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Behind this change in risk perception is a dawning realisation that the Middle East oil crisis threatens to destabilise the global economy which is already drowning in

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“In this exclusive interview, Alasdair Macleod joins us to unpack Matthew Piepenburg’s latest macroeconomic insights and the unprecedented shift currently unfolding in the global physical gold market.

”As retail investors get lost in the noise of daily price actions and short-term corrections, the world's 'big whales'—led by central banks and China—are quietly accumulating physical metal at historic rates. With China consuming roughly 40% of the world’s newly mined gold supply over the last decade and officially eliminating paper trading for gold and silver, the stage is being set for a new monetary system.

”We dive deep into the surging global bond yields, the weaponization of the U.S. dollar, and why gold is mathematically cementing itself as the de facto global reserve asset. If you are trying to navigate this broken financial system, understanding this historical wealth transfer is critical.”

Topics Covered in This Interview:

Are Central Banks & China the 'Big Whales' controlling the market?

China's 14,000-Tonne Masterplan: Positioning for the next monetary system.

Surging Bond Yields: Why central banks now hold more gold than U.S. Treasuries.

The End of Paper Gold: How China's new physical-only trading rules will shock global markets.

Gold's new role as the de facto global reserve asset and trusted collateral.

"The Greatest Buy Signal in a Generation": Protecting your generational wealth.

The chart of major currencies valued in gold shows them plunging at an accelerating pace, despite the six-month correction since January. The pace of their collapse is now resuming and if it continues, they will approximately halve by December. That implies a gold price exceeding $9,000. Not a forecast, just an extrapolation.

This article looks at the factors that might lead to this outcome; an outcome which implies a continuing collapse of major currencies’ purchasing powers which is unlikely to stop at a halving. Inevitably, it will lead to long bond yields rising rapidly which will destroy government finances and the fiat currency illusion.

The potential for bond yields to rise is clearly demonstrated in our next chart:

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In this interview we cover pretty much all that’s relevent in the near future.

Just about the only sensible arguments as to why this was the case veers towards conspiracies: bullion banks using febrile investor psychology that they should

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All fiat currencies end either by going back onto a metallic exchange standard or they simply die. The reason they die is loss of their users’ faith in their value, which always comes about through abuse. From Roman times to the current day, the abuse was by metallic debasement. Coins are now no more than tokens. The more topical abuse today is in the management of the currency by central banks, coupled with excess government spending over revenues.

In modern accounting, it is the accumulation of government debt which finally breaks a currency. We can begin to see this today in all G7 nations, whose currencies are the US dollar, the Canadian dollar, the euro, yen, and pound. The most critical debt situation is in Japan’s yen where the government’s debt is 240% of GDP, of which about half is owned by the Bank of Japan through quantitative easing. When the issuer of a currency buys in its government’s debt obligations it amounts to naked currency debasement.

The reasons for Japan’s debts need not detain us, other than to say they are still increasing. The question arises as to whether it can continue to be financed.

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There has been some debate as to which G7 will trigger the crisis first that brings them all down. We got our answer last week — Japan. Japan threatens to be the domino which falls first, knocking over the other G7s in a global crisis engulfing financial markets upon which our fiat currency system is based.

The purpose of Bessent’s intervention was to save Japan

Around August 1, 2026, the US coordinated with Japan to support the yen. Treasury

Secretary Scott Bessent was photographed at a Camp David cabinet meeting with a notepad reading “To Do Buy Japanese Yen $5-10 bil,” and both governments confirmed the action on August 3-4. Bessent described it on social media as “Friday’s coordinated foreign exchange actions countered disorderly yen movements.”

Rather than the more conventional approach of selling dollars directly, the Treasury reportedly sold euros held in the Exchange Stabilization Fund to finance the yen purchases.

Those appear to be the facts of the case. But other than causing a bear squeeze leading to a sharp 4.7% recovery in the yen/dollar rate, they have led to confusion as to what was to be achieved by this intervention. It should be noted that movements in

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Investors increasingly suspect that financial markets might be radically mispriced and nowhere is this truer than for precious metals.

In terms of the evolution of gold and silver prices, markets appear to be in a similar position to where they were in December 1973, after OPEC first hiked its reference price and before the second larger increase.

