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Table of Contents
- COUNTRIES WITH HARDER CURRENCIES
- SOUND MONEY
- HISTORICAL POSITION OF THE PRINCELY HOUSE OF LIECHTENSTEIN ON A GOLD-BACKED CURRENCY
- LIECHTENSTEIN BECOMES THE 191ST MEMBER OF THE IMF
- THE HIDDEN GOLD BAN: HOW THE IMF EXCLUDES THE GOLD STANDARD THROUGH ARTICLE IV (2B) OF ITS STATUTES
- THE IMF WARNS – BUT WHO, EXACTLY?
- PHYSICAL DELIVERABILITY IN THE GOLD FUTURES MARKET
2020
CURRENCIES
Kai Baumgartner
COUNTRIES WITH HARDER CURRENCIES
Countries with stronger currencies and less interventionist economic policies provide more attractive conditions for venture capital investors, who depend on long-term stability and market transparency—especially when compared to the Eurozone and Germany.
We also invest in alternative systems for preserving and storing value in line with the Sound Money movement, including gold, Bitcoin, and other monetary assets that meet sound money principles.
Persistently high inflation in the Eurozone, amplified by expansive fiscal and monetary policies, has eroded confidence in the Euro as a stable currency and increased the risk of losses for long-term investments. Rising public debt and the growth of transfer payments within the EU create fiscal “moral hazard”, further undermining long-term economic stability.
Germany, in particular, is losing its attractiveness as an investment destination due to regulatory hurdles, rising taxes, and high energy costs, all of which damage its competitiveness. According to Austrian Economics, artificially low interest rates set by the European Central Bank distort capital allocation and foster economic bubbles—ultimately weakening the risk-return profile for venture capital.
2021
CURRENCIES | GOLD STANDARD
Kai Baumgartner
SOUND MONEY
Sound money is characterized by the following fundamental properties:
Stability of Value: Sound money retains its value over time and is largely protected from inflation and deflation. This fosters trust and enables reliable preservation of purchasing power.
Scarcity and Limitation: A limited supply (e.g., gold or Bitcoin) prevents arbitrary expansion of the money supply, which could diminish its value.
Recognition and Acceptance: Sound money is widely accepted by a broad community and functions effectively as a medium of exchange and economic foundation.
Divisibility and Fungibility: It can be divided into smaller units, with each unit having the same value as any other, facilitating flexible trade.
Transportability and Durability: Sound money must be easy to transport and store without losing value or quality.
Neutrality: It should be immune to political manipulation and operate independently of government or institutional intervention to maintain long-term trust.
Examples like gold or Bitcoin fulfill many of these criteria, while fiat currencies are often criticized for their unlimited supply and susceptibility to political interference.
If you're considering precious metals gold, silver, palladium, or platinum as a reliable hedge against risks all fiat currencies like EUR and USD face, we warmly invite you to join the Swissmade flexgold community.
2024
CURRENCIES | LIECHTENSTEIN
Kai Baumgartner
HISTORICAL POSITION OF THE PRINCELY HOUSE OF LIECHTENSTEIN ON A GOLD-BACKED CURRENCY
Liechtenstein’s Monetary Policy and Gold Tradition
The Princely House of Liechtenstein has traditionally shown great interest in stable currency. Since 1924, Liechtenstein has used the Swiss franc as its official national currency – a deliberate decision, since the franc was partially gold-backed and extremely stable for many years. The close link to the CHF effectively meant a gold standard through the back door, as Switzerland maintained a substantial gold reserve backing until 1999. This commitment to stability reflects the stance of the Princely House, which has always valued sound money. For special occasions, such as the 1990 hereditary homage, Liechtenstein issued its own gold coins (50-franc pieces), underscoring the House's historically positive view of gold as a monetary metal.
