Biggest buyers of gold are orientals and middle easterners. I wonder what is going on in those areas that might make them want to buy gold?? Seen this before. My guess is a lot of the new wealth of China is being stored in gold (ditto) middle east. That, to my way seeing it is not a bad move on their part. These guys tend to buy alot of US Treasuries, but with the current yield and the currency risk they probably feel safer in gold. Also, buying bonds leave trails that central governments can observe, while gold can be hoarded.
When you are a rich despot like saddam, it pays to have a little gold around. The old iraqi dinar is not going to buy much. The chinese still remember when the commies took over. Unless you owned portable, stable wealth, you were out of luck.
If so then the collective IQ of China must be very low. The Chinese Yuan is deliberately undervalued...buying and storing gold with an undervalued currency is very, very poor advice.
You want to buy assets with overvalued currencies, not with undervalued ones. Then when the currencies eventually level off, the assets are worth more to those who once had overvalued currencies and less to those who once had undervalued money.