Last year, central banks were net buyers of gold for the first time since 1988. In fact, they bought the most gold in any year since 1964. Total central bank holdings worldwide, according to the World Gold Council, grew by 425 metric tons last year.

True, that’s only 1.4% of the gold central banks already held. But it’s the trend that matters: China, India, and Russia all added to their reserves last year. And it fits into a bigger picture -- growing distrust of the world’s reserve currency.

"I think we already have a gold standard … created by the marketplace," says the inimitable Marc Faber. Not just the central banks, either: "We have the [exchange-traded funds] that have proliferated, and we have more and more physical buying of gold."

At least there’s more physical buying when it comes to the ultra-wealthy who can buy huge bars of the stuff. Retail investors who buy coins? Not so much.

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OpEdNews

Goldman Sachs rules Wall Street, its alumni permeate the Obama administration, its derivative liability equals over 33% of its assets and Obama continues to subsidize it with zero interest fed loans with no real reform in sight: Allen L Roland

The latest data on derivatives is truly impressive ~ JP Morgan Chase, for example, held derivatives worth 6,072 percent of its assets at the peak of the bubble in 2007. The other two giants, Citigroup and Bank of America, although still far behind Chase, had 2,022 percent and 2,486 percent respectively. Goldman Sachs, the other giant, had an astonishing amount of derivatives on its balance sheets: 25,284 percent of assets in 2008 and 33,823 percent as of June 2009. Citigroup and BOA now have more of this risk on their books than before the crisis (FDIC SDI database).

Doug: There's a titanic battle right now between the forces of inflation and deflation. When a big corporation like General Motors, or Fannie or Freddie, defaults on its debt, hundreds of billions of dollars disappear. Assets people thought they had and could have been converted into cash disappear. That's deflationary. In a sound banking system, in which money is a commodity like gold, money can't disappear. It can change ownership, but it can't disappear. But in our current system, it can dry up and blow away as easily as it can be created.

One major problem that stems from this is that some people benefit from government money creation and some don't. Who gets to spend it first, when it's most valued, and who gets stuck holding the Old Maid card when it vanishes? It's usually the little guy - the middle-class guy - who gets hurt when this happens. And in the US, the middle class is contracting. The financial gyrations we're going through are destroying the middle class, which naïvely believes that traditional American values still hold sway and that their government is honest. The lower class has long since lost any values, and the upper class is way too cynical and self-interested to really care. Most middle-class people will end up joining one or the other of these two classes, and that'll be a moral disaster for the country.