A reason for making the comparison with the position today is that price suppression by the US’s strategic reserves drawdown is coming to an end, and crude oil prices will almost certainly begin rising due to the prolonged Hormuz and now Bab el-Mandab closures. We appear to be following the 1973—1974 precedent.

Gold and silver have started moving higher with oil prices, reflected in both metal contracts on Comex. This is evident in the chart for gold and its open interest;

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In this article I explain the market consequences of America and its allies hiding the truth of its failure in the Persian Gulf war from markets. So successful has the propaganda been that markets are now more mispriced than I can remember in the 56 years of following them. Yet investors are blissfully unaware of the acute dangers to their wealth.

The extent of the US’s propaganda campaign even fooled central bankers and government treasury ministries. But the closure of the Red Sea at the Bab el-Mandab and the potential loss of a further 7 million barrels per day from global oil supplies is a wake-up call for policymakers. There are signs that they are now very worried about the prospects for consumer prices, the global economic outlook, government finances, bond yields, and financial markets generally.

But of course, they are not telling us for fear of spooking markets.

Introduction

The inflationary consequences of the closure of Hormuz and now Bab el-Mandab are beginning to undermine policymakers’ expectations. It seems that the Houthi’s attacks on Saudi refining have removed up to 7 million bpd and their derivatives from global supply, which will have dashed lingering hopes that the consequences of the war on Iran can be contained. And from his actions it is clear that President Trump is cornered into falsely claiming time and again that the Iranians want peace when they do not, to conceal the true seriousness of the crisis from financial markets.

None of government insiders’ assessments and concerns are made public. But central banks and finance ministries in the G7 communicate with each other continually. They will have some grasp of the current situation, know that there is no resolution in sight, and are reassessing the consequences.

In Europe, which is home to four of the G7, there is the additional problem of drought which is more than halving crop yields. For lack of grazing, farmers are forced to feed their livestock with hay and silage stored for next winter. Furthermore, it is reported that Russia has closed Ukraine’s shipping access to the Black Sea, which effectively stops her cereal exports. Before the war, Ukraine was routinely referred to as the breadbasket of Europe and the impact couldn’t come at a worse time.

Therefore, food prices across the board are set to rise significantly, which combined with the consequences of the Hormuz and Bab el-Mandab closures for diesel, petrol, aviation fuel, and shipping bunkers ensures that consumer prices will rise sharply by winter. Evidence that this is now feared in the UK’s Treasury was confirmed by the new Chancellor, John Healey threatening supermarkets not to “price gouge”. There was no necessity for his statement, which was almost certainly triggered by internal Treasury briefings.

Collectively, the investing public seem blissfully unaware of the true situation, nor are

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Finally, it appears that bond yields in the US and all other G7 nations are rising above the consolidation zones of the last three years. Higher bond yields will be a catastrophe for both businesses and governments, bankrupting many of the former and making the latter’s bonds uninvestible.

In their summer torpor, financial markets seem oblivious to these dangers. But this may be beginning to change. For investors, the consequences for their wealth tied up in all forms of credit including fiat currencies will be disastrous. Those who have sought the safety of real, common-law legal money without counterparty risk which is gold and secondly silver are the only people with protection from this looming catastrophe.

The significance of higher bond yields

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This is also true of the vast majority of precious metal dealers. If proof of this statement is needed, those who account for their dealings in gold and not in their fiat currencies are probably less in number than the fingers on your hand. In other words, they calculate their performance in credit, not money. Admittedly, they are made to do this for tax reasons by their debauching governments but none of them run parallel accounts in gold-grammes.

This is what ignorant investors see:

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Then there are increasing reports of countries switching trade settlements from dollars to yuan, giving the impression at least that the yuan is taking over from the dollar. This is very much a minority activity so far, but the yuan’s trend is clear. It continues to rise against the dollar, which must be a reflection of international shifts in the yuan’s favour, and against that of the dollar. It reflects a currency which shows that China’s leaders are growing more confident of the dollar’s demise.

Furthermore, Reuters reports that China is shipping man-portable air-defence systems (MANPADS) to Iran, which admittedly China strongly denies. If Reuters is right, then this is a minor escalation of assistance to Iran, but significant.

