Turns Out it Really is Hip to be Square

This year's explosion in gold and related assets comes on the 25^th anniversary of a hit single that offers uncannily relevant advice for Wall Street's establishment: It is "Hip to Be Square."

While that Huey Lewis and the News tune referred to defying hairstyle mandates and clothing fashionistas, the contrarian message couldn't be more timely for an evidently hidebound investment community.

Wall Street has long held gold and related assets as beneath its attention, unworthy of anything approaching respect. Not only that, but folks who couldn't figure that out were scorned as "gold bugs," quirky fringe types who regularly confused a real investment and a store of value.

Among money managers, in other words, gold investors were quintessentially square.

But today, thanks to being so square, they are unquestionably hip ... if hip means rich.

Think John Paulson pocketing $5 billion last year on gold. Or consider the average guy who bought some SPDR Gold Trust (GLD), an exchange-traded fund backed by physical gold. He's up more than 40 percent this year.

Behind both Paulson's and that average guy's success is the following metric: From 2002 to today the price of gold in ounces has risen nearly sixfold $300 to more than $1,700. Contrast that to the S&P 500, which from 2002 to today has gone from 1,161 to 1,178.

Even granting that gold is a store of value, it is hard to deny the wisdom of having such a store when the world's fiat currencies look more and more like the Cheshire Cat of "Alice in Wonderland."

"Gold has been rising against all national currencies, and that's significant," James Turk, founder of bullion dealer Goldmoney, told Reuters recently.

"When there are problems with a national currency ... (investors) begin to worry about the value of their money, whether they're going to lose purchasing power because of inflation or other problems. As a consequence, they look for safe havens."

Turk thinks it will be even more hip to be square in the coming years. He estimates gold will reach $8,000 per ounce between 2013 and 2015.

"Politicians and central bankers are making decisions that debase national currencies, and the resulting bad monetary policies they are following are causing the gold price to rise," he said.

As Huey Lewis sang 25 years ago, "Don't try to fight it, an idea whose time has come."