re: Looming Depression! Why will gold go up? Can anyone please...

re: Looming Depression! Why will gold go up? Can anyone please explain why gold will go up if there is a depression? In the past gold has gone up in periods of inflation or war. I think we all agree inflation isn't a problem and the only war on the horizon is with Iraq which should be over very quickly, therefore, I am having a tough time seeing why gold will go up.

The gold bulls arguement that people want to hold a physical asset (gold) when fiat money collapses I have trouble comprehending. Can someone explain it please? If the world has deflation the safest thing to buy or do is to pay down debt as your dollars become more valuable as prices fall. Why buy gold which is an inconvenient store of wealth? I think being debt free is a better investment than gold.

I believe the world's economies are in big trouble and it won't take much to send them into a bad recession / depression but I am struggling with the notion that gold will increase dramatically.