Gourmet cupcakes sure are amazing. They are usually delicious. They invariably look like tiny works of art. They are comforting. They are pricey. Believe it or not, they have a seasonality component. (We are in one of the two "high cupcake seasons" right now what with weddings, graduations, end-of-school-year parties and renewed open-air cafe weather.) You can easily see some of the ready comparisons with gold. 

A few companies that make and distribute gourmet cupcakes are traded on NASDQ. One of those companies has seen its stock crash from $13 to $1.40 after vigorous first offerings. 

The question that people ask over and over goes something like this: "Can a single cupcake really be worth between $3.75 and $6?" 

At some point, as happens with all markets, buyers begin to say, heck, my stomach and I can invest in gourmet enchiladas from a lunch truck and still feel full and my mouth can tingle from new taste sensations. I wouldn't pay more than $2.00 for a gourmet cupcake. So, gourmet cupcake purveyors begin lowering their prices until (they hope) consumers come back. Or they offer something value added to the guest check and keep their prices the same.

Something similar happened with gold. It sold for almost $1900 per ounce during a period that seems as if it were only yesterday. Today the price is hovering around $1475. It endured a severe correction. Same gold, different price. Same cupcake, different price, you could say. The calculus of value has changed for both "commodities." 

With gold, the high-flying perception was that it would drift or even surge ever higher in price with little pause or even a limit. Some outlying types called for $10,000 gold. However, equities moved in next door and began sapping gold's strength. Faith in the American economy fueled by the easy money policy of the Federal Reserve trimmed even modest expectations for gold. Investors who had been waiting for a rising tide of corporate profit production hopped over the fence to stocks. So, stocks rose.

Gold got its comeuppance and was throttled down to $1320 before it bounced off the bottom. People said, "It's undervalued now and looks like a bargain." From Mumbai to Singapore to Perth to Rodeo Drive to 52nd Street in New York to the Ponte Vecchio in Florence, (one of the world's oldest gold markets), plain old folks bought. And keep buying. Sovereign funds are buying. Central banks are buying. Futures contracts are gaining. Spot gold is robust. 

Gold is, after being whipsawed over its lack of a role in the economy of 2013, is now playing dual roles. It is the prince and the pauper. It is a hedge against what most people see as inevitable inflation and it is a huddle-down safe haven. An incredible turn of events. Only 20 days ago gold was seen by some, like Warren Buffett, as being pointless, barbaric and a fool's game.