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When virtually all global financial institutions are exposed to one another in today's world of free flowing capital markets, where do you hide when bankrupt borrowers like Greece default?

Certainly not in French banks, which have lost almost half of their share value over the past year due to their Greek exposure. And if French banks go down, the country's credit status could get downgraded.

That would not be good news for German taxpayers, who, according to the terms of the euro zone's Stability and Growth Pact, would have to shell out an even bigger share of the mounting costs of the bailouts for the PIIGS (Portugal, Italy, Ireland, Greece and Spain) than they are already shouldering. With German taxpayers frustrated at sending so much of their good money chasing bad, they are unlikely to want to open up their wallets any more than they already have.

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Until the Euro loses its PIIGS, it is going to remain a troubled currency, with growing dissension among the ranks of the 17 member monetary union.

But across the Atlantic, the U.S. dollar is no more attractive a sanctuary from the shockwaves reverberating around global debt markets. The U.S. banks are not vulnerable to the contagion effects of a debt default by the PIIGS but Washington has some major league debt issues of its own.

The fact that so much of America's debt is now foreign owned makes devaluation of the U.S. dollar intrinsically appealing to the U.S. Treasury.

That leaves gold , which once again becomes the de facto global currency and the safest sanctuary from the risk of sovereign debt defaults. For all intents and purposes, gold has become the other side of the trade for everybody who wants to bail out of U.S. dollars.

What makes gold so appealing in today's unsettled currency markets is unlike the Japanese yen or the Swiss franc, which saw their country's central banks quickly push back when their currencies were getting too strong for their economy's liking, gold has no one central bank to lean against the wind.

As well, gold has no export sector upon which the livelihood of millions of workers depends upon the competitiveness of their exchange rate. In today's world of faltering economic growth and rising unemployment, these are admirable qualities for a currency or, in this case, a surrogate currency to hold.

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