After recently watching so many courageous athletes give their all to the pursuit of Olympic gold, I simply must defend the honor of this legendary precious metal.

I think I actually spoke aloud to myself as I read this recent article by my Foolish colleague Nick Kapur. I have been vocal in my contention that this decline in gold prices is just another pause in a long-term secular bull market, while Nick cautions Fools to stay away from the metal.

Here at the Fool, we welcome such differences of opinion, since the discussions that result are not only entertaining but uniquely beneficial for investors.

In a nutshell, Nick cites a study by Merrill Lynch strategists, who suggest that gold has been the worst-performing asset class over various periods during the past 40 years. He adds that "short-term, return-chasing investing is precisely what is driving this modern-day gold rush, and that is exactly why you should be looking elsewhere."

What is driving the gold rush?
Although I don't call myself a goldbug, I nonetheless have been bullish on the yellow stuff for some time. Ask any veteran gold investor why they hold the metal, and responses will likely revolve around the state of the U.S. dollar and the prospects for rising inflation. Given time, they will surely point to the deep well of history: the gold standard that once backed the greenback, the creation of the Federal Reserve in 1913, and the Nixon shock in 1971 that completed the dollar's conversion to a fiat currency. The modern-day gold rush has deep roots, and I believe many of those "return-chasing investors" are simply the latest to catch on.

All that glitters is gold
There are a couple of things to keep in mind regarding Nick's suggestion that investors avoid gold. First, the study is backward-looking, which doesn't necessarily do today's investor much good. Second, while the study does show gold to be an underperformer over several decade-long intervals, it ignores that since the beginning of the modern gold era in January 1971 -- around the time when Nixon declared that foreign central banks could no longer redeem their dollar holdings for gold -- the precious metal has actually outperformed the S&P 500.

Mining for profitable miners
Investors look to miners for supposed leverage to price gains in gold, but with rising costs from inflation, geopolitical risks, equipment shortfalls, and countless additional challenges, bullion has outperformed one gold mining stock index by more than 40 percentage points over the past two years. Bullion ETFs like SPDR Gold Shares (NYSE:GLD) make investing in bullion easy.

With the accelerated rise in gold prices that began this bull market cycle in 2001, long-term investors have endured excruciating peaks and valleys while waiting for that theoretical leverage to take shape. I suspect the lion's share of return-chasers were chased right out of gold shares by recent declines in names like Agnico-Eagle (NYSE:AEM) and Yamana Gold (NYSE:AUY). Goldcorp (NYSE:GG) actually lost money in the second quarter. The road has been even harder for investors in junior miners like Jaguar Mining (NYSE:JAG) and Northgate Minerals (AMEX:NXG).

I agree with Nick that small-cap equities have a formidable record over the past 40 years, and that the stock pickers at Motley Fool Hidden Gems have a tremendous knack for finding the great ones early, but I couldn't let gold bashing go unanswered on my Foolish watch.

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Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Agnico-Eagle, Yamana Gold, and Northgate Minerals. The Motley Fool has a disclosure policy.