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Gold just enjoyed one of its strongest quarters in a generation, and some people are getting very, very excited.

The World Gold Council, an association of gold producers, is urging investors to double up on – you guessed it – gold. The council's rationale is simple: Yields on many European bonds have sunk below zero, and savers are looking for other places to stash their money. Gold is an obvious alternative, and the price is likely to climb as a result.

It's an intriguing argument because, for once, the always-optimistic gold council appears to be making a dispassionate, rational case for its favourite commodity: In the past, real interest rates and gold prices have executed a fairly consistent dipsy-doodle. As one line heads up, the other moves down.

The question now is whether this pattern will continue in a negative-rate world. I don't think the logic will hold, but focusing on logic often misses the point when it comes to the yellow metal.

Gold rides on emotion. Gold bugs mist up when they start recounting the commodity's long history as a medium of exchange. They insist bullion is a currency, and they argue that it's superior to any government-backed paper bill as a store of value because nobody can fiddle with its inherent worth.

It's sad to say that none of those articles of faith bear up well under inspection. Sure, gold has been around for a long time, but then so have salt and beaver pelts, both of which have also been used as money at times.

Gold may be a currency in the same limited sense that any valuable raw material, from oil to coffee beans, can function as a quasi-currency under the right conditions. However, you'll note that chief executives of gold firms still insist on being paid in dollars, not bullion.

As for gold's purported capacity to protect your buying power over time, history begs to differ. Over the past five years, the metal has traded between $1,900 (all currency in U.S. dollars) an ounce and $1,051 an ounce. Some store of value, that.

Still, gold bugs love their gold. And their latest rationale for the metal demonstrates the depth of their faith. It begins with the acknowledgment that gold is actually rather useless. Unlike land, stocks or bonds, the metal produces no rent, pays no dividend, delivers no yield. That's pretty shabby when other investments are churning out good returns.

However, as yields on other potential stores of value dwindle to zero, gold's lack of payout becomes less of a handicap. In fact, as some rates turn negative, gold's potential for doing absolutely nothing winds up looking rather attractive. This makes it – according to gold bugs, at least – a fine way to protect wealth.

Of course, the holes in the argument also become clear. If you're going to put your money in gold because you're worried negative interest rates might corrode your bonds and bank accounts, why not just switch to paper money? A $1,000 bill will, by definition, always be worth $1,000, without the volatility.

But that's just logic, mind you. Gold's price is driven by gusts of emotion, and sentiment is running in its favour. I wouldn't be surprised if more gains lie ahead. Just watch out for what comes after that.

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