I would add to government accumulation the likelihood that as incomes rise in the East there will also be increased demand from households. There already is.
In the West, physical gold is mostly bling, with much of the saving in gold held largely in derivates as financial saving. And, as Jesse observes, the "paper gold" — "digital gold" really — is an issue owing to hypothecation and re-hypothecation.
In the East physical gold doubles as ornament and real saving. In addition, in Hindu India physical gold serves as a temple token. Some of the great temples have enormous stores of gold.
With global turmoil extending to the money system governments, especially in the East, and rising incomes there, with people traditionally desiring to hold physical gold, physical gold is being accumulated in that part of the world more than others.
While the gold bugs may be over the top in their assessments, demand for physical gold seems to be strong, it seems to me, for some of these reasons.
I don't want to get into the controversy over whether gold is "money," but a whole lot of people treat it as "money," and central banks have traditionally dealt in it and vault gold is considered the foundational real reserve. So, while there are many technical reasons for not considering gold to be "money," there are also a lot of practical reasons that many people do view it as "money."
More precisely, physical gold is the historical
numéraire, along with silver as secondary and copper third. For example, in the Bretton Woods system, the value of the dollar was fixed by a conversion rate into gold. Gold ceased to be the de jure numeraire when Nixon ended international settlement in gold, but many still view gold as the de facto numéraire.
Economists don't put much emphasis on the monetary significance of gold – with silver and copper now being chiefly industrial commodities, especially copper. However, conventional economists still tend to assume a gold standard and they reason "as if" on a gold standard.
The financial world is much more focused on precious metals as not only commodities but "an asset class" that serves as a saving vehicle that can be the basis for derivatives. Thus, this asset class includes both the physical metal as real saving and derivatives based on it as financial saving.
If one wishes to integrate economics and finance, then the gold becomes important as a bridge concept.
