It is vital to understand the legal and practical role of gold

Fiat currencies, central banks, commercial banks, and even governments themselves face a looming credit crisis.

Without a proper knowledge of the legal basis which defines gold as money and that everything else is credit, we cannot fully understand why the only escape for individuals from the growing financial calamity faced by America, Britain, Europe, and Japan is to sell credit to buy physical gold bullion and coin.

As to the danger, you would have to be a blind deaf mute to not be aware of the mounting instability in our credit system. Not only are central banks, issuers of our currencies technically bankrupt, but profligate governments with debt to GDPs of 100% and more are as well. Additionally, commercial banks face a range of crises which through systemic risk threatens to collapse the entire western banking system. And anyone who blithely thinks that these problems will go away with lower interest rates (as widely expected in heavily managed markets) displays irrational hope over rational thinking.

The reality of today’s credit markets is that in the not too distant future they face the prospect of a total collapse. The only escape for those seeking to protect their wealth is to get out of credit. This includes all financial assets. But to sell down risk exposure and to leave the proceeds on deposit at a bank still leaves investors with a pig-on-pork credit risk. There’s the bank itself and also the currency in which the deposit obligation is recorded. It is fiat, meaning that its value in terms of purchasing power is down to no more than faith — faith which is initially decided by foreigners in the foreign exchanges, likely to catch domestic users on the hop unexpectedly.

The only escape from this looming credit crisis is to possess physical gold — bullion and coin. But to understand why requires us to unwind decades of Keynesian and statist anti-gold propaganda. Accordingly, this article puts gold and credit in their proper legal contexts, so that the reader can truly understand why gold is the only escape route from a gathering credit crisis, and therefore act to protect his or her wealth with a confident understanding of the why and the how.

I strongly urge my Substack subscribers to read this article at least twice. It has never been more important to understand why in a general credit crisis, the only refuge from it is ownership of physical gold.