"It's interesting to note that a lot of gold (40% of annual production) is mined just so that it can be locked away somewhere, without any further utility derived from it."

Isn't it even much, much more interesting that paper money is just paper with fancy colors? And that most of the money in the world are just 0's and 1's residing inside databases?

Government do both love and hate gold: the problem is that socialist government can confiscate savings by creating inflation but they cannot confiscate gold (well, non-democratic government can and the US certainly already tried to confiscate citizen's physical gold, but it didn't work out too well).

Then you're confusing hedging and speculation in the case of people locking physical gold away. If people were speculating they'd be buying / selling physical gold. People typically don't do that. The ones speculating do it with paper gold. The ones with physical gold typically do hedge.

Then central banks already sold lots of gold. Germany is bringing back its gold because the situation is critical in Europe, with a first state that already defaulted and several others which are going to default too. At 25% unemployment in Spain there's simply no way they'll come back soon enough. Their banking sector needs a $400bn bailout or the entire house of (eurozone) cards collapses.

Gold is totally undervaluated. Some estimates it could go up by as much as 10x.

The reason Germany is doing it now is because it's more than likely that the US lied about the actual amount of physical in the US and they (the germans) don't want to be the fools the day everything crashes.

The other reason gold is going to skyrocket is that there are so many buggy financial products linked to gold that are going to be worth close to zero once the shit hit the fan. Paper gold is going to be worth as much as toilet paper. Should that happen, real physical gold would skyrocket.

Yet another reason it cannot possibly be undervaluated is that the USD doesn't correspond to market fundamentals anymore: the USD is artificially high and the system is not a capitalist system anymore. The cost of money creation is zero and the system cannot possibly work like that.

Governements have already tried to manipulate gold prices by selling huge amount of gold but to no avail.

There's however one thing that could bring the price of gold down: a scientific allowing to cheaply create gold. In a way we can do it today, but it requires materials even rarer than gold, so it's not economically practical.

I'm personally hedging myself against a major economical SNAFU with about 20% of my savings in physical gold (and 20% in other currencies). Should a real shit hit the fan, I'd still be quite rich compared to most people.

That's the thing: it's not speculation. It's an hedge. And, as I'm not speculating, I don't give a flying if the price of gold goes down. Because I don't see it as $ xxx or yyy EUR: I see at "zzz gold". And should a huge SNAFU happen later on, I'll have zzz gold and be quite wealthy.

And that's what Germany is doing: hedging against a major SNAFU (like a split-up of the eurozone, hyperinflation in the eurozone and Germany's exit, etc.).