Gold Returns to the World of Finance: Eternal Money Against the Paper Illusion
In an era of economic instability and diminishing predictability, we find ourselves reaching for instruments that have proved reliable across millennia. Among them—perhaps the only truly reliable one—is gold. For the past fifty years, the “lords of money” have done everything in their power to banish this metal from the world of finance and replace it with the dollar. They demoted it from a universal equivalent of value to the status of an exchange commodity, an industrial raw material, a relic of the past. They artificially suppressed its price. They created entire markets of fictitious, paper gold that exists only as entries in a computer.
None of it worked. Gold remained what it has been for five thousand years—the only real money. And now it has a chance to reclaim its throne.
The Day Money Became a Promise
Every story has its turning point. For the modern financial system, it came in 1971, when President Richard Nixon closed the “gold window”—the ability to exchange dollars for gold at a fixed rate. Five years later, at the Jamaica Monetary Conference, the world formally abandoned the gold standard. From that moment on, money ceased to be something; it became merely a promise of something.
This was a fundamental shift whose consequences most people fail to understand to this day. When you hold a banknote in your hand, you hold a piece of paper with printing on it. Its value derives from nothing material—it derives solely from your belief in the government’s ability and willingness to honor that promise. And history has shown, time and again, what happens when that faith weakens. Weimar Germany. Zimbabwe. Venezuela. Argentina. In each case, people woke up one day to find that their life savings couldn’t buy a loaf of bread.
Gold is something else entirely. It is not a promise—it is a thing. Its value depends on no government, no central bank, no financial institution. A gold bar mined by the Romans two thousand years ago is as pure and valuable today as it was the day it was extracted. The same cannot be said of any currency that has ever existed.
J. P. Morgan, the most powerful banker in American history, testifying before Congress in 1912, captured this distinction with brutal precision: “Money is gold. Everything else is credit.” More than a century has passed, and these words have lost none of their truth. If anything, they have gained in relevance.
Inflation as Hidden Taxation
Friedrich August von Hayek, the Austrian economist and Nobel laureate, surveyed the historical record with unsparing precision: “With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.”
Lysander Spooner, the nineteenth-century libertarian philosopher, reframed the problem of inflation in terms that expose the linguistic sleight of hand at the heart of modern economics: “In reality, there is no such thing as an inflation of prices, relatively to gold. There is such a thing as a depreciated paper currency.”
Prices denominated in gold may fall, hold steady, or rise—but the phenomenon we call inflation reflects only the depreciation of paper money. When gold climbs against the dollar, it is not because gold has grown stronger. It is because the dollar has grown weaker.
Peter Schiff, the economist and fund manager, put it with brutal clarity: “Gold has intrinsic value. The problem with the dollar is it has no intrinsic value. And if the Federal Reserve is going to spend trillions of them to buy up all these bad mortgages and all other kinds of bad debt, the dollar is going to lose all of its value. Gold will store its value, and you’ll always be able to buy more food with your gold.”
The Anatomy of Suppression
What until recently sounded like conspiracy theory is now documented historical fact. For decades, the price of gold was systematically manipulated downward. The mechanisms of this manipulation were sophisticated and multilayered.
First came official interventions—sales of gold from the reserves of the U.S. Treasury and the International Monetary Fund. Then an informal cartel emerged, encompassing the Federal Reserve Bank of New York, the Bank of England, and the largest investment banks on both sides of the Atlantic. The cartel used metal from official reserves, disguising the process with sham loan and lease agreements.
At the turn of the century, the Washington Agreement was signed, in which some fifteen European central banks agreed to “controlled” sales of gold from official reserves. Switzerland, England, France, Germany—all systematically divested their gold, officially in the name of “modernizing” reserves, in reality to keep the price of the metal low and the value of the dollar high.
But the most sophisticated tool of manipulation became so-called “paper gold”—futures contracts, options, and other derivatives linked to gold, which in ninety to ninety-nine per cent of cases never result in delivery of physical metal. On the London Bullion Market Association exchange, gold worth more than six hundred billion dollars changes hands daily. Annually, that’s a sum exceeding the entire G.D.P. of most countries. And nearly all of this trading involves gold that doesn’t physically exist—contracts on paper, delivery obligations that no one intends to fulfill.
This enormous scale of trading in derivatives linked to gold made it possible to influence the price of the real metal. The structure of the futures market by its very nature allows trading in multiples of the physically existing gold supply—and while this doesn’t necessarily require a conspiracy, it creates a system in which the price of the metal can be shaped by speculative capital flows rather than by actual supply and demand for physical gold.
