Over the past few weeks, we've seen an explosive rise in gold prices. The main reason is that investors around the world are increasingly betting on the depreciation of all major global currencies. The global fiat money system is bursting at the seams.
In 2025, gold proved to be the best performing financial asset; its price has increased by approximately 50% since the beginning of the year. And on Tuesday, October 7, the price of the precious metal once again hit a new all-time high, reaching a round figure of $4,000 per troy ounce (as of the morning of October 8, gold prices are around $4,030 per ounce). This is a good reason to take a look at what's happening in the global financial system.
Let's recall the price dynamics of gold in recent years. As a result of the "monetary frenzy" of the world's leading central banks during the COVID-19 pandemic, the price of gold rose to $2,000 per troy ounce in 2020. But when inflation accelerated and central banks began to combat it in earnest with high interest rates, the yellow metal began to lose ground.
Until the spring of 2024, the price of gold largely fluctuated between $1,800 and $2,000, even briefly dipping to $1,600 per ounce. However, when leading global central banks, still waiting for inflation to be completely defeated, began easing monetary policy, the price of gold began to rise again. It was a moderate rise, with pauses and pullbacks, but a rise nonetheless: in just over a year—from February 2024 to March 2025—the price of gold rose from $2,000 to $3,000 per ounce.
In early April of this year, the price of gold soared (temporarily reaching $3,500). This was primarily due to Trump's import tariffs and his pressure on the Federal Reserve to sharply lower its key interest rate. Following the April surge, the price of gold stabilized for several months in a new range of $3,300–$3,400 per ounce. Investors apparently took note of the fact that the US Supreme Court resisted the president's pressure and ruled that the US president cannot fire the head of the Federal Reserve, meaning the regulator's independence was not threatened.
However, following the Federal Reserve's September meeting, it became clear that President Trump had effectively subjugated the Federal Reserve, forcing it—essentially out of the blue—to move toward monetary easing. Specifically, with inflation stagnant for months and expected to accelerate due to import tariffs, the Federal Reserve ultimately decided to lower its key interest rate at its September meeting, using a slight jump in unemployment as a pretext. We wrote about this in detail in our recent article, "Fed Capitulation" (Pravda, No. 104, September 23, 2025).
In fact, the Federal Reserve's capitulation actually occurred slightly earlier—in the last ten days of August, when Fed Chairman Jerome Powell, who had previously held a firmly hawkish stance, hinted at an upcoming rate cut in his keynote speech in Jackson Hole on August 22. Around the same time, a strong rise in gold prices began (or rather, resumed after a hiatus) in global financial markets.
So, the loss of investor confidence in the US dollar worldwide due to the Federal Reserve's loss of independence is the most important reason for gold's explosive rise. It's the most important reason, but not the only one. After all, the dollar index (relative to major global currencies) hasn't moved much in the last few weeks; it's fluctuating within a fairly narrow range. The fact is that investors are disappointed not only in the US dollar but in other major currencies as well. All of these currencies are also experiencing significant problems, so it's not even clear which is worse.
So, within the eurozone, France is in big trouble, despite being the second-largest economy in the eurozone. A political crisis is brewing in France. On Monday, September 6, the latest French prime minister resigned, less than a month in office—the third in the past year. The root of the problem is a budget crisis: France has a huge budget deficit and public debt, and the authorities are trying to solve the problem by cutting budget spending, but this is not working.
In September, Fitch Ratings downgraded France's sovereign rating to A+, suggesting that investors will soon begin dumping French government bonds. This will be a major blow for everyone in the eurozone: the entire European banking system will be shaken, as major European banks hold huge amounts of French government debt on their balance sheets. It's not hard to guess that the European Central Bank will flood the nascent banking crisis with cash, making the prospects for the single European currency dim.
But the problem of unsustainable public debt isn't unique to France. We see a similar picture in the US (which, incidentally, is the main reason Trump is demanding the Fed cut interest rates), the UK, and many other developed countries. The bottom line is this.