Prince Hans-Adam II: Advocate of a Gold-Backed Currency
His Serene Highness Prince Hans-Adam II of Liechtenstein, Duke of Troppau and Jägerndorf, Count of Rietberg, Head of the House of Liechtenstein, has positioned himself as a strong advocate of a currency backed by precious metals. As hereditary prince in the 1980s, he even considered introducing an independent currency for Liechtenstein backed by gold and silver – decoupled from the fiat trend – to secure the principality’s financial sovereignty. He reaffirmed these ideas publicly, especially in his 2009 book “The State in the Third Millennium.” There, the trained economist made several unconventional proposals for financial and monetary policy, including the “attempt to stabilize the currency through gold backing,” which experts described as original and thought-provoking. With this approach, Prince Hans-Adam II aligned himself with classical economic theories – including those of the Austrian School – which hold that gold backing limits inflation and builds long-term trust in currency.
Public Statements and Influence on the Monetary Debate
In interviews, speeches, and essays, Prince Hans-Adam II has repeatedly emphasized the importance of “sound money,” meaning well-backed currency. Observers describe him as a “firm believer in gold” within the monetary system. At economic conferences – such as the Gottfried von Haberler Conference in Vaduz – he advocated for decentralized structures and hard currencies. He argues that real trust in money only arises when it cannot be inflated at will – which is why he favors gold and silver as value anchors.
His engagement goes beyond theory: as a liberal-minded monarch, he supports institutions and think tanks and promotes the global discourse around currency competition and gold standard–inspired systems. In a New Year interview, he remarked that small states could ensure their future by pursuing independent monetary paths – and, if necessary, returning to time-tested value standards like precious metals instead of relying on unbacked fiat money. These consistent statements make it clear that Prince Hans-Adam II actively brings his family’s traditional affinity for gold into today’s monetary policy debates.
Relations With the Swiss National Bank (SNB) and International Monetary Policy
As the head of a country using a foreign currency, Prince Hans-Adam II has closely followed the monetary policy of the Swiss National Bank. He welcomed the SNB’s historically high gold reserve ratio and expressed implicit criticism when Switzerland – under IMF pressure – abandoned the formal gold backing of the franc in the late 1990s. He has advocated that central banks – especially the SNB – should hold sufficient gold to support trust in the currency. During the 2014 Swiss “Save Our Gold” initiative, it became clear that Liechtenstein’s princely family viewed the idea of partial gold backing favorably, even though it remained diplomatically restrained. Internationally, and in line with his book, Prince Hans-Adam II has argued for allowing competition between monetary systems: states should act like service providers, and citizens should not be prohibited from using alternative, hard-backed currencies – whether gold, silver, or other stable units. He expressed this view in international forums and interviews. Liechtenstein’s long-standing commitment to monetary stability culminated in the country’s accession to the IMF in 2020 – a step supported by the Princely House to help shape global monetary policy. Nonetheless, the IMF’s statutes explicitly prohibit its member states from adopting gold-backed currencies.
Conclusion
In summary, the Princely House of Liechtenstein – especially Prince Hans-Adam II – has historically stood for a conservative, gold-friendly monetary position. Whether in publications, interviews, or symbolic gestures, Hans-Adam II highlights the advantages of a (partially) gold-backed currency for stability, trust, and economic sovereignty. This principled stance on gold as a monetary anchor has consistently shaped the small principality’s monetary philosophy: stability-oriented, reform-minded – and guided by the belief that good money must ultimately be hard money.
2024
IMF | LIECHTENSTEIN
Kai Baumgartner
LIECHTENSTEIN BECOMES THE IMF’S 191ST MEMBER
On Monday, October 21, 2024, following intense debate and a popular vote, the Principality of Liechtenstein officially became the 191st member of the International Monetary Fund (IMF). Prime Minister Daniel Risch signed the original Articles of Agreement at the US Department of State in Washington, D.C., marking a significant step for Liechtenstein’s global financial integration. This decision, backed by a popular vote in Liechtenstein, highlights the nation’s commitment to international cooperation and economic stability. [1]
2025
IMF | GOLD STANDARD
Kai Baumgartner
THE HIDDEN GOLD BAN: HOW THE IMF EXCLUDES THE GOLD STANDARD THROUGH ARTICLE IV (2B) OF ITS STATUTES
Why the International Monetary Fund (IMF) May Prevent a Gold-Backed Settlement System Even During a Global Monetary Disruption – and What the Austrian School Can Teach Us About It.