Basel III: The End of Paper Alchemy
And then something changed. The Bank for International Settlements in Basel—an institution that might be called “the central bank of central banks”—has for years been developing standards regulating banking operations. After the financial crisis of 2008–09, it became clear that the existing rules were inadequate. Work began on new standards, known as Basel III.
And here is where gold enters the picture.
The new regulations introduce a fundamental change in how banks treat gold. First, physical gold stored in bank vaults receives a zero risk weight—placing it on par with cash and government bonds. Second, gold begins to be treated in bank accounting as a foreign currency rather than an industrial commodity. Third—and this is crucial—banks must now hold eighty-five-per-cent collateral on all transactions involving unallocated gold.
What does this mean in practice? That the era of unlimited trading in fictitious gold is coming to an end. That banks which could previously buy and sell paper gold with no backing in physical metal must now have nearly full backing. That the game which for decades allowed gold-price manipulation is suddenly becoming prohibitively expensive.
The reaction from defenders of the old order was immediate and panicked. In May of 2021, the London Bullion Market Association and the World Gold Council sent a desperate appeal to British regulators, asking them not to implement the new standards. The official reason was “concern for market liquidity.” The real reason was concern about the end of manipulation.
Hugo Salinas Price, the Mexican billionaire and longtime observer of precious-metals markets, commented bluntly: the new rules mean that the price of gold will no longer be manipulated by the United States and the United Kingdom, because their banks will no longer be able to use nonexistent gold as a tool for controlling prices.
Gold as a Geopolitical Weapon
The history of gold is not merely a history of financial manipulation. It is also a history of geopolitics—and that history is now accelerating at an unprecedented pace.
When, in 2022, the West froze Russian foreign-exchange reserves—some three hundred billion dollars—the world received a brutal lesson. It turned out that money held in Western banks, denominated in Western currencies, could be confiscated with a single signature. For many countries, this was a moment of awakening. If it could be done to Russia, it could be done to anyone.
The response was predictable: central banks around the world began buying gold at a pace unseen in decades. China. India. Turkey. The Gulf states. Even Poland significantly increased its gold reserves. The logic is simple: gold stored in one’s own vaults cannot be frozen or confiscated by anyone.
But this is only the beginning. Within BRICS—the group comprising Brazil, Russia, India, China, and South Africa—work is under way on new settlement instruments potentially linked to gold. Russia is experimenting with the concept of a “gold crypto-ruble” for international settlements. China has for years been systematically increasing its official gold reserves, and its unofficial holdings are likely far larger. These are still prototypes and experiments, but the direction of change is unmistakable.
The West is responding with sanctions on Russian gold, trying to discredit it as “unethical” and force sales at a discount. But the very fact that gold has become a subject of sanctions proves its strategic importance. One doesn’t impose sanctions on things that don’t matter.
Charles de Gaulle once said, “Gold does not change its nature; it has no nationality.” He was right. But precisely because gold transcends political divisions, it is now becoming an arena of global rivalry. Whoever controls gold controls an alternative to the dollar system.
Why Governments Hate Gold
Anyone trying to understand the modern financial system must ask a fundamental question: why have governments tried so hard to degrade gold? Why have the world’s most powerful states devoted enormous resources to manipulating the price of a metal they officially dismissed as a “barbarous relic”?
The answer is simple and unsettling: gold limits power.
Under a gold standard, a government cannot simply print money when it needs it. It cannot finance wars, social programs, or bailouts of failing banks by firing up the printing press. Each unit of currency must be backed by physical metal, whose quantity is limited by geology and extraction technology. This is a natural financial constitution that no parliament can amend.
Herbert Hoover, the thirty-first President of the United States, expressed this with rare candor: “We have gold because we cannot trust government.” The sentence sounds like a libertarian manifesto, but it was uttered by a head of state. Even presidents understood that the power entrusted to them requires external constraints.
Alan Greenspan, before he assumed the chairmanship of the Federal Reserve, wrote even more openly: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process.”
This is a remarkable confession—and a remarkable hypocrisy. The man who would later direct American monetary policy for nearly two decades had earlier clearly articulated that the system he would manage is inherently a mechanism of confiscation. That without gold, governments can—and will—steal their citizens’ wealth, not through overt taxation but through the dilution of the value of money.