When interest rates were low, even high government debt wasn't a problem. But when the world's leading central banks raised rates to combat post-COVID inflation, the interest costs of the government budgets of these countries began to rise, as cheap government debt was replaced by more expensive debt. This means that these governments now have to borrow significantly more money, causing their government debt to grow even faster. The result is a debt spiral. The debt crisis in developed countries is entering the home stretch.
The situation is particularly challenging in Japan. It has the highest level of public debt (at least among developed countries)—approximately 235% of GDP. This is roughly twice as high as in the US and France. The fact that Japanese public debt has been able to "grow" to such levels without tipping the entire pyramid is a consequence of several factors specific to Japan, which we won't dwell on now. We'll likely have occasion to discuss them again in the not-too-distant future, when the Japanese public debt pyramid does tip over.
Meanwhile, the Japanese are making desperate efforts to delay this moment and are already preparing for the arrival of the new Prime Minister, Sanae Takaichi, who plans to pursue an economic policy of Abenomics (named after former Prime Minister Shinzo Abe), that is, a policy of stimulating the economy through high government spending and low interest rates.
Against this backdrop, the Japanese yen's prospects are also quite uncertain. It's no wonder that in recent days, since Takaichi's candidacy for prime minister became known, the Japanese yen has been plummeting, while government bond yields have been rising as investors panic-sell them.
All these debt problems are clearly visible to global financial market participants, who are reacting by buying gold, silver, other precious metals, and even cryptocurrency. While previously the main demand for gold came from central banks, which, seeing what had happened to Russian sovereign assets, began shifting funds from developed countries' government bonds to gold, private investors have now joined in large-scale gold investments.
Bloomberg, in a recently published article, called such actions by private investors a "debasement trade" (the English term debasement refers to the unofficial, unannounced reduction in the weight of coins or their precious metal content by government authorities, while maintaining their face value). In other words, private investors around the world are increasingly investing in assets that will generate profits if all fiat currencies devalue; this is a bet not against a specific currency, but against the current monetary system as such.
The surge in gold prices tells us that the "money debasement game" is gaining momentum. The global financial system, based on unbacked fiat money, is bursting at the seams.
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Economist Tatyana Kulikova: The system is bursting at the seams
https://kprf.ru/crisis/237978.htmlOver the past few weeks, we've seen an explosive rise in gold prices. The main reason is that investors around the world are increasingly betting on the depreciation of all major global currencies. The global fiat money system is bursting at the seams.
In 2025, gold proved to be the best performing financial asset; its price has increased by approximately 50% since the beginning of the year. And on Tuesday, October 7, the price of the precious metal once again hit a new all-time high, reaching a round figure of $4,000 per troy ounce (as of the morning of October 8, gold prices are around $4,030 per ounce). This is a good reason to take a look at what's happening in the global financial system.
Let's recall the price dynamics of gold in recent years. As a result of the "monetary frenzy" of the world's leading central banks during the COVID-19 pandemic, the price of gold rose to $2,000 per troy ounce in 2020. But when inflation accelerated and central banks began to combat it in earnest with high interest rates, the yellow metal began to lose ground.
Until the spring of 2024, the price of gold largely fluctuated between $1,800 and $2,000, even briefly dipping to $1,600 per ounce. However, when leading global central banks, still waiting for inflation to be completely defeated, began easing monetary policy, the price of gold began to rise again. It was a moderate rise, with pauses and pullbacks, but a rise nonetheless: in just over a year—from February 2024 to March 2025—the price of gold rose from $2,000 to $3,000 per ounce.
In early April of this year, the price of gold soared (temporarily reaching $3,500). This was primarily due to Trump's import tariffs and his pressure on the Federal Reserve to sharply lower its key interest rate. Following the April surge, the price of gold stabilized for several months in a new range of $3,300–$3,400 per ounce. Investors apparently took note of the fact that the US Supreme Court resisted the president's pressure and ruled that the US president cannot fire the head of the Federal Reserve, meaning the regulator's independence was not threatened.
However, following the Federal Reserve's September meeting, it became clear that President Trump had effectively subjugated the Federal Reserve, forcing it—essentially out of the blue—to move toward monetary easing. Specifically, with inflation stagnant for months and expected to accelerate due to import tariffs, the Federal Reserve ultimately decided to lower its key interest rate at its September meeting, using a slight jump in unemployment as a pretext. We wrote about this in detail in our recent article, "Fed Capitulation" (Pravda, No. 104, September 23, 2025).
