Sorry, Peter Hug, gold buyers are careful not ‘crazy’

Speaking at the Inside ETF Conference last month, Peter Hug, an executive at metals retailer Kitco, called one-quarter of the physical gold buyers “crazy” because this percentage of the market thinks the world will end, an economic collapse will unfold in the United States and gold will inevitably reach $10,000.

Indeed, gold is held as an insurance policy against the chaotic political and financial situations transpiring in every region of the world. Whether it’s the Federal Reserve printing $4 trillion in money since the economic crisis or the currency war being embarked upon by the major central banks, gold investors want to protect their wealth.

To identify these investors as “crazies” is irresponsible, insulting and uncouth. Of course, Hug isn’t turning away their business because these “crazy” goldbugs are huge customers for Kitco. They usually purchase between one and 32 ounces of the precious metal. However, they don’t do anything with the yellow metal, says Hug.

“These investors buy the metal and it just disappears. It goes under their mattress. They want to use it when the world ends,” Hug told CNNMoney. He added that Canadians buy gold but they’re less fearful of a doomsday scenario because their financial system is viewed as more stable than Wall Street.

Peter Schiff, president of Euro Pacific Capital, told the same news outlet that it’s not irrational to be concerned over a seismic economic collapse. What’s worse is to be complacent and do nothing. Although hyperinflation has yet to happen nor has the United States dollar collapsed, price inflation is becoming rampant (SEE: 15 statistics to show 2014 was the year of price inflation) and the destruction of fiat money is a real possibility (SEE: Marc Faber to Investors: ‘Find a way to short central banks’).

Schiff believes it may be obsessive and misguided if a goldbug has 100 percent of their portfolio in gold, but it’s still better than not owning any precious metals at all. He recommends having between five and 15 percent of their portfolio in gold.

At the time of this writing, gold is trading at $1,223. Many analysts expect gold to descend even more this year and eventually bottom out before entering a bull market next year.

What may be “crazy” and frightening is the fact that some people still believe the U.S. dollar is a stable currency and will last forever despite the $18 trillion national debt, $120 trillion in unfunded liabilities and expenditures and the amount of debt owned by China and Japan.