"Gold Is Money, All Else Is Credit": Experts Say Credit Bubble Guarantees a 'Sudden, Violent' Crash

Macleod highlighted the sheer scale of speculation. "We are in a credit bubble... bank credit has been expanded in favor of financial assets," he stated, pointing to margin finance running at an all-time high of over $1.12 trillion. This froth, he warns, makes the market ripe for a "sudden and quite violent" end, reminiscent of the "Roaring '20s." For fund managers, the key takeaway is simple: "If you're left holding the baby when it ends, you are going to lose an awful lot of money."

The core of their concern centers on the declining real value of the U.S. dollar and the extreme vulnerability of the bond market. Schectman passionately dismantled the official inflation narrative, citing alternative measures that show real purchasing power is significantly falling. He noted that even recent nominal returns are "an illusion when inflation certainly is higher than we think."

This reality has already begun to shake the confidence of institutional giants. Schectman pointed to a significant, recent shift in mainstream finance: chief investment officers from institutions like Morgan Stanley and Bank of America are advising clients to sell bonds and allocate up to 20-25% to gold. This advice comes at the expense of the traditional 60/40 stock-bond portfolio, which has been the cornerstone of wealth accumulation for decades.

"You can't trust a regulator that's also the world's largest debtor... You hold bonds, you lose," Schectman warned.

The experts stressed that bonds are no longer "risk-free." As the credit bubble pops, the combination of a market downturn in equities and a simultaneous rise in bond yields, driven by escalating credit risk, will create an "awful combination" for investors. For the individual investor, Schectman’s message is clear: "Stay liquid. Forget yield chasing. It's a trap."

A crucial and often overlooked point made by Macleod is the physical scarcity of investment-grade gold and silver. It is one thing for financial institutions to recommend a 10-25% allocation to gold, but quite another for the global supply to accommodate this demand. Macleod estimates that a mere 1% increase in gold across global portfolios would require 25,000 tons of gold, a supply that simply "is not there."

This lack of available physical metal is compounded by the ongoing, quiet movement of central banks repatriating and accumulating their own gold, as noted by Schectman.

Macleod observed, "The largest mine in the world is Comex because this year so far has delivered around 1,200 tons. That's three times China's total gold mining effort."

This dynamic proves that the "paper" market is unsustainable and is already being exploited by the most informed global players, the central banks and sovereign wealth funds. Early adoption is everything, as latecomers will find the physical supply "all locked up and all gone."

The consensus from both Schectman and Macleod is an emphatic call to action. The current financial system, built on layers of credit and debt, is reaching its inevitable breaking point. The transition away from the U.S. dollar's supremacy, a move already being aggressively front-run by international central banks, is now trickling down to the largest Western investment houses.

For ordinary investors, the key lies in understanding a fundamental truth articulated by Macleod: "Gold is money and all else is credit." The solution is to prioritize wealth preservation over accumulation by owning assets with no counterparty risk. Physical gold and silver fit this description.

Their advice offers a powerful counter-narrative to mainstream media silence, urging a strategic, defensive move: "Hold physical gold. Stay liquid... Diversity by risk, not by asset class. own things that survive inflation and fiat decay." Failing to act now, as Macleod cautions, means you're going to "miss the boat."