Constructing the Invisible Wall Against Gold
Anyone who reads the statutes of the International Monetary Fund encounters a remarkable passage in Article IV, Section 2(b). It permits member states “the maintenance (...) of a value for its currency in terms of the special drawing right or another denominator, other than gold.”[1]
This seemingly technical formulation is, in truth, a gold prohibition enshrined in international law: no member may peg its currency to gold or settle payments on that basis while remaining part of the IMF system.
Founded in 1944 at Bretton Woods, the IMF was originally created as a guardian of fixed exchange rates under the gold-dollar standard. But after the termination of the Bretton Woods system in 1971 (the Nixon shock of August 15, 1971), its role changed fundamentally: instead of a gold anchor, the concept of Special Drawing Rights (SDRs) was introduced — a synthetic paper reserve medium with no intrinsic value.
With the Jamaica Revision (January 7–8, 1976), the link to gold was not merely suspended but – in legal language – negatively codified: gold was explicitly excluded as a reference point.[2]
The Logic of Exclusion
The phrase “other than gold” is no minor detail. It means that while states may choose any fiat or computational unit (e.g., US dollar, euro, SDR, RWA, basket of currencies), they cannot use the precious metal that has served as natural money for millennia. Thus, within the IMF framework, the gold standard is de jure prohibited.
Under Article IV, Section 3, the IMF also exercises “firm surveillance” over the exchange rate policies of its members and their monetary measures.[3] Any member that pegged its currency to gold would therefore violate the “exchange arrangements” defined by the IMF — a clear reason for diplomatic pressure or the suspension of financial assistance.
This rule is therefore not a neutral “option,” but an implicit sanctioning mechanism against any gold-backed alternative. It remains unclear, however, whether gold could legally form a (minority) component within a basket currency. Other metals such as silver, platinum, or palladium are not explicitly excluded in the current revision of the IMF Statutes.
The Austrian Perspective: The Monopoly of Fiat Money
From the perspective of the Austrian School of Economics, the IMF represents a textbook example of what Ludwig Heinrich von Mises called “institutionalized inflation.”[4] The gold standard restricted governments’ ability to finance deficits through pure money creation. The system of Special Drawing Rights, by contrast, dissolves the final link between money and real value — a form of monetary collectivism that distorts price signals and promotes capital misallocation.
Murray N. Rothbard argued that the transition from the gold standard to fiat money always entails a redistribution of wealth in favor of governments and banks — an “expropriation through inflation.”[5] The IMF cements this condition at the institutional level.
Friedrich August von Hayek viewed supranational monetary regimes as fundamentally incompatible with market freedom. In Denationalisation of Money (1976), he warned that international institutions would eliminate currency competition “under the pretext of stability.”[6] Article IV (2b) is the legal manifestation of that concern.
What Happens During a Fiat System Disruption?
Given rising public debt, de-dollarization, and geopolitical tensions, one might ask: could a return to the gold standard occur in a crisis — for example, through bilateral settlements or commodity backing? In theory, yes; in practice, no — as long as the IMF remains the key institution of the global monetary system and its members adhere to its statutes.
The Fund’s rules explicitly prohibit gold linkage “under an international monetary system of the kind prevailing on January 1, 1976.”[1] Even if individual countries — such as Russia, China, or BRICS members — sought to introduce gold- or commodity-backed settlements, they would have to violate Article IV or withdraw from the Fund.
