Gold prices are climbing to record highs, with some believing that gold could cross the $2,000 mark by next year. Why? In part, because some people believe the world will end when the Mayan calendar is set to end on Dec. 21, 2012.
“Gold has been a useful store of value for 6,500 years,” says Andrew Gause, who publishes the newsletter “The World of Money” and is author of The Secret World of Money. “Uncertainty causes people to see stable value, and gold provides that confidence.”
Among investors, there is a subset known as “gold bugs,” people who are particularly bullish about gold, even if many of them are bears about prospects for the world’s continuation.
The first “gold bugs” gained fame in the 1896 Presidential election, when supporters of William McKinley showed their support for the lustrous metal over what is called “bimetallism” – a monetary standard in which value is defined as equivalent to a certain quantity of gold or a certain quantity of silver.
Another story of the origin of the term dates back to 1843 with Edgar Allan Poe’s story “The Gold Bug.” This tale centered on a treasure map and the search for a bug thought to be made of pure gold.
Today’s gold bugs fall into two main categories: Those who promote gold as an investment, and those who think of gold as a monetary standard. You can believe one and not the other, but these days the lines between the two groups often blurs.
“There is confusion with gold bugs,” says Stephen Zarlenga, director of the American Monetary Institute, and author of The Lost Science of Money. “This is essentially confusing money with an investment. Gold can be a good investment at times, but if you look at it carefully you want something different from an investment from what you want from money.”