The Week: Everything you need to know about investing in gold

Everywhere you look, people are talking about gold, and it isn't even Oscar season. So why have precious metals been taking center stage?

Well, when investors are scared, they have historically bought gold, silver and other precious metals as a security blanket.

Beyond their uses in jewelry and industry, precious metals are seen as a hedge against inflation. Why? Because investors assume such metals will hold or increase in value as major currencies decline in value due to financial uncertainty.

Famed investor Warren Buffett describes the dynamics of this phenomenon best when he talks about gold: "Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid, you make money; if they become less afraid, you lose money. But the gold itself doesn't produce anything."

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