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Gold reclaims its currency status as the global system unravels

By Ambrose Evans-Pritchard

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The Bank of England underground Gold Vaults in London Stacks of
Gold Bars are arranged on storage shelves
Last week gold surged to an all-time high of $1,258 an ounce Photo: Alamy

Jean-ClaudeTrichet, the president of the European Central Bank (EC), talked days later of "the most difficult situation since the Second World War, and perhaps the First".

The ECB’s latest monthly bulletin gives us some startling details. It reveals that the bank’s "systemic risk indicator" surged suddenly to an all-time high on May 7 as measured by EURIBOR derivatives and stress in the EONIA swaps market, exceeding the strains at the height of the Lehman Brothers crisis in September 2008. "The probability of a simultaneous default of two or more euro-area large and complex banking groups rose sharply," it said.