The appeal of gold
Survivalists and speculators see it as the ultimate safe haven, but buying too much can also be a trap.
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| Gold: the ultimate hedge? |
(Fortune) -- As far as I can tell, there are only three constituencies outside the mining or commodities-trading industries who have historically demonstrated consistent enthusiasm for acquiring gold: street pavers in heaven, leprechauns, and survivalists. I can't speak to the status of the first two, but the last are enjoying a tremendous boom in influence.
Concerns about the economy, international conflicts that could end in nasty ways, the speculative fever of the oil market, and the prospect of being lightly toasted by global warming have increasingly made worst-case-scenario planning seem less paranoid than practical.
This mainstreaming has happened so quickly that despite their preparation for nearly any terrifying scenario, survivalists recently found themselves in an unexpected place - the New York Times Style section - an indicator perhaps that being a survivalist is now officially fashionable. In fact, according to one of the experts quoted, survivalism is "experiencing its largest growth since the late 1970s."
And for those who remember the late 1970s, survivalism wasn't the only thing going up at the time. If you have any interest in precious metals, you may recall that period as the last time gold went up precipitously, setting a record high of $850 an ounce in January 1980. The intersection of the two is not a coincidence.
Both were in part triggered by the Soviet invasion of Afghanistan and concerns about the economy. In 1979 inflation was high, energy prices were high, unemployment was high, and global political instability was an ongoing source of anxiety.
Now it's 2008. Inflation is on the rise (unless you're averting your eyes and focusing only on "core inflation," as the Fed would have you do), energy prices are high, unemployment is going up, and political instability is an ongoing source of anxiety. Concurrently, survivalism is enjoying a revival, and after a horrendous performance during most of the '80s and '90s (dropping to around $264 an ounce in 2000), gold has once again shot up, reaching a record high of $1,030.80 on March 17.
As the survivalist instinct rises in all of us, it's worth asking ourselves, How much of this should I do for real emergency preparedness and how much for an investment because everyone else is feeling the same way?
Much of the current growth in survivalism comes from people who, having witnessed the aftermath of 9/11 and Hurricane Katrina, are adopting measures to ensure that they will at least have food and shelter in a worst-case scenario. They stock up on emergency food supplies and water and maybe look into solar panels - things that would be considered reasonable to anyone who lived through the Cold War and spent time in school learning to huddle under a desk should anyone press the big red button. Those things just seem like Good Common Sense.
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