Gold’s record-setting rally has stolen the precious metals spotlight as investors celebrate their gains and prepare for the next leg up. However, the yellow metal’s meteoric rise tells a larger story.

In this week’s The Gold Spot video, Scottsdale Bullion & Coin Sr. Precious Metals Advisor Steve Rand and Precious Metals Advisor Tim Murphy explain what the gold bullion demand surge might indicate about the dollar’s strength, why countries are lessening their dependence on USD en masse, and what this shift could mean for all of us.

What is De-Dollarization?

De-dollarization refers to countries and monetary bodies moving away from using the US dollar as the preferred currency in international trade, foreign reserves, and asset holdings. Nations wishing to decouple from the USD and its accompanying influence actively shift their economies away from dependence on the world reserve currency.

Understanding the nuances of this crucial process requires a quick history lesson: In 1971, President Richard Nixon officially removed the US from the gold standard—the de facto monetary system for most of the country’s history. This momentous decision untethered the dollar from any meaningful backing and marked the beginning of the fiat monetary system.

A Rising Trend of Debt

Total outstanding us debt chart

Since abandoning the gold standard, the US national debt has risen exponentially. More accurately, our debt has skyrocketed by 7,300% since 1970. That represents 98% of current US debt, highlighting the immediacy of this severe problem. Unfortunately, both political parties seem to agree that more spending is the solution to this financial catastrophe.

Gold vs. US Bonds

The US debt crisis has Wall Street and many others questioning the dollar’s reputation as a stable, strong, and viable investment. Over the past few years, there’s been a noticeable trend of countries dumping their USD reserves in exchange for the yellow metal. Instead of jeopardizing their economies, central banks are buying gold at record rates.

Xi Jin Ping is leading a pack of China-friendly nations in a simultaneous dump of US bonds and a binge of gold.

china foreign exchange reserves and gold

The CCP and Russia are pursuing this end to work around sanctions while other BRICS members want to improve their economies. Regardless of the motivation, the result is the same for the United States: less demand and a weaker dollar.

Gold Benefits From Dollar Weakness

Gold’s recent rally to new highs is directly attributable to the growing skepticism of a USD-centered world economy and the resulting boom in demand for precious metal assets. This further solidifies gold’s reputation as a viable asset to keep up with inflation and protect wealth when the economy nosedives. The yellow metal is moving so quickly that experts are raising their gold price predictions for 2024 and 2025.

A Looming Debt Crisis

Some debt apologists point to the government’s ability to maintain debt for decades. However, this ignores the acute ramifications of this reckless spending and printing cycle. Inflation, interest rates, and a loss of buying power weigh heavily on the average American. Besides, the US debt is reaching a point of no return. Credit card debt is also at all-time highs, exacerbated by the stark devaluation of the US dollar.

credit card total debt vs savings rate chart

“As a country, we’ve been living over our means.” – Precious Metals Advisor Tim Murphy

Financial experts, bank heads, and world economic leaders are warning that something is going to break if the US doesn’t get its act together. Of course, the American people will be forced to pick up the tab the government has been running up for centuries.

Protect Your Assets from De-Dollarization

A few decades ago, concerns about de-dollarization might have been associated with conspiracy theorists and fear-mongers. Today, it’s inevitable. Countries are making decisive moves away from the US dollar and toward physical gold. As the smartest, wealthiest, and most experienced investors in the world, central banks are a vital barometer for determining the value and merit of an asset. Right now, the winds are decisively shifting in favor of physical gold.

When it comes to financial security, knowledge is power. To put investors in the best position to succeed, we’ve compiled a comprehensive timeline covering the entire history of this shift away from USD. Click below to read The Petrodollar: De-Dollarization Timeline.

De-Dollarization Timeline Report