By MATTHEW CRAFT
NEW YORK (AP) â¿¿ When the price of gold plunged $200 last month, many people thought they caught the sound of the gold bubble popping.
What Peter Schiff, CEO of the brokerage Euro Pacific Precious Metals, believes he heard was a stampede of fair-weather speculators fleeing the precious metal.
Schiff and other champions of gold weren't shaken by the plunge. To them, it was just a short breather in preparation for another long climb.
All the reasons they give for buying gold haven't changed: gold remains a refuge from disaster, they say, arguing that a steep drop in the dollar and a spike in the price of consumer goods are a threat.
For speculators, buying gold was simply a way to profit from its popularity.
"That's what happens in a bull market," Schiff says. "The selloffs shake out the Johnny-come-latelies. It's healthy. Now we can have a real rally."
Gold, often touted as the most trustworthy of investments, has looked wild over the past month. After starting April above $1,600 an ounce, it dropped below $1,361 on April 15 and has steadily recovered to settle at $1,436 on Friday.
But gold was supposed to be a haven from turmoil. When the housing market started cracking and the stock market sank in 2007, the price of gold began to surge. Over the next two years, it soared from around $600 an ounce to nearly $900 in the depths of the financial crisis in late 2008.
For those who were wary of financial institutions or thought the Federal Reserve's rescue efforts would backfire, it became the favored investment. The television personality Glenn Beck advised his audience to stock up on gold bars in case the dollar became worthless. The tea party called for a return to linking the value of the dollar to the price of gold.