All that's gold doesn't glitter

What do Hugo Chavez and Glenn Beck have in common? The socialist/populist president of Venezuela and the right-wing talk show host often have strange ideas - just not the same ones. But it turns out, they are both gold bugs.

Now, many people have been investing in gold. But Hugo Chavez wants to horde it literally, physically. The Venezuelan government controls the world's 15th largest stockpile of gold: about 365 tons. But, like most gold investors, it doesn't really have that gold. At least not physically. More than half of Venezuela's reserves are held overseas in London, New York and Zurich. If you ever visit the New York federal reserve, you can even see it in the underground vaults, neatly labelled as Venezuela's.

Mr. Chavez, as you know, doesn't like the West; he doesn't like this predicament. So he's announced he wants his gold. But how do you transport 211 tons of gold across the seas? Well, by spending lots of money. You have to insure against a gold heist, like the one in The Italian Job. Experts say Mr. Chavez could spend at least 4% of the total value of his gold on insurance, with more on security and transport. Add it all up and you could get about half a billion dollars. That's serious money for any country, let alone one that has negative growth rates as does Venezuela these days.

What in the World is Hugo Chavez thinking?

Actually: He's not alone. From the ancient times of Egypt's Tutankhamun to the Gold Rush in the mid-19th century, right through to the modern day, we've always been attracted to gold. Who can ever forget the appropriately named Auric Goldfinger, from the James Bond movie, who said, "This is gold, Mr. Bond. All my life I've admired its color, its brilliance, its divine heaviness."

There are many who share Mr. Goldfinger's sentiments around the globe. especially in times of confusion and uncertainty about governments. People worry that governments are keeping interest rates too low, that will cause inflation and could weaken the dollar and other currencies.

The answer: Store Gold - something that has always been seen as a solid, substantial hedge against inflation. If everything else collapses, the theory goes, gold will hold its value. For this reason, in the last decade gold prices have risen more than 600%. Is this a rational response to legitimate fears of inflation? Or are we in the middle of a bubble?

There are signs that suggest a bubble. The fact is, global demand for gold in industry and jewelry has actually declined by 18% since 2004. And yet over the same period prices have surged. So it's clear that the market is flooded with speculators who see gold as an investment, not as a usable currency or product.

What's really changed in the last few years is access. It's easier to buy gold over the internet than it is stocks or shares. In places like Abu Dhabi and some European cities, you can buy grams of gold at ATM-style dispensers. All over the world, there's a new Gold Rush. You switch on the TV and commercials warn you that the end of the world is coming and that you need to put your money in gold. Glenn Beck says that if you haven't switched your savings to gold, you're nuts. And Donald Trump is now accepting gold bars instead of wire transfers for luxury condos.

This is bizarre. A lot of it is simply scaremongering. The truth is that for two and half decades, between 1980 and the mid 2000s - gold prices actually declined. Unlike many other commodities which actually have an end use - oil, minerals - gold is just a symbol, and as such its price rises have to do more with psychology and emotion than reason. So, when it falls out of fashion, the price could really collapse. The next time you watch Goldfinger or you hear of the antics of a Hugo Chavez or a Donald Trump, be a little wary.

Gold isn't a stock with real earnings. It isn't a bond with interest payments. It isn't oil. It won't help you drive a car; it won't help you light a fire. Yes, you can wear it, but you can't eat it. If doomsday really arrives, a can of baked beans might be worth a lot more than a brick of gold.