A withdrawal (under Article XXVI) is possible, but such a state would lose all access to SDR reserves, credit facilities, and multilateral payment mechanisms — a step of enormous political consequence. In an increasingly multipolar world, however, this might become feasible if several actors took it simultaneously.
Thus, the IMF system creates a path dependency: those who stay must play fiat; those who leave risk economic isolation.
The Hidden Irony of the System
Ironically, the IMF clause confirms von Mises’s economic insight:
When money is replaced by government decree, gold must be prohibited — otherwise, the market would eventually return to real money. The prohibition of the gold standard is therefore not a historical accident but a systemic necessity to stabilize the fiat regime.
Yet stability, in the IMF’s sense, does not mean price stability but systemic stability — the maintenance of a debt architecture that would collapse without permanent monetary expansion. The “surveillance of exchange rate policies” (Article IV, Section 3) serves not coordination but discipline. Any return to market-driven, asset-backed money would pose an existential threat to the institutionalized credit-money system.
Conclusion: A Gold Standard Would Be Contrary to the IMF System, Not Consistent With It
The analysis of Article IV (2b) demonstrates that the IMF has rendered a return to gold not only practically but legally impossible. In a scenario of global fiat disruption, the institution’s response would not be liberalization but further centralization — likely through expanded SDR issuance or the introduction of digital reserve units.
The Austrian School would therefore conclude that genuine monetary competition can emerge only outside the existing system — through free currency choice, private gold or crypto reserves, and the rejection of central monetary planning. In von Mises’s words: “The return to gold is not a technical problem but a moral one — the restoration of freedom of contract in money.”[7]
References
[1] IMF Agreement, Article IV, Section 2(b), 2020 edition, p. 6, https://www.imf.org/external/pubs/ft/aa/
(accessed January 1, 2025).
[2] Jamaica Accord, Second Amendment to the IMF Articles, April 1978.
[3] IMF Articles of Agreement, Article IV, Section 3(b).
[4] Ludwig von Mises, Human Action (1949), Chapter XVII.
[5] Murray N. Rothbard, What Has Government Done to Our Money? (1963).
[6] Friedrich A. von Hayek, Denationalisation of Money (1976), pp. 19–22.
[7] Ludwig von Mises, The Theory of Money and Credit (1912), p. 470 ff.
2025
IMF | GOLD
Kai Baumgartner
The IMF Warns — But Whom Exactly?
In October 2025, the IMF (International Monetary Fund) warns central banks that they are losing trust. They fear that this loss of confidence could turn into high inflation. But that’s not the real warning. It goes far deeper.
Central banks themselves are not living beings. They are buildings, computers, and bureaucratic hierarchies. So how can one “lose trust” in a building, a chair, or a spreadsheet? You can’t.
The real loss of trust concerns the assets and promises that central banks hold. And those promises are nothing but government bonds — the IOUs of states that have promised to pay tomorrow what they cannot afford today: “I owe you” = they owe us
The Core of the Problem
A central bank is nothing more than the guardian of its government’s credit. It sits on mountains of public debt, pretending that this pile of promises has real value. But when people start to doubt the value of those promises, the façade collapses. To lose trust in a central bank is, in truth, to lose trust in government debt itself.
Let’s take the United States—the issuer of the world’s “risk-free” asse —as an example.
- Public debt: $38 trillion
- New debt each year: $2–3 trillion
- Interest payments: $1.2 trillion per year
- Annual tax revenue: $5 trillion
That means the government collects only one-seventh of what it owes — and the gap widens every year. By 2030, every cent of U.S. tax revenue will go to mandatory expenses: interest, healthcare, veterans, social programs.
There will be nothing left. No surplus. No repayment. Only more debt. So what is the value of an asset whose issuer cannot possibly honor it? The answer is self-evident: zero.
The Real Warning
So why is the IMF warning now?
Because its own empire is trembling.
