Throughout human history, gold has shown a remarkable tendency to drive people crazy. As the "currency of last resort," they'll do anything to get it and once they have it, they'll do anything to protect it. Even today, gold is seen by people from all walks of life—who are often mocked with the label "goldbugs"—as the one safe haven for investing in troubled economic times. It's older than any bank or state currency, you can make it into other things, and you can take it almost anywhere in the world and trade it for something. (That's the marketing pitch, anyway, made by those commercials you see a lot on Fox News, not to mention all those "cash-for-gold" stores on every corner.)
Imagine the worst case scenario—nuclear holocaust, plague, alien invasion, or (horror of horrors) the collapse of the world financial system—and you can imagine a world where it would be handy to have something you can actually trade with other people for valuable stuff. The problem is that if you're the kind of person who buys gold to ward off disaster, you're also probably the kind of person who sees disaster around every corner. Even worse, you actually start to hope for it, because a collapse of the system both vindicates your strategy and makes you a ton of money.
I love the fact that i am being blasted for liking $GLD for $800. If i hate it now can i say i madeyou 80%?— Jim Cramer (@jimcramer) April 15, 2013
That makes things especially complicated when disaster actually does strike. Monday's giant dip in gold prices happened to coincide with the Boston Marathon terrorist attack. Stocks plunged across the board, as markets had their worst day of 2013. Bad news was everywhere and that's good news for goldbugs, right?