There is certainly more deflationary psychology around than inflationary, so gold should be a lot lower than it is. The reason it is not is that gold is the commodity with the best storage of value and is a great hedge against potential future inflation and a decent track record in deflation (went down with the other commodities but came right back).
Gold and silver are considered the "thing" for an investor to run to when an economy sours. What we're seeing is an "emotional" attachment to precious metals, because people think that's where they should find refuge.
People need to understand the concept of debt-based money (or having a claim on someone's future labor...i.e. owning a bond).
The safest investment strategy right now, in my opinion, is to own "direct" claims on the future labor of others. Short term US T-bills are an excellent example of this. You won't earn any money, but you also won't lose your shirt with what is coming.
"Currency" (or what many incorrectly refer to as money) is just what we carry in wallets and purses. It's backed by "money", but isn't money in and of itself - it's a "2nd deed" if you will on money.
Gold and silver are typically bought and sold with "currency". In other words, they're "backed" by currency - a 2nd order deed to money.
Gold and silver are actually 3rd order deeds to money - a REALLY poor investment decision in times of a world-wide deflationary crisis.
Do I own some gold and silver? Yes. I believe that 10% of every investment portfolio should be put into something that is a direct contradiction to where you believe things are going. I use gold and silver as a 10% hedging strategy.