And this is exactly what we have observed for fifty years. The dollar has lost nearly ninety per cent of its purchasing power since the departure from the gold standard. Politicians and economists call this “inflation,” as though it were some external meteorological phenomenon beyond anyone’s control. But this is linguistic mystification. There is no such thing as rising prices relative to gold—an ounce of gold buys roughly the same amount of goods today as it did a century ago. What exists is the depreciation of paper currency. Prices aren’t rising—money is losing value. And it’s losing value because someone is printing it.
The Illusion of Money
We live in a world of financial illusions so pervasive that most people take them for reality. One of the greatest is the belief that the money in our wallets and bank accounts is something real.
It isn’t. Modern money is an entry in databases, created by banks out of nothing at the moment a loan is made. When a bank lends you a hundred thousand dollars for an apartment, it doesn’t reach into a vault where other depositors’ money lies waiting. It simply credits that sum to your account, creating money that didn’t exist before. The entire banking system rests on the assumption that all depositors will never come for their money at the same time—because that money physically isn’t there.
Ray Dalio, founder of the world’s largest hedge fund and a man who has managed assets exceeding a trillion dollars, put it precisely: “Gold is the only asset that is not someone else’s liability.” This is a fundamental difference. Every other financial asset—stocks, bonds, bank deposits, insurance policies—represents someone’s promise. The value of stocks depends on whether a company will prosper. The value of bonds depends on whether the issuer will be able to repay its debt. The value of a bank deposit depends on whether the bank will remain solvent. All of these are bets on the future behavior of other people and institutions.
Gold is not a bet. It is simply gold. Its value depends on no one’s promise, competence, or honesty. It cannot go bankrupt, cannot be diluted by additional issuance, cannot be printed by a central bank. When you hold an ounce of gold in your hand, you hold something that people have valued for five thousand years and will value for the next five thousand.
This is why so many members of the financial establishment, despite their official rhetoric, privately accumulate gold. They know how the system they help create works. And they know that every system based on promises ultimately collapses when there are too many promises.
The Lessons of History
The history of fiat currencies is monotonously predictable. Each of them ends the same way—in inflationary collapse. Only the tempo and circumstances differ.
The most famous example is the Weimar Republic. In 1919, one dollar cost four marks. By November of 1923, it cost 4.2 trillion marks. People burned banknotes in stoves because they were cheaper than firewood. The savings of an entire generation evaporated in a few months. What followed—the rise of Nazism, the Second World War—can largely be attributed to the trauma of hyperinflation, which destroyed the middle class and radicalized society.
But Weimar was not an exception. It was the rule. In the twentieth and twenty-first centuries, dozens of countries experienced hyperinflation: Hungary, Yugoslavia, Argentina (repeatedly), Brazil, Peru, Bolivia, Zimbabwe, Venezuela. In each case, the pattern was similar: the government printed money to finance deficits, inflation rose, the government printed more, inflation rose faster, until finally the system collapsed under its own weight.
Venezuela was still the richest country in Latin America in 2000, with enormous oil reserves. Today its currency is practically worthless, and citizens pay for purchases with backpacks stuffed with banknotes. In 2008, Zimbabwe was printing hundred-trillion-dollar notes—and even those weren’t enough for daily shopping.
Those who say “it can’t happen here” don’t know history. Or they’re deliberately ignoring it. Every empire, every economic power that ever existed eventually debased its currency. Rome began with silver denarii and ended with bronze coins covered in a thin layer of silver. Spain flooded Europe with gold from the Americas, only to go bankrupt within a century. The British pound sterling, once “as good as gold,” was linked to the metal from 1717 but abandoned the gold standard on September 21, 1931, during the Great Depression. According to the official inflation calculator of the Bank of England and the Office for National Statistics, a hundred pounds in 1931 equals 8,705 pounds today—which means the pound’s value has fallen to 1.15 per cent of its original worth, a loss of 98.85 per cent.
The American dollar is in the same process. It’s taking longer because the dollar has reserve-currency status—but that’s a status that can be lost. And everything indicates that the dollar is following the same path.
Freedom Is Golden
There is another dimension to gold that is rarely discussed in conventional financial analysis: the dimension of freedom.
Money controlled by the government is an instrument of control. Every transaction can be tracked. Every account can be frozen. Every citizen can be financially “switched off”—cut off from the ability to buy, sell, travel. We saw it in Cyprus in 2013, when the government simply took a portion of bank deposits. We saw it in Greece in 2015, when citizens could withdraw a maximum of sixty euros per day from their own accounts. History knows dozens of similar cases—and will know more.
