What is a Gold Bug?
Gold bugs are people who are fans of investing in gold.
How Does a Gold Bug Work?
Gold is generally considered a safe haven against the ravages of inflation and volatile markets. Even though gold no longer backs U.S. currency, it is still widely regarded as a store of value and thus often considered a 'safe' investment in times of uncertainty.
Why Does a Gold Bug Matter?
Throughout history, gold has traditionally risen in value when things like wars, the Great Depression, or high inflation have occurred. For example, from 1970 to 1975, the price of gold rose 375% as the Consumer Price Index (CPI) posted double-digit increases. When Standard & Poor's (S&P) downgraded U.S. Treasury debt in 2011, gold reached record highs in response. It is important to note, however, that gold prices can be volatile, leading some analysts to question the psychological hold gold has over some gold bugs.