The single most important point to understand is that the US is being driven out of the Middle East and its role as the global hegemon effectively ends. It is the most important signal to the world outside the Americas that for all intents she can be

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Today’s relationship between money and credit started with the Romans. The first system of Roman law from which modern banking and commercial relationships evolved was the Twelve Tables (or Tablets) of 448 BC, which through subsequent jurists’ rulings established methodical habits of business, and defined value. The Twelve Tables were the foundation of Roman private law. And the fact that even today commercial banks have evolved their businesses on the basis of the Romans’ rulings says something about the durability of banking in its current form. The systemic problems we face today are more the responsibility of a far younger phenomenon — the rise and evolution of central banks.

It is central banks, coordinated by a Bank for International Settlements committee which are trying to develop systems to give the state more control over media of exchange, devising means of directing new forms of credit to enhance the states’ desired objectives, and withholding credit from those deemed disadvantageous to policy. A further evolution of the current system of fiat currencies is intended, which already operate in defiance of Roman and therefore our common laws and which history confirms always fail before reverting to the Roman-based system.

The legal distinctions of money and credit

What interests us in this topic is the system of recording transactions, which following Rome’s Twelve Tables and subsequent juristic findings were divided into two classes, res mancipi, and res nec mancipi. The former referred to a small list of physical property transferred by a formal ceremony of mancipation, or final settlement. It consisted of bronze-copper ingots (the physical form of money at that time), lands and houses on Roman soil, beasts of burden, slaves, agricultural rights, and other rights over land which are res mancipi. By this definition only a bronze-copper ingot weighing a Roman pound, the aes, was corporeal money and the final payment for discharging debt obligations. It was conveyed formally in the presence of five witnesses of full age (cives) and another citizen (librepens) carrying a balancing scale. The aes would be weighed on scales in front of the witnesses and handed to the seller in exchange for goods and to settle outstanding obligations.

Everything else were termed res nec mancipi, including incorporeal debt obligations, which were always entered into to be finally settled in aes in due course. The relationship between money and credit, the latter always the other side of a debt obligation and being subject to final payment was thereby defined in Roman law.

At the time of the Twelve Tables very few Romans were literate, agriculture dominated, and settlement practices reflected society at the time. The strict formalities of a property transfer in res mancipi were abolished by Emperor Leo in 469CE, reflecting the economic and social advances in the eight centuries since the Twelve Tables. Other forms of money, principally the silver denarius and gold aureus coins had entered into use during that time, replacing the earlier aes. The distinction between items confined to res mancipi and res nec mancipi was finally abolished in Justinian’s Pandects in 520CE. Reflecting the rulings of jurists Gaius, then Ulpian and Paulus in the second and third centuries CE, the relationship between money as final settlement and credit with its matching obligation was crystalised in their original relationship.

Jurists were independent wealthy statesmen and legal experts who initially advised the praetors and judges with the approval of the emperor. There is no equivalent of jurists today, but they directly influenced edicts issued by praetors and legal judgements on all matters. In the first two centuries CE, the power of the praetors to create edicts was gradually curtailed and juristic rulings given fuller legal weight. Thus it was that the three jurists particularly associated with the evolution of credit, debt obligations, and security for debt which had become common practice over preceding centuries derived their legal influence. The juristic system was only superseded by the direct authority of the emperor after the third century CE.

Despite these legal evolutions, Roman law firmly established that credit is always the other side of a debt obligation only to be extinguished by final agreement between creditor and debtor. The jurist Gaius (130—180CE) ruled that a debt obligation was strictly personal between debtor and creditor and could only be transferred to another creditor with the agreement of the debtor. Because the Romans had left Britain before Justinian’s Pandects, this was the accepted practice in English common law until the court of common law merged with the Court of Chancery in the 1870s, which had developed the law of equity before being replaced by the Chancery Division. It was this merger in the late-nineteenth century which put an end to the system of qualifying novation whereby a debtor would agree to each transfer to its creditor, unless under the terms of the original contract the debt obligation was agreed to be transferrable at the outset.

Following and contradicting Gaius, Ulpian in the early third century CE ruled that a debt obligation was transferrable between creditors without the debtor’s permission. He recognised the commercial need for a creditor making a loan of property to retain its value to the creditor even though he temporarily lost possession of it. It was formal recognition of a practice which had already been in use between private parties in preceding centuries.

