The drama of London's terror attack yesterday was clearly evident. The event itself factually illustrates that relationships between people and governments are in a state of radical change. Thus and presently, gold is significantly undervalued.
In considering this event, as it pertains to gold, I will use Occam's Razor.
In times of instability, gold becomes more desirable as a store of value. The mechanism of denial presently constrains the value of gold from appreciating. The majority of market participants are intentionally short of fact. Over time, facts will prevail. Because facts are not prevailing, gold is undervalued.
The majority will reach a point where dissonance to fact can no longer prevail. At such a time, the illusion of wealth will be lost. Gold needs to be purchased before reality sets in. It's still possible to buy it at a significant under-valuation.
The Overcomplexity of the Deflation-Inflation Argument
Individuals allocating monies to physical gold need not be at all concerned with the inflation-deflation debate. It is generally agreed that gold will perform well under the "best worst case", which is inflation.
In the worst case (deflation), gold will likely find value through its inverse relationship to instability. Stability, and the good faith and credit of nation states, are synergistic and inseparable.
Fiat money currency can hold value only under stable military, political, economic, legal and social conditions. Change is taking place and will continue to do so. Stability has been lost.
Hard and Soft Currencies
During my lifetime I have visited "third world" and Soviet bloc countries, where fiat money paper can lose (or does not have) international convertibility against hard currency. In such places, hard and soft currencies coexist.
Most people in the US have no working experience with two currency systems, bimetallic currencies included. In such systems, small units of hard currency are horded while larger amounts of the soft currency circulate. Perhaps, Gold could be horded hard currency vs. Silver or paper as soft currency.
When the dust settles after a deflationary period, fiat money paper may be accepted locally and may have value, because purchasing and earnings power are scarce. It is most likely that local paper monies will hold value to purchase labor.
However, I doubt that fiat money will be accepted for international trade and for shortfall necessities such as food and energy. For hard goods, real money or purchasing power will be required. Necessity goods are subject to international competition and sourcing.