A bearish article on the US monetary system and the role of gold past and present. http://www.zerohedge.com/article/gold-and-systemic-crisis Is gold too expensive at the moment? That's an important question. Is gold at the top of a small bubble getting ready to drop; or is it about to explode upwards into a much larger bubble? Not even precious metals dealers seem to know, though would they say if they did know. It's possible that gold could crash next week, though the current situation seems different to usual. A dealer I spoke to last week mentioned that one refiner in Birmingham is melting down a million quid of scrap gold (scrap sold by the public) into bars every day. These bars are being shipped abroad, with the likely recipients being foreign governments, most probably China, Singapore, and Dubai. However, it will be several months before this information becomes publicly known. Perhaps these governmental purchases explain why gold hasn't dropped in price from the $990 - $1000 upper resistance level, as it usually does. Though perhaps China is playing a risky game in buying near the non-inflationary adjusted high. Time will tell. It's unlikely that the British Treasury or Bank of England will begin buying gold anytime soon. Britain holds over $200 billion of US Treasuries (the third largest holder of American debt after China and Japan) as well as having billions of euro foreign reserves. Britain holds plenty of paper. China aims to rid itself of foreign paper, especially US paper. China remains very bearish on the future status of the US dollar and is converting its dollar holdings into IMF bonds ($50 billion so far), gold and other tangible assets. On the other hand, some, like Hugh Hendry, are bullish on the dollar due to the massive deflationary pressures in the US economy. Hendry believes that only a fiscal stimulus massively larger than the current one could lead to a fundamental devaluation of the dollar. Hendry believes that the dollar will appreciate in purchasing power, whilst gold will crash to join the ranks of other commodities in a deflation driven bear market. Again, time will tell. Sadly, Britain's private gold is leaving the country, and this leaves us weakened. I say, don't sell your gold to those scrap gold sharks. Hold onto it for dear life. Consider your gold and silver jewellery a perpetual insurance policy that's already been paid for with no future premiums to pay.