The four latest reasons to back gold:

1. The latest World Gold Council (WGC) figures show that, while global gold purchases were down 5 per cent in the first quarter (due largely to new import taxes in India and high prices), China’s investment and jewellery demand was up 10 per cent year-on-year. China, with 156.6 tonnes in the first quarter, now accounts for 30 per cent of global gold demand for jewellery. Investment demand for the three months was 98.6 tonnes. As we have been harping on, China’s gold appetite is underpinning the yellow metal and will continue to do so.

2. Now the Japanese are joining in. Okayama Metal & Machinery’s pension fund has become the first such fund to make a public purchase of gold. If other pension funds follow suit, that will be significant for gold - the country’s pension industry controls $US3.4 trillion in total funds. Okayama will have 1.5 per cent of its money in gold accounts.

3. Back to the WGC figures. Central banks in the three months to March 31 had net gold buying of 80.8 tonnes. Russia and Kazakhstan were two big buyers, while Mexico’s central bank added 16.8 tonnes in its vaults.

4. European financial newspapers are reporting rumours that the European Central Bank, with help from the Federal Reserve and Bank of Japan, are just waiting for Greece to exit the euro. Then they will not only rush in to back the revived drachma but flood the eurozone with more money printing to help prevent Spain and the other Club Med members also collapsing. If that happens, there’s going to be a reinvigorated grab for gold.

The common factor: all four of these developments are about falling trust in paper money and seeking gold as a hedge against future inflation.