While gold has dropped 34 percent from its September 2011 record high, some experts say it has a good chance to rebound.

Spot gold traded at $1,272 an ounce Wednesday morning, down from the all-time peak of $1,921.

Gold bulls say it represents a solid hedge against inflation, a weaker dollar and political and/or financial turmoil, The Wall Street Journal reports.

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"People have been second-guessing gold as a hedge," Chris Hyzy, chief investment officer of Bank of America's U.S. Trust, tells the paper. He thinks investors should have a gold allocation. But he cautions: "you have to take a very long view if you're a buyer or owner of gold today."

Gold also provides diversification for your portfolio, experts point out. "Historically, the price of gold has hardly had any correlation with the price of other investment categories," Jeffrey Nichols, managing director of American Precious Metals Advisors, adds.

"Because of this, it provides an insurance policy against systemic and other risks that might affect [the majority of] your investments and savings."

Nichols sees strong Asian demand and steady to falling supply pushing gold higher in coming years. "In the next three to five years, we'll see gold well above its historic high," he predicts.

Gold advocates recommend allocating 5 to 10 percent of your investment portfolio to the precious metal, The Journal reports.

Ed Moy, chief strategist at Morgan Gold and former director of the U.S. Mint, is another gold bull.

Investors in the United States and Europe have abandoned gold in favor of stocks, as inflation has remained low and the Federal Reserve's quantitative easing (QE) has boosted equities, he tells Yahoo.

"That gold has been bought by record demand in Asia," including China and India, he explains.

"The demand for gold bars and gold coins is at its highest in history. That gets covered up by the fact that gold prices are down now."

Asians keep the gold they buy. "They pass it down from family member to family member," notes Moy, a Moneynews contributor.

"So with all that gold off the market in Asia, and with the gold prices as low as they are, there's going to be a supply crunch should there be increased demand in the West for gold."

Once the Fed exits QE, gold should move in tandem with the level of U.S. debt, which could mean such a demand increase will occur, Moy says.

Gold hit a one-month low Tuesday amid fear that the Federal Reserve will taper its quantitative easing soon.

"The sharp drop over the last few days is mostly a reaction to the [strong U.S.] jobs data last week," a Hong Kong precious metals trader tells Reuters.

"Before the report, markets were expecting a tapering only next year but after the data everyone started thinking it could be in December. If the tapering is going to be in December, [gold] prices are going to be much lower than current levels."

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