The IMF’s greatest rival has returned — not another institution, but a timeless one: Gold. When the IMF was created in 1945, its purpose was clear — to replace gold as the world’s reserve asset with U.S. government bonds. Gold pays no interest, they said. Bonds do. And for decades, the world believed that story. But reality has a habit of returning. As people rediscover that interest without repayment is an illusion, gold has staged its quiet revenge. In just one year, gold’s global market value has surged by $10 trillion. At $4,000 per ounce as of October 2025, gold has overtaken U.S. Treasuries as the world’s preferred reserve asset.
The IMF is not warning central banks.
It is warning itself.
The Inevitable Future
At 10% annual appreciation, gold will reach $16,000 per ounce by 2040. Not through speculation—through mathematics. The paper promises of governments are dying. The real money of civilization—gold—is reclaiming its role.
As Ludwig Heinrich von Mises once wrote: “There is no means of avoiding the final collapse of a boom brought about by credit expansion”
The IMF knows it.
Central banks feel it.
And the market has already decided.
What about you?
References
[1] Erosion of trust in central banks can boost inflation expectations, IMF warns, Reuters, October 14, 2025
2025
MARKETS | GOLD
Kai Baumgartner
PHYSICAL DELIVERABILITY IN THE GOLD FUTURES MARKET
With gold prices surpassing $4,300 per ounce in October 2025, it is worth examining a structural vulnerability in the precious metals market that many investors overlook. It concerns the extreme imbalance between traded paper claims on gold and the amount of physical gold actually available—a phenomenon that closely resembles the fractional reserve system in banking. This fragility of the “paper gold” market could have dramatic consequences in a crisis. The paper-to-physical ratio covers only a fraction of outstanding claims.
A 100:1 Ratio Between Gold Futures and Physical Gold
Current estimates suggest that trading in “paper gold” (futures, certificates, ETCs, ETFs, and similar instruments) exceeds actual physical gold holdings many times over. Experts frequently cite ratios of at least 100:1—and in certain market segments, even as high as 200–250 to 1. In other words, for every physical ounce of gold, there may be hundreds of paper ounces circulating as claims. Even a study by the European Central Bank (ECB) confirms that the global gold market effectively functions as a fractional reserve system—with more than one hundred paper claims on every ounce of real gold. This discrepancy is worth reflecting on.
The Delivery Question
What happens if even a modest percentage of paper gold investors were to demand physical delivery simultaneously? The math is sobering: If only 5% of paper gold holders at a 200:1 ratio requested delivery, that would amount to ten times more gold than physically exists. In such a scenario, not all claims could be met—some investors would literally be left without a chair when the music stops. Analysts warn that in the event of a broader loss of confidence, many holders of gold ETCs, ETFs, and futures would demand delivery to obtain the metal physically. When multiple claims exist on the same gold bar, some investors might not receive their metal on time—if at all. Storage facilities would first have to recall leased inventory—a process unlikely to run smoothly in times of stress. Ironically, such a delivery run would occur precisely when everyone simultaneously seeks the safety of physical possession—for instance, during systemic crises or hyperinflation.
The Hidden Counterparty Risk
Major gold ETFs and futures exchanges are prepared for such scenarios—though not necessarily to the benefit of investors. The contractual terms of many such products contain clauses allowing for cash settlement instead of physical delivery in exceptional circumstances. In other words, in the event of “market disruptions,” issuers reserve the right to pay investors in cash rather than bullion. This fine print effectively constitutes counterparty risk—precisely the kind of risk that physical gold is meant to hedge against.
No Mere Theory
These risks are not abstract theory. Time and again, market disruptions have provided glimpses of what a delivery run might look like. A striking example was the 2022 nickel crisis: In March 2022, the London Metal Exchange was forced to take drastic measures as nickel prices skyrocketed. Trading was halted, transactions were canceled, and the physical delivery of due contracts was postponed because available inventories could not meet delivery obligations. At the time, one analyst pointedly asked whether this could still be called a “functioning market” if the “market of last resort” could not provide the inventory to deliver [1].
