There’s more than one side to every market. Our new monthly "The Other Side of the Coin" series is where we give individuals the floor to share their own take on the forces shaping precious metals. Their views are their own, not necessarily ours – but we think they’re worth hearing.

This month we spoke to one of our product experts, John, who has worked within the precious metals industry for almost 20years. We get his thoughts on the topic of Fiat and if he thinks in light of the ever increasing global debt pile and governments struggle to control inflation, if its a doomed concept:

Is Fiat doomed?

No – it’s the wrong question.

The more relevant question is perhaps what happens to the assets and institutions sitting behind fiat currency - and its purchasing power along the way.

Fiat will almost certainly remain the unit through which the majority of the world's population earns, spends, borrows and pays tax for the foreseeable future, even as money becomes increasingly digital. The system is simply too entrenched and interconnected to disappear without enormous disruption. The recent Japanese / US joint intervention to stabilise the Yen (and avoid them selling off treasuries, increasing USA borrowing costs) illustrates this interdependence. Fiat provides basis as a taxable unit of account and provides huge power to the issuer of that currency.

The popular misquote “Give me control over a nation's currency, and I care not who makes its laws.” – even if not an actual quote- holds some truth. While developed economies are proud to highlight the independence of their central banks, free from state interference – history suggests that when push comes to shove, then the lines between treasury and central bank become blurred as they act together to save the financial system.

I believe that saving the financial system and preserving the value of the currency are not the same thing. At times, they can pull in completely opposite directions.

The currency survives, but the rules and assets behind it change.

The British Pound survived the end of the gold standard. The US Dollar survived Bretton Woods. The currency endures while the system around it changes.

Senior figures in central banking, commercial banking and government finance understand this. In many cases they are the same people who move between these roles interchangeably. They understand economic history and they certainly understand the role of gold. They are not clueless – do not underestimate them or their ability to change the rules mid game.

We already see the reserves of central bank gold surpassing the reserves they hold of treasury debt. Recent trade data suggests an extraordinary surge in U.S. gold exports since October 2025, at times making gold one of America's largest export categories. Predominantly exporting to Hong Kong, Switzerland and London. Flows onwards from London and Switzerland also point to an Eastward trajectory for gold. Some believe a portion of the USA trade deficit is – in effect – already being net settled in gold with countries like China and some OPEC countries – they want more gold and fewer dollars. Historically countries who are accumulating gold imports are strengthening, those who are exporting it are not. Gold, in my view, will become an increasingly important asset as institutions and people generally try to avoid the currency devaluation and the financial repression that will be imposed on a faltering monetary system.

The problem started a long time ago

That faltering is already happening in my humble opinion. We started with the great financial crisis in 2008 where we tried to solve a debt problem with more debt and supressing interest rates through central bank purchases of debt. Government borrowing then drives up interest rates and reduces private sector investment and lowers growth. The debt level cannot increase forever without impacting the economy.

Japan was, until recently, held up as the example of why the debt could continue growing forever without inflation – their recent experience of raising interest rates and seeing a fall in the value of their currency (inflationary) requiring the aforementioned US / Japanese currency intervention debunks that theory and it is worrying to see a developed economy exhibiting emerging market characteristics and vulnerabilities. The broader point being that markets are starting to test the assumption that very high debt levels can coexist indefinitely with ultra-low rates.

So just tax our way out?

If only it were that simple. Whilst taxation can raise revenue, I believe taxation beyond current levels carries a risk of triggering a recession. And with a recession, there's further risk of the deficit continuing to climb as debt interest expense increases. There is no painless lever marked "Fix Debt" sitting in a central bank basement. My expectation is that when policymakers are eventually forced to choose between protecting the purchasing power of currency and protecting the functioning of an over-indebted financial system, they will prioritise the system. That could mean greater liquidity, lower real rates, financial repression or other policies that gradually reduce the real burden of debt.

The next five years worry me

As is everything I have wrote so far, this is only my opinion, but I believe the current woes are all part of the same rolling crisis that started in 2008. I expect this to deepen rapidly over the next 5 years as A.I. job losses help drive a widening wealth gap, growing deficits to support those job losses, greater political upheaval due to economic inequalities, and more geopolitical instability as countries compete for resources. It's not the world's most reassuring cocktail.

Ukraine and the Middle East may prove to be isolated conflicts, or future historians may view them as early symptoms of a much broader period of instability. I don't know , but neither does anyone else really at this stage. However, I don't think the possibility should be casually dismissed.

I do feel that history tells us we are well on this path – and once you are on a path, do not be surprised when you reach that destination. There are some parallels to the period preceding WW2, the American Civil War, American war of independence and earlier crises - which is sobering. And whilst history doesn't carry a stopwatch, human behaviour does have an irritating habit of rhyming. All those moments in time have a frequency of around 80 years between them and I believe we are approaching our crescendo now.

So It’s all doom and gloom them?

Even backing currency with Gold didn’t stop these crises historically. All prior crises were ultimately driven by the fight for a greater economic opportunity – there is no stronger driving force than this instinct to provide for our children. If maintaining your economic worldview requires betting against people's determination to provide a better future for their children, then good luck with that.

But despite me saying this, I do think there is an extraordinarily bright future once we clear this period. Humanity has navigated monetary crises, technological revolutions, wars and political upheaval many times before. We've subsequently built new institutions, created extraordinary technologies and produced standards of living previous generations couldn't have imagined. And history suggests periods of upheaval are eventually followed by periods of renewal.

So whilst I think the monetary system is changing again, I think the difficult bit getting from this one to whatever comes next, ahead of what hopefully will be brighter days.


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