Global economic and political instability increases demand for gold, which is seen as a safe haven. I’m always amused the people who take it a little too far — the ones that truly believe the apocalypse coming and that gold will be the only thing with value. These people are also inclined to hoard weapons. I think the weapons are more useful, because if the apocalypse should come a la I Am Legend, the zombies or whatever are not going to want your gold.
15th century woodcut by Albrecht Durer*
Jon Nadler, a gold analyst with Kitco, agrees with me. He’s quoted in today’s Wall Street Journal:
But he said gold bugs who hoard gold to the exclusion of other assets, predicting prices will reach $4,000 or $5,000 an ounce, are missing the point. The financial system would have to break down for gold to rise to those levels. It would “mean complete ruin for everything you own,” he said, in which case “you’d better invest in lead, for bullets.”
*Interestingly, Durer trained as a goldsmith before devoting himself to art.
UPDATED TO ADD: How exciting! Someone at a gold forum posted a link to this. I’m pretty sure I’m the only zombie reference they have on that forum. Woot!