If the Western Economies as we know it go bust, gold brick will be worth zero. You are better off buying a farm or jewelry. Bartering would take over. This is pure economics at work. You exchange gold for fiat currency and vice versa. In theory if currencies go bust gold cannot be exchanged for currency.
Go and look up history and see what has happened to gold in large deflationary period. No asset is able to hide unless you load up on Grizzly Fund. Second of all you can have deflation and inflation in different assets which has happened a lot of times in history of finance.
If sever deflation happens you will have much bigger problems then worrying about a brick of gold.
Who is holding the bag of gold at 1365? Looks like Gold is getting very volatile. Those 30 bucks swings are not for the faint of the heart. Obviously Gold is going up as governments around the world are trying to print themselves out of abysmal economic activity, hence create inflation. Now the question is, if there is a hedge fund that has huge exposure in Gold, like there was Amaranth Advisors who had huge exposure in Natural Gas futures.
Let me see. US is responsible for roughly 25% of the economic activity on this planet. What do you think would happen to the world economy if that activity was cut in half due to deflation? Additionally you can count all those leveraged debts that would go unpaid.
The question also is how much of the Gold holdings are bought on leverage.
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