MAY 31, 2018
The tectonic shift in the default currency of global commerce is ongoing. So much of world trade is so bound up in the exchange of US dollars that a definitive move away from this mechanism requires years or planning and steady execution. But those wheels are turning.
Witness ten straight years of sovereign reserve gold hoard increases, notably led by Russia, the country with perhaps most to gain from a USD demise. RT, the propaganda-driven news outlet backed by the Russian government, spends a great deal of time recycling headlines of death-to-dollar topics:
Despite its heavy-handed approach, the thesis is real. Increased gold holdings and the petro-yuan are definitive, real steps that pose a clear exigent threat to the dollar’s long-enjoyed (and maybe not so well-deserved) unchallenged global reign.
Every year, Ronald-Peter Stoeferle and Mark Valek at Incrementum AG, a Liechtenstein-based investment and asset-management company, put together an exhaustive report into the state of gold and gold-related markets. It’s known as In gold we trust.
Incrementum sees a change in the global monetary order, what it calls “de-dollarisation”.
According to the report, “the creeping loss of the hegemonic status of the US dollar as the senior global reserve currency could have far-reaching consequences for the US. Declining global demand for the US dollar and Treasury bonds could boost domestic US price inflation and drive interest rates up further.”
Gold will see increasing demand as a substitute. To back up this point, Incrementum presents a chart showing central bank gold reserves, which are clearly rising.