A

t the moment the gold bugs are out in force, with that horrible look of "we're all doomed . told you so ... now do you believe?"

Gold has rocketed to record heights hitting more than US$1,050 an ounce. And the bugs slyly smile suggesting that this is just the beginning!

There are many reasons why there has been this turn of events, which can be found at great length in newspapers' financial pages. Everything from inflation to rising commodities and concerns over the future pricing of oil.

When they are all boiled down, we come face to face with our old nemesis fear and his brother worry. Whenever these two arrive at the party, you can be sure the gold lovers start gathering in corners, muttering darkly about what's ahead. Fear and worry, the calling cards of the gold lover.

At the moment many of the issues behind fear and worry simply don't seem justified. For instance, it seems quaint to be talking of inflation when many developed countries are speculating about a double-dip recession by mid-2010.

The theory behind our travellers in misery is the sheer amount of money that has been printed by central banks as part of stimulus packages.

No one knows exactly how much has been printed, but it runs into trillions of dollars. Globally, the figure could be more than 10 trillion. And that's a lot of money.

So it's not at all surprising that there are those who believe this will, in the fullness of time, stoke inflation.

This is despite numerous statements from central bankers reminding us they will raise interest rates as fast as they cut them if needed.

It's easy to understand why gold has been the chosen metal of fortune. With its limited supply, we have vested gold with a mystique of value since we were kicked out of the Garden of Eden.

Anything gold seems to be the asset de jour. Gold bars owned by central banks are likely to be in demand. Also in vogue are gold coins with strong names like The Eagle from the US, The Britannia from the UK and the Maple from Canada.

More accessible is the gold we have at home, in the form of jewellery.

But don't get too excited by those rings and necklaces you've been storing away. Their main value seems to be as a measure of love and affection rather than dollars and cents.

Think twice before smelting down the ex's ring. It's probably not that pure (a bit like they turned out to be) and likely not to give you much of a reward.

Of course resource metals should play a part in a diversified, well-balanced portfolio.

In the end, it really doesn't matter if I understand why gold is still so valued in times of trouble, it just is. And even if I don't very much like the metal as an asset, it is those people who swear by its invincibility that I find most fascinating.

The gold bugs can be summed up by the Bond movie's famous Goldfinger line: "No Mr. Bond, I expect you to die." Which just about sums up the depressing mood of many of those who put their faith in gold!