In fact, the Federal Reserve's capitulation actually occurred slightly earlier—in the last ten days of August, when Fed Chairman Jerome Powell, who had previously held a firmly hawkish stance, hinted at an upcoming rate cut in his keynote speech in Jackson Hole on August 22. Around the same time, a strong rise in gold prices began (or rather, resumed after a hiatus) in global financial markets.
So, the loss of investor confidence in the US dollar worldwide due to the Federal Reserve's loss of independence is the most important reason for gold's explosive rise. It's the most important reason, but not the only one. After all, the dollar index (relative to major global currencies) hasn't moved much in the last few weeks; it's fluctuating within a fairly narrow range. The fact is that investors are disappointed not only in the US dollar but in other major currencies as well. All of these currencies are also experiencing significant problems, so it's not even clear which is worse.
So, within the eurozone, France is in big trouble, despite being the second-largest economy in the eurozone. A political crisis is brewing in France. On Monday, September 6, the latest French prime minister resigned, less than a month in office—the third in the past year. The root of the problem is a budget crisis: France has a huge budget deficit and public debt, and the authorities are trying to solve the problem by cutting budget spending, but this is not working.
In September, Fitch Ratings downgraded France's sovereign rating to A+, suggesting that investors will soon begin dumping French government bonds. This will be a major blow for everyone in the eurozone: the entire European banking system will be shaken, as major European banks hold huge amounts of French government debt on their balance sheets. It's not hard to guess that the European Central Bank will flood the nascent banking crisis with cash, making the prospects for the single European currency dim.
But the problem of unsustainable public debt isn't unique to France. We see a similar picture in the US (which, incidentally, is the main reason Trump is demanding the Fed cut interest rates), the UK, and many other developed countries. The bottom line is this.
When interest rates were low, even high government debt wasn't a problem. But when the world's leading central banks raised rates to combat post-COVID inflation, the interest costs of the government budgets of these countries began to rise, as cheap government debt was replaced by more expensive debt. This means that these governments now have to borrow significantly more money, causing their government debt to grow even faster. The result is a debt spiral. The debt crisis in developed countries is entering the home stretch.
The situation is particularly challenging in Japan. It has the highest level of public debt (at least among developed countries)—approximately 235% of GDP. This is roughly twice as high as in the US and France. The fact that Japanese public debt has been able to "grow" to such levels without tipping the entire pyramid is a consequence of several factors specific to Japan, which we won't dwell on now. We'll likely have occasion to discuss them again in the not-too-distant future, when the Japanese public debt pyramid does tip over.
Meanwhile, the Japanese are making desperate efforts to delay this moment and are already preparing for the arrival of the new Prime Minister, Sanae Takaichi, who plans to pursue an economic policy of Abenomics (named after former Prime Minister Shinzo Abe), that is, a policy of stimulating the economy through high government spending and low interest rates.
Against this backdrop, the Japanese yen's prospects are also quite uncertain. It's no wonder that in recent days, since Takaichi's candidacy for prime minister became known, the Japanese yen has been plummeting, while government bond yields have been rising as investors panic-sell them.
All these debt problems are clearly visible to global financial market participants, who are reacting by buying gold, silver, other precious metals, and even cryptocurrency. While previously the main demand for gold came from central banks, which, seeing what had happened to Russian sovereign assets, began shifting funds from developed countries' government bonds to gold, private investors have now joined in large-scale gold investments.
Bloomberg, in a recently published article, called such actions by private investors a "debasement trade" (the English term debasement refers to the unofficial, unannounced reduction in the weight of coins or their precious metal content by government authorities, while maintaining their face value). In other words, private investors around the world are increasingly investing in assets that will generate profits if all fiat currencies devalue; this is a bet not against a specific currency, but against the current monetary system as such.
The surge in gold prices tells us that the "money debasement game" is gaining momentum. The global financial system, based on unbacked fiat money, is bursting at the seams.