“Much of the recent decline in the paper value of gold, silver, platinum and palladium can be traced to the collapse of investment banks and hedge funds on Wall Street,”
what happened was a massive deleveraging because of the lack of credit
This statement has it backwards. The deleveraging is causing banks to panic over reserve ratios, which in turn is negatively impacting the availability of credit.
Deleveraging is causing hedge funds, etc., to sell their holdings to meet redemptions and obligations, which is causing commodities such as gold to fall in price, even though demand for physical gold is apparently still quite high.