this line in the "china effect";

Nick’s conclusion: Without any new financial crises, both mid- and long-term trends indicate that gold – and silver – will continue rising through 2011 and well beyond.

I tend to disagree with his statement on a financial crisis impact on gold. I beleive we could be instore for another financial crisis, and right here in Canada. I beleive a new financial crisis would have the opposite effect on gold to what he is saying here and could be the most significant catalyst in reaching extraordinary highs. These countries that are currently in great debt ,and as new debt for other countries become more apparent, should force them to retain some wealth by what ever means they can. Oil and gold are the two most common forms of wealth at present, with agriculture next in line. If world conditions changed dramatically for the worst, you would see this order change, with the necessities becoming a higher form of wealth.

Remember the personal gold confiscation OF 1933 by the U.S.?

http://www.blanchardonline.com/beru/confiscation_1933.php

If gold is considered king in a financial crisis, then wouldnt it only make sense that countries would hoard as much gold as they could to retain their position in the world powers? If they didnt, wouldnt that leave them very vulnerable and may upset the balance of world power?

China sees this, IMO, and thats why they are hoarding gold. They can back their monetary issues with bullion at this time, not too mention the other commodities they may be stockpiling. As said before, the Chinese are a wise and ancient culture that have been successful, they are survivors.