There is a case to be made for having precious metals as part of a diversified investment portfolio. (IIRC Burton Malkiel, mentioned elsewhere in this thread, suggests that it be about 1% of your holdings.) But the “gold bugs” are the people who treat gold as the measure of value.

Paul Krugman wrote an excellent critique of the gold bugs in 1996: http://www.slate.com/articles/business/the_dismal_science/19...

The price of gold has had a nice run since Krugman wrote that column, but if you look at the longer-run historical data, you can see that it’s gone down before: http://en.wikipedia.org/wiki/File:Gold_Spot_Price_per_Gram_f...