What is a Gold Bug?

Mary McMahon
Mary McMahon

A gold bug is someone who consistently and aggressively buys gold, and may advocate for others to do the same. Gold bugs consider gold to be among the safest investments, believing the value of gold will always rise, making investment in gold a sound decision. In the investment community, gold bugs are sometimes mocked or questioned for their loyalty to gold, especially when gold prices decline and they lose money on their investments. A gold bug may see the investment position as long term and won't take the mockery to heart.

Someone who has invested in gold usually receives a certificate that indicates their ownership rather than physical gold bars.
Someone who has invested in gold usually receives a certificate that indicates their ownership rather than physical gold bars.

Gold bugs are consistently bullish about buying gold, and will buy anything from gold coins to bullion. Some expand their interests and purchase shares in companies related to the gold industry, such as mining companies. There is a commonly held idea that gold and other precious metals have inherent value and hold their value, making them fiscally sound investments.

A gold bug buys gold.
A gold bug buys gold.

Usually, the tendency to buy gold increases when there is economic or political uncertainty. Fear about the market can turn someone into a gold bug, at least temporarily, in response to concerns that other types of investments may be more risky and highly unstable. After disasters and other major events hit the newscycle, the price of gold often climbs in response to increased investment activity.

There are a number of venues for people to buy and sell gold. A gold bug usually wants to operate on a large scale and may trade gold certificates, rather than actual physical gold, because it is not practical to move large volumes of gold around. Like other investors, gold bugs will jostle for position to get the best price on their investments and are alert to trends so they can move quickly to take advantage of changing circumstances in the market. Investment trade publications usually include information about gold and other precious metals, including profiles discussing the pros and cons of taking investments in gold.

The merits of investing in gold are a topic of debate. A gold bug may believe gold is a financially sound, stable investment with minimal risks. Other investors may argue that gold bugs are basing their investment decisions on an era when gold and other precious metals backed currency, when they were indeed a strong investment, and the lack of gold and silver standards today makes gold just as unpredictable and potentially risky as other commodities. Ultimately, investment in gold or anything else should make up only a share of a portfolio to distribute risks as much as possible.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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