It was Ulpian’s ruling of a creditor’s right to transfer obligations that became incorporated in Justinian’s Pandects (530—533CE). Through the advancement of banking, by common agreement bills of exchange were not required to be indorsed at every transfer, which until well into the nineteenth century was the principal business of banking.

The merger of Courts of Chancery with the court of common law in the 1870s finally did away with the need to indorse transfers, confirming Justinian’s rulings and permitted debt to be valued as wealth in the form of credit in possession. This is the basis of capital markets worldwide to this day.

Debt security

The Romans had two means of ensuring that the relationship between credit and debt would be secured. The first was a personal surety by the debtor, and the second a pledge of a res, an asset of economic value. Roman law with respect to the valuation, possession, and identification of a res formed a considerable body of legal evolution from the earliest days, which are not the focus of our attention. But we should note that these are still the two methods of securing a debt today, underpinning the value of all credit.

Post-Roman common law

Out of the Roman Empire evolved the colonising nations whose common laws were based on Justinian’s Pandects and the later Basilica translation of them into Greek (AD892). Following the global discoveries by Spain and Portugal in the fifteenth and sixteenth centuries, their colonies and those of the colonising nations that followed them all adopted Justinian’s legal distinction between money and credit in their common laws. Spain’s discoveries in the New World brought gold and silver into greater circulation, as did Britain’s guinea from West African gold introduced in 1663, eventually leading to gold replacing silver as the merchants’ favoured final settlement as money.

Following independence, the US adopted UK common law through Blackstone’s Commentaries on the Laws of England, including the inherited relationship between money and credit crystalised in Justinian’s Pandects. And when in evidence to Congress in 1912, John Pierpont Morgan the greatest banker at that time said that “Credit is evidence of banking, but it is not the money itself. Money is gold, and nothing else”, he was stating correctly the legal position defined in common law from Roman times.

The attributes of gold as money

To this day banknotes issued by the Bank of England bear the legend, “I promise to pay the bearer on demand the sum of [the face value of the note]” signed by the chief cashier. It requires the issuer to maintain sufficient stocks of gold in the form of coin or bullion to meet public demand for redemptions of currency and deposits. To suspend conversion of currency and deposits into gold is simply fraudulent in common law.

In the twentieth century, governments began to bend the law, starting with European combatants suspending convertibility of currencies into gold at the outbreak of the First World War. In 1933, America’s President Roosevelt transgressed common law by executive order commanding citizens to submit their gold and gold notes in return for dollars, which he then devalued by 40% the following year. The selective return to international convertibility under the Bretton Woods Agreement was in 1944, which was finally suspended in 1971. Since then, the US Treasury and its central bank embarked on a propaganda campaign to establish dollars as money in place of gold and for all other currencies to regard it as such for international settlements.

But the dollar is never money in common law. It is a broken promise to pay the bearer his right to final settlement in legal money. Since 1971 the dollar has been a fiat currency, fiat meaning it owes its status to the legislation of the country and not to the common law right of private citizens to demand final settlement in gold. The consequence is that the dollar has lost purchasing power against gold so that its value in real money has declined since Bretton Woods was “suspended” from 13.714 grains of gold per dollar ($35 per ounce) to only 0.12 of a grain currently (July 2026).

Credit today

The influence of Roman law embodied in juristic findings incorporated in Justinian’s Pandects and the Eastern Basilica delineates the basis of all our commerce today. Credit is an incorporeal asset still defined as a promise to finally pay in a corporeal asset to which no one else has a claim and includes physical metal. Circulating credit is imaginary money, not money itself. Credit can be settled in other incorporeal promises to pay, a pass-the-parcel of credit-for-credit without final settlement which is almost entirely the basis of modern commerce.

Credit is not restricted to banking. In fact, bank credit is only a minor part of our lives and is central to the entire system of the division of labour. A workman is employed for his skills, expecting payment on completion. He gives his employer credit for his work until the task is done. If he is paid in advance, the employer gives the workman credit to be discharged by his labour.

A parent educating his children by committing to pay school or university fees commits to a series of debt obligations until their education is complete, the creditors being the educational institutions. If he pays these fees in advance, then the institution is the debtor to be discharged by providing the education.

