🪙 Gold: The Barometer of Distrust

He does not promise wealth, but safety. He does not guarantee prosperity, but survival.

Gold, whose ounce was flirting with $2,000 as recently as March 2024, is now on the verge of crossing the $4,400 mark. Up more than 55% over one year, and 16% this month alone, its acceleration is spectacular.

Perfectly proportional to the near-irreversible distrust toward the global financial order revealed by the surge of this “barbarous relic” (to use Keynes’s words), dethroned on August 15, 1971, by Richard Nixon, who “temporarily” suspended the dollar’s convertibility into gold.

🕰️ When “Temporary” Becomes Forever

Probably inspired by Clemenceau, who once said that “nothing lasts longer than the temporary,” President Nixon was already perfectly aware—even then—that there were far more dollars in circulation than gold in reserve.

Sixty-four years later, we are witnessing in real time the application of what could be called “Thiers’s Law,” named after one of France’s great statesmen, Adolphe Thiers, the first President of the Third Republic.

🏛️ Thiers’s Visionary Speech of 1848

Excerpt from his address to the National Assembly on September 16, 1848, during the debate on the Constitution, in which he tackled the question of paper money:

“Paper money — this currency whose value depends solely on public confidence — when that confidence fails, what becomes of it? It depreciates. It loses its guarantees. And then, the worker, the craftsman, the merchant refuse to accept it, or do so at a lower price.
It is not enough to decree that this paper shall be worth a certain amount; someone must be willing to exchange it for that amount. If such exchange does not occur, money remains foreign to the real economy, and society suffers.
Money is not an arbitrary creation of the law; it is a commodity — a precious one — chosen by the universal consent of peoples.
When the State seeks to substitute its credit for that of metal, it attempts something that social nature does not permit. Paper money, gentlemen, is an illusion of wealth. It creates no real value; it merely shifts existing wealth. It is dangerous, for it can be issued in excessive quantities, thereby depreciating its own value.”

💡 An Economic Lesson Still Relevant Today

Isn’t this speech eerily modern and suited to our current circumstances, 177 years later?

If given the freedom, Thiers affirmed, people will naturally choose the best currency — the one in which they have confidence.

His principle, set forth in 1848 but studied in economics departments around the world, explains how economic agents hoard the “good” money and spend the “bad,” of lesser value.

Thiers knew his history: that of ancient empires which, in times of hardship, diluted the concentration of gold and silver in their coins!

⚖️ From Thiers to Gresham: The Mechanics of Money

This is precisely the phenomenon analyzed by a counselor to Queen Elizabeth I of England in the 16th century, Thomas Gresham, who observed (after Aristophanes and Copernicus) that “bad” money is systematically used for transactions, while “good” money (the one with higher intrinsic value) is hoarded.

Gresham’s Law demonstrates how high-quality money—whatever its form—tends to become scarce, even to vanish from circulation, locked away in vaults — today in metal accounts or even on the blockchain for cryptocurrencies — while the depreciated money floods the markets.

💣 The Foretold Implosion of the Fiat System

These principles apply today with chilling accuracy.

Fiat currencies — the dollar, euro, and yen — seem like empty shells, sustained only by a fading confidence in faltering institutions and exhausted central banks.

Visible symptoms of the system’s loss of credibility and of the failure of those in power: the U.S. Federal Reserve brought to its knees by a reality in which the cost of food and housing is soaring by 20–30% in real annual terms; a politically fractured Europe whose only escape forward is to rearm massively and rekindle its old demons; a Japan that no longer counts.

⚖️ Thiers and Gresham: More Relevant Than Ever

The laws of Thiers and Gresham are not dusty theories. They dissect the relentless mechanics of our implosion.

At $4,400 an ounce, the Western monetary empire no longer decays slowly — it convulses.

The United States of America now bears a debt easier to state as 40 trillion dollars than as forty thousand billion. For the first time in its history, its annual debt service ($1.16 trillion) exceeds its military spending ($1.13 trillion).

The payment of interest on its debt now surpasses the cost of maintaining and expanding its empire.

I wonder what Nixon would do today, in this situation, as all the tricks seem to have run out.

After all — true wealth may not be printable.