Gold Rises Most in Nine Weeks as Physical Demand Climbs … Gold prices advanced the most in nine weeks as demand for coins, bars and jewelry rebounded following the record quarterly plunge. – Bloomberg

Dominant Social Theme: Gold is so 'last year.'

Free-Market Analysis: The puzzling thing about the decline in the price of gold relative to dollars is that there is demand for the physical stuff, and now that physical demand may be translating into higher prices generally … as Bloomberg notes.

Certainly, the physical demand has remained relatively constant, not just in the near term but over decades and even centuries. It is this permanence that gold bugs take note of when making the case for precious metals either verbally or with assets.

In India women still wear a good deal of the family fortune on their bodies and, of course, in China, as well. In fact, in China, there were recently reports of 10,000 people lined up to buy the scarce metal. Here's how InfoWars and SHTF reported on it:

In China, where the central government has manipulated the currency, economic and financial markets for decades, the people have seen it all before. And they aren't taking any chances.

While the paper price of gold and silver may have dropped nearly 25% this year, it's clear that demand in the real world is soaring.

If you want to know what it's going to look like in front of precious metals dealers when confidence in our government's ability to manage this crisis is finally lost for good, then look no further than the streets of China.

The following pictures, taken in Jinan in the last 48 hours, depict some 10,000 Chinese citizens lining up to buy physical gold, providing all the evidence you need for the argument that gold is, in fact, money.

The pictures do indeed tell a tale – and one can see them on the Internet if one wishes to search them out.

China has been exposed to "flying money" numerous times in its 3,000-year history and like other ancient civilizations those who are alive today have imbibed the wisdom of their ancestors. Gold – at least some gold in a physical form – is good to have.

And yet that is not the position of much of the Western mainstream media. Nor even of the West's financial industry.

In fact, there is a fairly significant disconnect between what can be called paper gold and the physical. Paper gold encompasses any instrument that allows one to take possession of gold without receiving an actual shipment of metal. It also includes mines and junior mining companies.

After a long run to nearly US$2,000 an ounce, the price of gold in dollars has collapsed – an event that has been mystifying to those who follow the fortunes of fiat money and are rightly concerned about the way central banks are administering the world's economy.

Now, it seems, there may be a slight resurgence in price, especially when it comes to the physical product. This can be attributed to a sense that the US Federal Reserve is not going to tighten monetary policy as quickly as some had suspected. Also, as noted above, physical demand for gold remains quite strong.

Here's more from Bloomberg:

The premium for the metal in China rose to $36 an ounce, the highest since April, according to Tim Gardiner, a managing director at TD Securities Inc. in New York. "Physical demand in Asia continues to be strong," Carlos Perez-Santalla, a New York-based broker at Marex North America LLC, said in a telephone interview. "The focus on the Fed stimulus and when the tapering may begin has begun to wane."

Gold futures for August delivery rose 2.6 percent to settle at $1,255.70 at 1:46 p.m. on the Comex in New York, the biggest gain for a most-active contract since April 25. On June 28, the price touched $1,179.40 on June 28, the lowest since Aug. 2, 2010. Futures have slumped 25 percent this year, wiping out $59.5 billion from the value of exchange-traded products backed by the metal, as some investors lost faith in gold as a store of value.

The price may climb because reducing the stimulus might take longer than some analyst expect, and the price approached the cost of output, according to Macquarie Group Ltd. Barrick Gold Corp., the world's biggest gold producer, said on June 28 that it may take a writedown of as much as $5.5 billion on its Pascua-Lama project in the Andes after prices tumbled.

It remains to be seen in the short term where gold heads. But in the long term there can be little doubt that the historical record speaks clearly: Both gold and silver retain value and at times of economic stress can provide a surety for those caught up in financial turmoil.