This means paper that was good, will be no good, no longer. There is Gitic in China. There was Russia. There was Long Term Capital. Another one of their states is delaying payments to their central government.
Defaults mean loss of confidence.
That investment demand is surging in Japan. The last time the price of gold was this low in yen terms was 1995. Demand surged then to 36 tonnes per month. That is a big number. Demand for gold bars was very strong last October.