Gold Bugs: Don’t Get Too Excited

After looking dull for years, gold is finally sparkling again. With the market in convulsions, and Fed Chair Janet Yellen broaching the possibility of negative interest rates, the yellow metal is up over 14% in the few short weeks of 2016.

Hey, I get it. People are scared. And justifiably so.

Frankly, I’m a little scared about where all of this is going.

But before you run out and fill up the trunk of your car with precious metals (and maybe some canned goods and ammo), let’s look at gold with a cold, analytical eye.

Gold isn’t so much an investment as it is an emotional ideology. Being a “gold bug” isn’t just a matter of passionately believing in the investment merits of gold. It’s an identity, and an extreme one at that. It reminds me of a radical political movement or even a religious cult.

Investors already have an odd way of developing feelings for the assets they buy, and not just gold. Even if you insult a man’s stocks, you might as well be insulting his wife or mother. A weird possession takes hold.

But with gold, the attachment goes deeper. There is a fundamental belief that gold is the “one true store of value” or the “one true currency,” and that all imposters are heretical.

Don’t be that guy. I’ve met him. He’s a buzzkill at parties and way too intense.

But I digress.

Let’s strip away all the ideology and try to look at gold on its own merits. I would argue that the “barbarous relic” does indeed have its uses but that it’s still