I would also ask why are the nations with surpluses the gold buyers because they want to protect their surpluses and why have the Euro zone countries stopped selling gold because they want to protect their wealth. It's hard to understand why the mainstream media doesn't get it. It's really so simple something like Aucums razor concept.

The venerable Richard Russell last evening … a fine piece, but if the US has all its gold reserves, I will eat my hat:

December 29, 2009 -- It's easy to be deceived by the near-term picture. By that I mean it's easy to lose perspective when you are struggling with the daily and even the weekly market action.

Over the long-term, the big fundamental picture will often reveal itself. For instance, consider this. In January 2000, the Dow was selling for just over 11000. At the same time gold was selling for about $280 an ounce.

Today the Dow is selling for about 10500, actually below its year 2000 price. Gold is selling for over 1100, four times its year 2000 price. So what does that tell us? Gold has represented the standard for wealth for over 5000 years. Consequently the above tells us that the Dow and the stock market have failed to conserve our wealth.

Below, the Dow from the year 2000.

Below, gold from the year 2000.

It tells us something else. Since the year 2000, the Fed, the know-nothings, and many analysts have been bad-mouthing gold, which some still call the "barbaric relic." In the face of all the bad-mouthing, how is it that gold has risen from 280 to 1100? Clearly, some investors have been buying the precious metal, all the while ignoring the nonsense spewed by the anti-gold elements.

Now consider this -- almost everything -- housing, stocks, commodities, bonds -- has declined in terms of gold. That tells us that the forces of deflation are now weighing heavily on the world.

Let's take it one step further. Over the last year the US Fed and most other central banks have been flooding the markets with their fiat currencies. The question is -- in the face of all this currency creation, why aren't we seeing all-out inflation? The answer is that the forces of world-wide deflation are more powerful than any inflation that has been created by the central banks.

In the meantime, a towering mountain of debt has been built. This debt will have to be financed, paid off or reneged on. This mountain of debt acts like a sponge -- it absorbs billions of dollars every week and month of the year. Since this debt "eats up" money like a hungry shark, it's deflationary. And remember, with interest rates currently low, this debt has already been "eating up" money. What happens as interest rates rise? Payment on the sky-high tower of debt will be prohibitive -- it will be crushing.

It's now widely held that gold has been rising "because the dollar has been falling." I don't subscribe to this simple thesis. I think gold is rising (being accumulated) because far-thinking investors don't believe fiat money (money created by the central banks) will survive. Consequently, they are buying "wealth insurance" with gold.

What lies behind the dollar, the ruble, the real, the yen, the pound and the euro? In every case it's the full faith and credit of the issuing nation. In other words, each currency is dependent on the health and viability of its issuing nation. Question -- what happens in the event of a world economic collapse? What are the trillions in fiat currencies worth in the event of a global depression? My answer -- these currencies could decline to the point where nobody would want to own them. In the face of a world depression, there is only one money whose worth would not be questioned, and that money is gold.

Ironically, it has been so long since Americans have used gold as money that they have forgotten the fact that gold IS MONEY. I think that mind-set is just beginning to change. It's slowly dawning on most Americans that gold is the ultimate money.

If gold was a useless "barbaric relic," why is the US holding the largest hoard of the yellow metal of any nation on this earth? And why has the US refused to settle its debts with gold? The answer is that someone in the Treasury realizes that gold is pure wealth, and the US government is not willing to give up any of our gold to settle our debts with other creditor nations.

Now here's a thought. The US prices its gold at 42.22 an ounce. But suppose the US unilaterally announced that its gold was worth $5000 an ounce. If so, we could pay off our debts with high-priced gold. But would China, for instance, accept gold at a high price rather than our bonds and notes? Are you kidding, just try them. China would love to take in gold rather than US bonds.

And I have to wonder -- is the following what Bernanke is thinking? After all, in 1932 Roosevelt raised the price of gold from 20.67 to 35 dollars an ounce. He did this in the fight against the deadly deflation that was so prevalent during the Great Depression. Could Bernanke be thinking, "If I unilaterally raise the price of the US's vast hoard of gold to $5000 or more an ounce, it would be inflationary, and we'd get out of this deflationary mess. And, after all, who'd object if I raised the price of gold? And if I backed the dollar with gold, the dollar would continue to be the world's reserve currency. If the dollar was backed by the world's largest hoard of gold, what fool would be able to talk down the safety of the dollar?"

Russell Conclusion -- The US is facing a brutal problem dealing with its unfunded liabilities. I can't be the only one thinking about raising the dollar price of gold. Question -- Why are China, Russia and the Asian nations so intent on building up their gold reserves? And why are so many central banks now reversing their stands on gold? Instead of selling their gold, the central banks are now trying to buy gold. Think about it!!