Alasdair Macleod: Gold Returns to Monetary Power Amid the Fiat Reckoning

In the latest Live from the Vault, Andrew Maguire welcomed economist Alasdair Macleod to examine the accelerating breakdown of fiat currencies and the reassertion of gold as the ultimate form of money. Dismissing claims that gold is “overbought”, Macleod explains that COMEX open interest data shows no evidence of speculative excess. 

The recent rise in precious metals, he noted, reflects a bear squeeze rather than investor frenzy, highlighting a widespread misunderstanding of gold’s true monetary role. Western commentators, Macleod argues, continue to misinterpret market movements, failing to grasp that gold functions as final settlement – a payment method free of counterparty risk.

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The Decline of Fiat

Tracing gold’s role as money back to Roman times, Macleod emphasises that only metallic money provides true settlement. Fiat currencies, by contrast, are inherently temporary and promise only deferred payment, a fragile construct exposed by declining confidence worldwide. With the US dollar’s unbacked status formalised in 1971 after the end of Bretton Woods, gold’s enduring value is increasingly apparent, signalling the nearing conclusion of the fiat era.

China’s Strategic Accumulation

China’s long-term strategy in gold acquisition has been deliberate and disciplined. Since 1983, the People’s Bank of China has quietly built vast reserves, estimated to now exceed 75,000 tonnes when combining public and private holdings. 

Meanwhile, households divert a portion of their $5 trillion annual savings into gold, reinforcing cultural and policy-driven demand. The Shanghai Gold Exchange operates as a closed-loop system, ensuring imported gold remains in the country, draining liquidity from Western vaults and creating a structural shortage in the physical market.

Gold Squeeze is Coming?

Macleod warned that a mere one per cent increase in global portfolio allocation to gold would require 25,000 tonnes – a quantity that simply does not exist in the open market. With central banks hoarding metal, paper markets losing credibility, and institutional investors awakening to the importance of physical holdings, the stage is set for a historic revaluation. In this emerging monetary environment, tangible gold and silver will determine wealth preservation, while those reliant on fiat risk seeing their purchasing power evaporate.

As history has shown, those holding tangible wealth – not fiat or credit instruments – have a much greater chance to emerge on the other side of the crisis intact. In the words of Andrew Maguire “the time to act is now” before access to physical gold and silver becomes restricted by systemic failure.

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The opinions, analyses, and predictions expressed by Andrew Maguire and his guests in this content are his own and do not necessarily reflect the views, positions, or official policies of Kinesis.

This information is provided for informational purposes only and should not be considered financial advice. Kinesis assumes no responsibility for any investment or financial decisions made based on the information provided. Please consult with a qualified financial advisor for personalised guidance