It is the resurgent passion of doomsday crowd, a bet that everything will go wrong. No matter what has you worried, they say, the answer is gold.

The most visible new gold enthusiasts range from financier George Soros, to Fox News commentator Glenn Beck. But even ordinary Wall Street types are taking interest.

Inflation, deflation, government borrowing or plunging euro — you name it — the specter of these concerns has set off a dash to gold, driving the precious metal to new highs and illustrating how fears of economic turmoil have moved from the fringe to the mainstream.
And gold bugs, often dismissed as crackpots who hoard gold bars in the basement, are finally having their day.

The most visible new gold enthusiasts range from Glenn Beck to George Soros, with even some sober-minded Wall Street types developing a case of gold fever. While their language may differ, they share a fundamental view that the age-old refuge of gold is relevant again, especially as other assets like stocks and national currencies show signs of weakness.

Now, individual investors are following their example around the world. The United States mint is running short of gold coins, and South African mint increased Krugerrand production by 50 per cent late last month, to its highest level in 25 years, on brisk European demand.

The debt crisis in Europe and the ensuing drop in the value of euro are the most recent catalysts for gold’s spike last week to $1,254 an ounce, a record before adjusting for inflation, but deeper concern is that even in the United States, government borrowing is unsustainable and the day of reckoning is at hand.

If governments print more money to pay off their debts, the logic goes, inflation will destroy the value of dollar, the euro and other paper currencies — thus enhancing the value of gold. What is more, with tax increases unlikely and with Europe on the brink, the unthinkable — a sovereign debt default or the collapse of the credit system — has suddenly become thinkable.

To be sure, gold buyers have always been motivated by fear. What has changed is that some of the most respected investors on Wall Street are now among the fearful.
“In recent years, we have gone from one bubble and bailout to the next,” David Einhorn, a New York Money Manager who was among first to foretell failure of Lehman Brothers. “Our gold position reflects our concern that our fiscal and monetary policies are not sufficiently geared toward heading off a possible crisis.”
Since ancient times, gold has been deemed intrinsically valuable, holding its worth even as governments fell and currencies collapsed, while seemingly casting a spell on its owners.

Still, gold can go down — sometimes sharply. But unlike paper assets that can become worthless, gold always retains at least some value. These days, gold is also something of a political test. Glenn Beck advised his audience to consider “Gold, God and Guns,” while laying out three possible scenarios for the economy: recession, depression or collapse. Soros, holds more than $600 million in bullion and gold mining shares. Even as worries about global economy have intensified, gold has become easier to buy.

Although some people still regard bars of gold in a vault as the ultimate insurance policy, exchange-traded funds, or ETFs, that hold gold have exploded in popularity in recent years. Besides luring individual investors, these funds have also made gold more appealing to hedge funds and other institutions, allowing them to own vast amounts of gold without the burden of having to store it.

True believers note that gold has risen in each of the last nine years, and that while the Standard & Poor’s 500-stock index is down 13 per cent since 2001, gold is now worth nearly five times what it was then.

For all its newfound respectability, gold still manages to bring out the inner survivalist in its adherents. Gold bugs like Peter Schiff of investment firm Euro Pacific Capital in Westport, Conn., envision a black market arising in the United States, with merchants refusing paper money and insisting on gold instead, while Hathaway, gold fund manager, says the credit system has entered “the end game.”