Gold prices rose again last week on news of the downing of Malaysia Air Flight MH17, the latest in a series of geopolitical shocks that have sent the price of the precious metal up this year.
The price of gold rose 4 percent in the year preceding July 17. On news that the airliner had been shot down over Ukraine, it rose 1.2 percent, to $1,315 per ounce, according to Morningstar data based on the London Fix. (It's since fallen a little as investors have started taking profits.)
The volatility is a sign of the most fundamental fact about gold. It is possibly the most emotionally-driven asset class: the refuge of apocalyptic worriers, as well as of serious traders who look at it as a portfolio diversifier and alternative to paper currency.
"You cannot discount the psychosis that exists around gold," said Ben Johnson, Chicago-based Morningstar's director of manager research for passive strategies. "We call it the oldest continuous 2,000-year-old investment bubble around here."
Ray Olson Jr., a financial advisor in Midlothian, Virginia, said he fields regular inquiries about investing in gold and tries to dissuade his clients. "The problem is when they want to invest in gold is usually the worst time to invest in gold," he said.