When reading about gold and people who are interested in the yellow metal you will come across the term: Gold Bug. A gold bug is not an insect but rather a human being who loves and is very passionate about gold and its prospects for increasing in value. Gold bugs are always bullish about golf being a great investment. Economic analysts who always recommend the buying of more gold are also referred to as hold bugs.
The definition of the gold bug
There is a spectrum that is used to define gold bugs. People who use gold as a hedge and buy more gold in times of economic uncertainty fall on the mild spectrum. On the extreme end of the gold bug spectrum are people who are obsessed with gold. These people tend to have a deep distrust for the modern banking system and will have an investment portfolio that has more gold than any other commodity.
Gold bugs and the gold standard
Most gold bugs believe in the gold standard
Gold bugs trust gold more than they trust international fiat currencies. They may believe that gold is a reliable store of wealth but they may also have a deep conviction that gold should be the one real universal currency. These people might see the world’s economy being in an inevitable fatal crash and this belief is usually based on what they have seen the fiat currency system deteriorate to since the abandonment of the gold standard. Gold bugs who are preparing for the economic doomsday that would make all major currencies like the U.S dollar or the Euro and Pound obsolete are buying and storing their gold. If an economic doomsday should come, gold might be the only currency to trade for food, water guns and ammunition. These people do not only think that the world should return to the gold standard but that the gold standard is actually inevitable.
The gold price aud fluctuates on a daily basis. Throughout the gold market’s history, the precious metal has plummeted significantly only to skyrocket when no one else wasn’t expecting it to. For instance, in the 80s the price of gold plummeted from $800 an ounce to $300 an ounce. Between 2002 and 2010, it skyrocketed from $300 to $1,200 an ounce. In 2011 it rose to about $1,900 before settling back to $1,200. Over the last couple of months we have seen it rise steadily to $1,400 and it is still rising.
So, there were times when being a gold bug paid off. For instance, a gold bug who held on to their gold between 2000 and 2011 earned a 300% return on his or gold investment. Their returns could have risen to 530% if they sold at that perfect time when gold price audwas $1900 in 2011. Gold bugs that bought gold after 2011 may have experience no return or a loss of about 30%. That shows the gold market to be rather volatile and not as stable as most gold bugs would have everyone believe.