One of the perks of stardom is the indulgence of unusual requests. Ozzy Osbourne used to require the presence backstage of an ear, nose, and throat specialist who could administer B-12 shots. Guns N’ Roses demanded Dom Pérignon and Wonder Bread. For Van Halen, it was a bowl of M&M’s—with all the brown ones removed. Then, there was Bette Midler, who, when she toured Europe in the late seventies, insisted on being paid not in dollars or pounds or francs but in gold. It was a fashionable extravagance. With inflation devastating the value of national currencies, Western economies in the dumps, and oil prices soaring because of tension in the Middle East, anxious investors had fled to the security that supposedly only gold could provide. An ounce of gold, at its peak, in 1980, was worth eight hundred and fifty dollars.

That was a long time ago, and, as far as we know, Usher has yet to pester his promoters for Krugerrands, but economic worries have recently prompted investors to start coveting gold again. The weakness of the dollar, America’s enormous trade deficit, and war in the Middle East have sent the price of gold up forty per cent in the past two years, and last week it hit a sixteen-year high of four hundred and forty-five dollars an ounce. In the speculative imagination, gold remains the best hedge against Armageddon.

It also remains a testament to the tenacity of popular delusion. What is gold, after all? Strictly speaking, it’s a commodity, like oil, steel, or lead, albeit not an especially useful one. There’s a steady but small demand for gold as an industrial product—for consumer electronics, computers, and dental work—and as jewelry, particularly in India, which now buys twenty per cent of the world’s annual gold output. And there’s a steady supply. Since 1970, world production has nearly doubled, thanks to mining companies that tear up mountainsides every year in search of it.

Yet the price of gold has little to do with these two variables. To true believers—known as “gold bugs”—the idea that gold is a commodity is rank heresy. They prefer to think of gold as the planet’s most reliable currency, a stable, ineradicable source of wealth, whose value will endure no matter what comes to pass.

It’s hard to square this faith with what has happened to the price of gold in the past two decades. It has been a terrible investment. Even with the recent surge, it’s up zero per cent since 1988, while the S. & P. 500 has almost quadrupled. Gold’s buying power has plummeted, too. In 1980, ten ounces of gold would have bought you a nice car. Today, it would get you a nice bike. The gold bugs have a handy explanation: gold is a victim of market manipulation and bad press. Wall Street and the world’s central banks are, apparently, “enemies of gold,” holding gold prices down in order to prop up people’s confidence in the paper-money system. One gold bug even filed a lawsuit against various government officials and big banks alleging a conspiracy to sabotage gold prices with surreptitious sales. Another compared a skeptical journalist to Joseph Goebbels.

The gold bugs are classic cranks, but their obsession is rooted in experience; we’ve all been conditioned—by history, by myth, by Mr. T—to think of gold as money. James Bond never had to contend with a Nickelfinger, and Bette Midler would probably not have accepted payment in palladium or cowrie shells or cattle. The world’s central banks and the International Monetary Fund still have vaults full of bullion, even though currencies are no longer backed by gold. Governments hold on to it as a kind of magic symbol, a way of reassuring people that their money is real.

So there’s a little bit of the gold bug in all of us. Still, in a world of “swaptions” and strips gold’s allure is increasingly atavistic. The idea of gold as a platonic currency, universally valuable across time and space, reflects a basic distrust of markets, a fear that in a world of paper money wealth is just an illusion. For gold bugs, paper money turns us all into Wile E. Coyote—we’re running on air, and we’ll plummet once we look down and realize there’s nothing holding us up. The gold bug’s apocalyptic mentality maintains that someday the global economy will look down and the result will be chaos. Gold is the only thing that will still be valuable after the bottom drops out.

Yet gold is valuable only as long as we collectively agree that it is. It may be soft, shiny, durable, and rare, but it has no more intrinsic value than feldspar or quartz. Just because it has a long history of being used as money doesn’t mean that it has a future. In the end, our trust in gold is no different from our trust in a piece of paper with “one dollar” written on it. The value of a currency is, ultimately, what someone will give you for it—whether in food, fuel, assets, or labor. And that’s always and everywhere a subjective decision. Gold or not, we’re always just running on air. You can’t be rich unless everyone else agrees that you’re rich.

Gold investors like to pride themselves on being sober realists. The irony is that buying gold is the purest form of speculation. If you invest in a company, you’re investing in machinery, technology, and people. If you buy steel, you’re investing in something that people need. But if you invest in gold you’re basically betting that someday a greater fool will come along, who thinks gold is worth more than you do. You’re buying into a collective hallucination—exactly what those dot-com investors did in the late nineties. One could say that gold is the biggest, most durable bubble in history. Someday, even this one may pop.