The management of a business has a debt obligation to its shareholders to provide a future stream of returns, for which the shareholders are the creditors. The idea that equities escape the debtor/creditor relationship is incorrect: the relationship still exists, it is the risks to credit’s value which differs. Creditor—debtor relationships of this sort and in the previous paragraph, even if a socialising state intermediates, dwarf the lending of banking systems and commonly escape the attentions of credit analysts.

In all credit relationships, the key is that the value of the debtor’s promise should be tied to a corporeal asset which itself is a medium of exchange, and today that is commonly gold. It is for this reason that a currency issued by a government which denies the relationship eventually fails. And before it fails, its value in terms of goods (corporeal assets in Roman law) and services (incorporeal assets) varies considerably. Figure 1 illustrates this divergence for West Texas Intermediary oil priced in final settlement (gold) and the dollar currency, which is unsettled credit and a debt obligation of the central bank.

So long as the Bretton Woods Agreement guaranteed that the dollar would act as a gold substitute between nations, the price of oil in gold and the dollar were the same for practical purposes. In other words, the dollar took its value from gold and acted as a gold substitute. Consequently, the oil price varied little in the two decades following the Second World War.

However, the Bretton Woods Agreement led to a run on the US’s gold reserves, reducing them from 20,279.3 tonnes in 1950 to 9,069.7 tonnes in 1971, leading to President Nixon suspending the agreement. No longer a gold substitute, the dollar became a fiat currency from that moment, leading to a decline in its purchasing power reflected in dollar oil prices moving multiples higher with great volatility. The instability of oil priced fiat dollars since the absence of final settlement in gold as a res mancipi since 1971 is plain to see, comparted with oil priced in gold.

The value of all credit, including that of currencies is always a matter of faith. It is true that variations in a currency’s quantity will affect its value. Even though a currency is the objective element in transactions where buyer and seller agree its value and confine price subjectivity to the goods and services being bought or sold, currency units are themselves a commodity which have a value.

Normally, users of a currency will fail to recognise the loss of its value, observing it in changes in the prices of goods and services. This naturally accords with objective and subjective relationships in transactions. But when commodities in aggregate have developed higher values expressed in currency, it is because the purchasing power of the currency has lost value. Not understanding that the currency has lost purchasing power is an error which can persist for some time, demonstrated by the substantial decline in the dollar priced in gold since the Bretton Woods Agreement was abandoned. But like any commodity, if it is not wanted, irrespective of changes in its quantity a currency becomes valueless and the promises of the issuer no longer have credibility.

The only way in which a currency’s credibility can be maintained is for the issuer to ensure that it will always be exchangeable for gold at a fixed weight. And the emergence of new forms of exchange media in future will be subject to the same basic law.

Furthermore, the Keynesian playbook is for governments to expand credit in addition, to prevent economic slumps and recessions. Coupled with domestic political priorities G7 central banks will be forced to intensify suppression of interest rates and bond yields. It is leading all these nations into deeper debt traps.

So, what is a debt trap? At the sovereign level, here is a definition:

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The problem is that by managing outcomes governments always make things worse. And just occasionally the consequence is a crisis. Drop the Keynesian la-la stuff, and we can see the approaching crisis clearly. There are a number of elements to it which give MacleodFinance easy copy, but the purpose of this report is to look at it with respect to precious metals.

This week, gold and silver showed signs of turning a corner after their major declines since end-January. This morning they are tickling a little better, but investors need to focus on the big picture.

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If you think I exaggerate, don’t forget that owning the means of production is a basic tenet of Marxist theory. Burnham starts with the obvious: endorsing nationalisation of steel production, utilities, transport, and energy. For his trade union backers and his backbenchers, this will only be the start; they all have their wish-lists to be funded by taxing the rich, the banks, and oil businesses.

It is a recipe for disaster, played many times before which appears to be generally unrecognised by the media and by sleepy voters. Already, on his first day in office the gilt market celebrated with the yield on the 10-year gilt rising to over 5%.

With a preponderance of foreign hedge funds and other non-UK investors long of gilts, they will become sellers as they wake up to what a Burnham premiership means. So where is the silver lining in all this?

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