My hypothesis is that China is buying gold among other commodities in response to perceived inflation risk. Already there is a second bubble in China, but they cannot raise interest rate because upon doing so would trigger more inflow of capital seeking higher interest rate (relative to the 0% rate in the #1 and #2 world economies). Tighter requirements on margin would trigger a second round of panic selling. Therefore they need other methods of hedging inflation. That is why they are buying and stock piling commodities. The only people that buy gold are central banks and jewelers and some coin collectors.
A lot of folks haven't figured it out yet or are too blind to see the freight train headed right toward them.
The freight train already blew right through.....most not paying full attention are still staring at their guts all stuck to the rails in denial.
last time the gold passed 1000, imf started to sell; it went to as low as 875. IMF is selling again, India is the buyer. I would bet with IMF than India.
1) Beware of goofy, gimmicky, copycat funds invested in gold. 2) Avoid gold-related investment seminars.