as another example where fundamentals mean little. I have no well-founded reason to put on the trade – there is still a staggering glut of gold held at central banks and in socks and undies drawers around the world.

It’s frankly a hunch. The vibe.

So the trade is long gold, fully hedge on currency, at US$1,152. Cost of carry 2 per cent per annum. So a 12 month break even is around US$1,176 an ounce.

There is a 15 per cent stop (US$990 an ounce). I don’t really have a target but will be watching it closely, like all trades, and will look to cash in some time during 2017 – or even beyond if there is a tidy 20 per cent (or more) gain.