“Gold is money. Everything else is credit.” — J.P. Morgan
I always believed gold to be real money. You can bury it for a thousand years, dig it back up, and it’s still gold.
Almost all the gold ever mined still exists, about 216,000 tonnes. If you melted it all down, it would fit into a cube roughly the height of a seven-storey building. That’s it.
Human civilisation, stored in a lump you could walk around in a minute or two. Compare that with fiat money, which grows relentlessly.
Gold is essential beyond its monetary value, serving indispensable roles in high-reliability applications due to its unique physical properties. It is crucial in:
- Electronics: Components in computers and mobile phones.
- Medicine: Used in cancer treatments and medical implants.
- Aerospace: Provides vital radiation protection for NASA spacecraft.
For most of history, money was tied to something scarce, like gold.
The scarcity of gold enforced discipline but simultaneously restricted the growth of wealth because of the limited amount that could be mined annually.
However, when governments abandoned the gold-based monetary system, they largely did so to fund wars, expand welfare states and manage crises.
In recent years, governments have eroded monetary discipline by resorting to printing more money during peacetime—an easy but destabilising long-term solution.
Fiat money is powerful. It’s light, flexible, and incredibly useful. It allows economies to fight deflation, fund innovation, and respond quickly to crises. But like any powerful tool, it gets abused.
Printing money is easier than fixing structural problems. Getting more in debt is easier than enforcing discipline.
History shows this pattern over and over, from ancient Rome to modern Argentina.
Think about it this way. Most of the things we call “wealth” today are, in fact, promises.
A promise that a government will behave. A promise that a company will stay profitable.
A promise that tomorrow will look roughly like yesterday. Most of the time, those promises hold. Sometimes, they don’t.
A gold coin pulled from a Viking hoard still looks like money, while the currency those people used is now a museum label.
It’s why ancient Egyptian gold dental work survives intact while entire empires have turned to dust. Gold doesn’t care who’s in power or what economic theory is fashionable. It ignores it all.
Fiat systems are confidence-based. When confidence erodes, people start looking for assets that don’t rely on promises.
Also, inflation doesn’t need to be extreme to be damaging. Even moderate inflation compounds into a quiet transfer of wealth away from cash savers.
Since 2009, the Argentine peso has suffered a catastrophic devaluation, losing 99.8% of its value.
Global public debt is already enormous, over $100 trillion, according to the IMF, and is projected to keep rising.
The re-evaluation of gold as a sanction-resistant reserve asset has been a key development since 2022.
This shift was largely triggered by the freezing of Russia’s foreign assets, which underscored the significant political risk that most central banks face regarding their reserve holdings.
Gold supply grows slowly (2%) a year relative to fiat money creation. Mining output can rise when prices rise, but it responds on a long timeline.
New mines take years to permit, fund, and build. That slow supply response is part of why gold behaves differently in shocks.
Despite this, the stock market remains, by a significant margin, the superior long-term safeguard against inflation.
What fascinates me is that gold has survived more than 5,000 years of regime changes, wars, religions, technologies, and financial systems.
Of course, the longevity doesn’t guarantee the future—but it tilts the odds. Things that last are more likely to keep lasting.
Gold also stirs emotions like few other assets: greed, fear, obsession and reverence. Its price moves less on supply and more on psychology. It reflects how people feel about the system they live in.
It’s also why gold can be uncomfortable to own. It produces no income. It just sits there, quietly doing its job. And its job is not to make you rich. Its job is to keep you from getting poor when the rules change.
Today, the stock market valuations are stretched, and investors want insurance against the uncertainty surrounding AI. Some are turning to gold, and some to hedging instruments.
The key takeaway is this: we just need to recognise that all systems evolve and trust is cyclical. There is comfort in owning a small percentage of an asset that requires no justification and makes no guarantees but survived thousands of years.
The exploitation within the fiat system is evident, and a new global financial structure, potentially featuring decentralised payment systems, is emerging to challenge the traditional monetary system.
The extent to which governments will permit this disruption remains to be seen.
As Henry Ford once suggested, public awareness of the banking system’s practices, specifically how banks lend out nearly all deposits with minimal reserves, could spark a new revolution of money.
Given this, the arrival of a new world order in finance is a distinct possibility.
Awet Ghirmay, Head of Investment Research
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Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
