A friend of mine is starting to buy precious metals and is convinced by some quacky newsletter/website called Nation Inflation Association, which runs on fear mongering from what I've read, that this is a fool-proof investment.

The basis of the claim seems to be that precious metals, unlike fiat currencies, are immune to bubbles. While gold does have intrinsic value in that it is a great electrical conduit, much of it value seems to be derived from the same faith faith-of-society that gives paper money value. Why is this not the case? Or is it the case? How can precious metals be bubble proof?

I guess we can discuss the practicality of investing in gold... insurance, brokerage fees, storage fees, etc.. but I'd like to cover the basics of how it is or is not susceptible to being a bubble.