Traditionally gold has tracked the inflation rate, in a hugely lumpy manner, until the great stock crash of 2008. Based on its historical behavior of correlating with inflation it should only be about $800 or $1,000 an ounce; instead it trades at $1,513. The theoretical reason for the 50% premium over hypothetical intrinsic value is that this is like a call option on the future: what if future inflation is much worse, thus justifying a high price for gold today?

    The reason to stop using the old paradigm that gold simply tracks the CPI inflation index and instead start viewing gold differently, is that CPI or PCE inflation indexes are something based on lifestyles of the masses; by contrast, regarding the lifestyles of high income people who buy hand crafted luxuries, they may find their inflation rate is much higher. It is high income, degreed, credentialed professionals who have the money and desire to buy stocks and bonds. Thus gold prices should correlate to the outlook and economic health of this class of people and not to the nation’s CPI index. At some point investors will wake up to the risks of a global currency crisis, or a global miscalculation by central bankers, etc. and turn to gold. If stocks are fated to drop 50% and stay down then investors will try to sell stocks (hopefully before the crash) and invest in bonds, except that they will resent the negative yield of foreign bonds and resent the zero real yield of U.S. bonds. Thus they may start to consider gold as a form of pseudo-money, in which to store their wealth, that has only a small negative “yield” (the expenses of holding gold). Then investors will look not merely at the CPI index to judge gold but will look at golds potential as a crude form of insurance against economic catastrophe.
Looking at  50 year charts of the dollar and foreign currencies and gold, there were several multi-year eras when one country’s currency was 20% higher or lower than the other currencies. Over the long run average, the price difference between the U.S. and a basket of the Developed country currencies hasn’t been that big. Thus, if one takes that attitude, then why not accept that gold’s price volatility is no more unreasonable than a basket of Developed countries’ currencies.
If U.S. interest rates are destined to converge with the negative rates of the EU and Japan then investors may want to own gold, which has no negative interest rates, although it has some modest expenses so the expenses are similar to negative interest rates.  For example, a physical gold investor might pay for storage, assaying, insurance, and an armored car delivery, etc. Or an ETF investor might pay 0.35% a year to the ETF company.
On the other hand there are strong reasons to suggest that governments of the world know that the financial system of banks and insurance companies can’t survive if rates are deeply negative and thus a nightmare situation that would justify gold investing may never happen. If the authorities want to wisely implement a negative rates policy they would wise to do it only in the form of government subsidies to borrowers (who have been specifically targeted as being likely to stimulate the economy) so that the borrowers get a negative rate but savers, Life Insurance Cash Value policy holders, banks, etc. still get a decent positive yield.
Perhaps a hybrid rationale (a blend of CPI inflation compensation rationale and fear of catastrophe rationale) will still be strong enough to legitimately justify gold going much higher, even though ultimately the authorities will probably end their foolish extremist policies of negative interest. The governmental authorities such as central bankers are responsible for protecting banks and insurance companies from a catastrophe caused by negative rates so they must stop negative rates from happening. The question is will they merely play dumb and implement bad policy because of pressure from elected officials or will they be a great leader like Paul Volcker and say no to irresponsible inflationary bubble making. Mr. Volcker was able to do his work because president Carter was a mellow leader who didn’t try to usurp power and bully the Federal Reserve to inflate the economy. This behavior has been rare in presidents and thus it is possible there won’t be another Volcker and then people will have to return to hoarding gold.
Gold could go up in reaction to a stock crash even though a crash would be deflationary (and thus bad for gold). The deeper the crash the greater the chances of excessive unsound deficit fueled government stimulation which would result in a fear of inflation and devaluation thus driving people into gold even if inflation was low.
Investors need independent financial advice about the risks of investing in gold. I prefer to view owning gold as a trader’s speculation, since it lacks a cash flow like stocks and bonds that can be analyzed and compared for valuation purposes. However, the potential extreme drama of increasing global NIRP, QE, etc. may make conventional dollar-based bank accounts and bonds less secure, so that gold ownership on a relative basis may be less risky than in previous eras.