Gold is the antithesis of this control. Physical gold, stored outside the banking system, cannot be frozen by an official’s decision. It cannot be confiscated without physically breaking into your home. It leaves no digital trace. It is, as Ralph Waldo Emerson said, “the means to freedom”—not an end in itself but a tool that allows the individual to maintain autonomy against excessive state power.
This is why authoritarian regimes throughout history have tried to restrict private gold ownership. Franklin Delano Roosevelt in 1933 ordered Americans to surrender their gold under threat of imprisonment. The Soviet Union criminalized gold ownership for most of its existence. India for decades imposed drastic restrictions on gold imports. Power instinctively understands that a citizen who owns gold is a citizen harder to control.
Of course, gold confiscation in Western countries seems unlikely today. But it seems unlikely precisely because we haven’t yet experienced a true crisis. In moments of panic—and history teaches that such moments come—governments reach for measures that seemed unthinkable only recently. Better to have protection you don’t need than to need protection you don’t have.
Alchemy in Reverse
Medieval alchemists dreamed of transmutation—turning lead into gold. They never succeeded. But modern alchemists at central banks have accomplished something equally magical, only in the opposite direction: they have convinced the world that paper is as valuable as gold.
This illusion has persisted for fifty years. It persists thanks to widespread ignorance, trust in institutions, and the absence of direct experience with hyperinflation in developed countries. But the foundations of this illusion weaken with each passing year.
Global debt has exceeded three hundred and forty trillion dollars and is growing at a pace impossible to repay. Central banks, which for decades pretended to be guardians of stability, openly admit that their main goal is now “managing” inflation, not eliminating it—which in practice means accepting a continuous decline in the value of money. Younger generations, burdened with student debt and real-estate prices many times their parents’ incomes, are beginning to intuit that something is fundamentally wrong with the system.
In this context, gold is not an “investment” in the conventional sense. It doesn’t generate dividends or interest. It doesn’t grow exponentially like tech companies in a bull market. It is something different and more important: it is an anchor in a world of drifting currencies. A reference point that allows us to measure what a paper promise is really worth.
When people say “the price of gold rose,” they usually speak imprecisely. Gold hasn’t changed. What changed is the value of the paper in which we price it. An ounce of gold buys roughly the same amount of bread, clothing, or housing today as it did a hundred years ago. But the dollar, the pound, or the mark buys a fraction of what they bought then. Gold isn’t getting more expensive—currencies are getting cheaper.
The Practice of Prudence
What does all this mean for an ordinary person who is neither a central banker nor a billionaire?
Above all, awareness. Understanding that money in a bank account isn’t safe in the way most people assume. That the system which appears stable rests on continuous money-printing and continuous dilution of value. That savings held exclusively in fiat currency are exposed to erosion that is hard to notice from month to month but that over decades can consume most of their value.
Many sensible observers—from conservative wealth managers to libertarian economists—recommend keeping a portion of savings in gold. Not as speculation, not as a way to get rich quick, but as insurance. Kevin O’Leary, the hard-nosed capitalist known for his ruthless assessment of investments, puts it plainly: he keeps five per cent of his portfolio in gold, treating it not as an investment but as an insurance policy.
The specific percentage depends on individual circumstances, age, risk tolerance. But the principle is universal: a certain portion of wealth should be held in a form that no government can print, no bank can freeze, and no inflation can dilute.
The Return of the Exile
Gold has survived the fall of every empire, every currency, every financial system in human history. It will survive this one, too.
We don’t know when or how the next great change in the global monetary system will come. Maybe in five years, maybe in twenty. Maybe it will be a slow erosion of confidence in the dollar, maybe a sudden crisis. Maybe the new system will be based on gold, maybe on a basket of currencies, maybe on something we can’t yet imagine.
But one thing is certain: when paper promises fail—and history teaches that they always ultimately fail—gold will remain. As it has for five thousand years. As it will for the next five thousand.
Richard Russell, the legendary analyst who observed financial markets for more than half a century, put it most simply: “Gold will be around, gold will be money when the dollar and the euro and the yuan are mere memories.”
This is not a prophecy. It is a historical observation, extrapolated into the future. Every fiat currency in history has eventually returned to its intrinsic value—zero. Gold never has.
And that is why, in a world of paper illusions, gold remains the only thing you can truly rely on. Not because it is magical. Not because it is beautiful. But because it is real.
Author: Robert Nogacki
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
