Every fiat currency in history has eventually failed.
Not most of them. Every single one.
The Roman denarius. The Spanish real. The Dutch guilder. The British pound – once the world’s reserve currency, now not.
The US dollar has held that status since 1944. In the sweep of monetary history, that is a relatively short run.
Gold hit an all-time high of $5,589 per ounce in January 2026. It now trades around $4,190. Most commentators called that a 25% correction and moved on.
They are looking at the wrong number.
What matters is the year behind it: gold rose 41% between May 2025 and January 2026. That is not a bubble popping. That is a structural signal giving back some altitude – while the message underneath it remains entirely unchanged.
Gold does not pay a dividend. It has no earnings. It is, in the strictest sense, a vote of no confidence – a bet that the alternatives are less trustworthy than a metal that has been scarce for five thousand years.
Five thousand years is the important phrase. In that time, every fiat currency ever created has eventually failed. Not most of them – every single one. Empires have debased their coinage, republics have printed their way through wars, and reserve currencies have come and gone. The Roman denarius. The Spanish real. The Dutch guilder. The British pound – which was once the world’s reserve currency and is no longer.
The Roman empire is probably the most obvious example. As the empire expanded, the cost of maintaining legions across three continents grew faster than the tax base could support. Conquest had been self-financing previously – looted gold and tribute from new provinces funded the machine. Once expansion slowed and borders had to be defended rather than advanced, that income dried up but the costs remained. As the empire’s debts grew, emperors began shaving the silver content of the denarius – from around 90% under Augustus to less than 5% silver three centuries later.
The consequence? Prices rose. Trade contracted. Confidence collapsed. The currency that had held the ancient world together for centuries became worthless within a generation. Rome did not fall because of barbarians alone. It was hollowed out from within, by debasement.
The US dollar has held reserve currency status since Bretton Woods in 1944. That is, in the sweep of monetary history, a relatively short run. And the dollar’s “exorbitant privilege” – the term coined by French Finance Minister Valéry Giscard d’Estaing in the 1960s to describe America’s unique ability to borrow in its own currency at the world’s expense – has never been infinite. It has simply, so far, been durable.
Gold is the market’s way of asking how much longer.
What we’re wathcing
The US national debt crossed $39.2 trillion in early June 2026. It is growing at roughly $8.2 billion per day. Interest payments on that debt are now running at $1 trillion per year – broadly equal to the entire US defence budget. The Congressional Budget Office projects those interest costs will double to $2.1 trillion by 2036, growing faster than any other item in the federal budget.
No country – not even one with the exorbitant privilege of issuing the world’s reserve currency – can compound debt at this rate indefinitely. The question is never whether the mathematics eventually reassert themselves. It is only when, and through what mechanism. Inflation is one mechanism. Currency debasement is another. Both are, historically, far more common than outright default. Both are bullish for gold.
Enter Kevin Warsh – newly appointed chairman of the US Federal Reserve, and the question of who, exactly, is running US monetary policy.
Warsh was appointed Fed Chairman by Donald Trump, who has been consistently and publicly vocal about wanting lower interest rates. The logic is straightforward: $39 trillion of debt is far easier to carry at 2% than at 4%. Lower rates reduce the interest burden, weaken the dollar, and inflate away some of the real value of that debt. A compliant Fed is, for a heavily indebted government, enormously valuable.
As the old saying goes, ‘He who pays the piper, calls the tune’, so we are left wondering what tune Kevin Warsh will play.
Warsh’s first act was to scrap forward guidance. The Fed no longer tells markets where rates are going. That may be genuine independence – a refusal to be boxed in. Or it may simply be optionality, preserving the ability to cut without appearing to capitulate. Markets cannot yet tell the difference. What they can see is that with inflation still running above the 2% target, the orthodox case is to hold or raise. The pressure from the White House runs the other way.
History suggests the White House usually wins that argument eventually. It did with Arthur Burns in the 1970s. The inflation that followed took a decade to repair.
Gold is watching that tension. So should you.
The expat angle
For those of you based in Switzerland, (or even just outside the USA), there is a layer to this that rarely makes the financial press.
Gold is priced in US dollars. The Swiss franc has appreciated roughly 56% against the dollar over the past 25 years. A Swiss-based investor holding gold in dollars has seen a meaningful portion of gold’s impressive returns eroded simply by the currency move – even before fees or tax.
The dollar’s recent strengthening – USD/CHF moved from 0.79 to above 0.81 in a single week – is a reminder that this dynamic cuts both ways in the short term. A stronger dollar temporarily flatters dollar-denominated assets in franc terms. But the 25-year direction of travel is clear. And if Warsh is eventually pressed toward cuts – by White House pressure, by the debt arithmetic, or by an economic slowdown – that direction reasserts itself.
The franc’s own resilience has a quiet logic to it. Switzerland runs a current account surplus. Its national debt is modest. Its central bank is not under political pressure to print. It is, in miniature, the antithesis of what gold investors fear about the US fiscal position. That is not a coincidence. It is why the franc has behaved, over decades, as a partial gold substitute – and why expats whose liabilities are in francs but whose assets are in dollars are carrying more currency risk than they may realise.
The question for your portfolio is not whether gold will recover to $5,000. It is whether your allocation reflects the currency and fiscal environment you are actually living in – or the one that felt familiar when you first built it.
One number
$1,000,000,000,000
One trillion dollars. What the United States will spend this year on interest payments alone – a figure now running broadly level with the entire US defence budget and projected to double by 2036. This is equal to 3.3% of US GDP in 2026.
The average interest rate on US marketable debt five years ago was 1.49%. Today it is 3.39%, on a debt pile that has grown by $11 trillion in the same period.
History has a long record of what happens when sovereign debt levels reach this point. The mechanisms vary – inflation, debasement, restructuring, default. The endpoint does not. No fiat currency has survived indefinitely. The dollar’s exorbitant privilege is real. It is not permanent.
Donald Trump wants lower rates. He appointed the man who sets them. Whether Kevin Warsh acts independently or accommodates that pressure may be the single most consequential variable in global markets over the next two years.
Gold already has a view.
If US rates stay higher for longer, the dollar strengthens and gold stays under pressure – but the debt compounds faster, and the long-run debasement thesis strengthens. If rates fall, gold recovers – but so does the question of whether the dollar’s reserve status can hold.
Either way, the fiscal problem does not improve. It is only deferred, or accelerated.
How much of your portfolio is genuinely protected against both outcomes?
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