Similarly, in March 2020, the New York gold market experienced a historic shortage. Refiners were closed and transport routes disrupted due to pandemic restrictions, while demand for gold surged. Open interest in the April gold future reached nearly 200,000 contracts (equivalent to roughly 19.6 million ounces), whereas COMEX inventories listed only about 8.7 million ounces as immediately deliverable . The result: The New York futures price soared to the highest premium over the London spot price since the 1980s (temporarily about $67 per ounce above spot)—a clear sign of physical scarcity. Market observers described it as a historic squeeze—“never in a generation” had such a decoupling been seen. It took coordinated efforts among market participants (including the temporary acceptance of 400-ounce bars on COMEX) to stabilize the situation.
Similar tensions were also seen in the silver market. In early 2021, retail investors attempted to trigger a “short squeeze” in silver, resulting in record inflows into the largest silver ETF. The issuer was forced to amend its prospectus on February 3, 2021, stating: “Demand for silver may temporarily exceed the available supply acceptable to the Trust” [2]. In other words, the provider acknowledged that, in the event of continued scarcity, the creation of new ETF shares could be suspended or limited.
The Uncomfortable Reality
Investors—especially those holding gold as insurance against financial market risk—should clearly understand what they actually own. Paper gold offers undeniable advantages: high liquidity, low transaction costs, and convenient portfolio handling. At the same time, it carries distinct risks.
Counterparty Risk and Dependence on the Financial System: The value of paper gold claims depends on the solvency and willingness of the issuers. Paper gold is ultimately a promise—and a promise is only as good as the ability to honor it when it matters. If a broker, bank, or ETF becomes insolvent, the investor is left with a claim, not a tangible asset. The Austrian School of Economics has long emphasized that such reliance constitutes a concentration risk—analogous to fractional-reserve banking, where more claims circulate than reserves exist.
Possible Cash Settlement Instead of Physical Delivery: Exactly in the stress scenario for which gold is meant as a hedge, paper gold may lose its promised convertibility. Contracts allow issuers, under exceptional circumstances, to settle in cash instead of metal. The investor might then receive a payment—but no gold—precisely when physical metal would be most sought after, such as during a currency crisis.
Systemic Market-Structure Risks: The enormous leverage and rehypothecation of the same gold inventories make the system vulnerable to shockwaves. The ECB warns that “in the event of extreme circumstances, adverse effects on financial stability could emanate from the gold market” [3]. A sudden deleveraging—the flight from paper positions into physical assets—could create liquidity shortages and transmit shocks to other markets. A significant divergence between paper and physical gold ultimately undermines confidence in gold-backed financial instruments.
In short, those who believe they are safely hedged against a “crash” through a gold ETF or future should read the fine print carefully. The uncomfortable reality is that many of these structures contain mechanisms that may activate precisely when gold is needed most. From the perspective of the Austrian School, only physical gold fully meets the definition of sound money: it is a real asset, not a promise, and ownership is independent of third parties.
A Final Question
With gold prices soaring and uncertainty mounting, one must ask whether the risk of paper gold being non-convertible into physical metal is adequately priced into the market. For investors who hold gold as insurance against systemic crises, it is worth examining whether their “insurance policy” might include clauses that prevent payout in real assets precisely when it matters most. Put differently: Do you truly own gold—or just a piece of paper that says you do?
To be clear, this is not a call to abandon paper gold entirely—it serves important functions for trading and liquidity. However, a prudent strategy might involve diversifying within one’s gold allocation: keeping a solid portion in physical form (stored securely, ideally outside the fiat banking system) and using paper instruments primarily for shorter-term trading purposes.
References
[1] Reuters (2022): "Nickel Trading Chaos Forces LME to Cancel Trades"
[2] Bullion.Directory (2021): "SLV Prospectus Updated Amid Silver Squeeze"
[3] Kitco News (2024): "ECB: Leveraged Gold Markets Pose Stability Risks"