He said gold hoarders can range from small investors to high net worth individuals.
"For some investors, it's important to have physical possession of the gold," said Nichols. "They either feel more comfortable with it or have an irrational or rational fear of the market collapsing and that they won't have access to their investment."
Nichols said he does not fear the market will collapse in the near future.
"I don't think that's going to happen," said Nichols.
But some investors have that fear and, he said, it is their prerogative.
"Gold investors tend to be more conservative and more fearful of future economic performance and financial market performance," said Nichols. "They fear higher inflation; they fear a decline in the U.S. dollar related to foreign currencies and a breakdown in the financial system. That may be irrational, but this is what motivates some of the people who take physical possession."
Jonathan Xiong, director of global asset allocation fund for Mellon Capital Management, said holding gold can be a good idea if you are able to hold it long-term, and with minimal storage costs. He said it could be a "safe haven" as an investment, but he warned that the fear of a monetary collapse may not be a rational reason to hoard gold.
"There's this notion out there [that] in the case of a collapse things will be all good if you have gold," said Xiong. "But if you think the entire fiat system is going to collapse, than you probably wouldn't have access to the bank anyways."