Volatility indexes are replacing gold as the favorite way to hedge risk, some experts say.

"As the world becomes more virtual, the value of a physical commodity as a store of value or hedge against turmoil is falling," Scott Nations, CEO of Nations Shares, told CNBC.

"Here in the U.S., volatility indices like the VIX are now really where people are looking if they want some sort of 'Armageddon trade.'"

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Investors fearing economic calamity or inflation have long turned to gold. Yet some observers argue that gold failed to fulfill its role as a safe haven asset. During the two-week long government shutdown, when one would have expected gold to skyrocket, it actually fell 3.35 percent.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) may be emerging as an alternative for hedging against downturns. The VIX, also called the "fear index," is inversely correlated to the Standard & Poor's 500 index, rising when stocks fall.

A strong rise in trading volume on the VIX indicates its rising popularity as a hedging tool, Nations explained, noting that 1.78 million VIX options traded on Oct. 8 and 1.24 million VIX options traded Wednesday, while the 30-day average volume is 600,000.

Vishnu Varathan, senior economist at Mizhuo Bank, thinks gold falls short as a safe haven. "By definition, an asset with a speculative element cannot be an unadulterated safe haven, especially if that speculation is positively correlated to risk appetite," he told CNBC.

But the VIX isn't perfect either, as it is linked strictly to the S&P 500, he noted. Emerging markets or the eurozone may sink in a crisis, but leave the S&P 500 relatively unscathed. For that reason, the CBOE index is not the best measure of global risk.

Other analysts still think gold is a good safe-haven investment.

Gold is being questioned as a safe have because its price didn't jump as much during the shutdown as it did during the last debt ceiling crisis two years ago.

"The difference is people were fearful then and are not now," Matt Grossman, senior equity strategist at T3Live.com, told CNBC.

"I don’t think you can describe something as volatile as gold as really a safe haven," United States Commodity Funds Chief Investment Officer John Hyland told IndexUniverse.com. "Something that can rise and fall 30 to 40 percent in a fairly typical year I would describe more like an option."

Determining gold's fair market value and predicting its price is extremely difficult, he added.

"All I know is that if I’m buying my wife jewelry, the price always seems too high."

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