“We could be seeing the slow demise of the US dollar. That’s going to cause severe inflation.”— Precious Metals Advisor Damian White
The US dollar has enjoyed a prestigious position in the world economy as the preeminent global currency for nearly half a century. However, complex economic and geopolitical factors are starting to put a strain on the world’s confidence in the US dollar.
This pressure is causing a lot of uncertainty among investors with assets tied to the performance of the greenback. Watch the video to hear what Precious Metals Advisors Damian White and Todd Graf are saying about the current state of the US dollar on the global stage and what that means for investors.
China & Russia Continue Move Away from the US Dollar
The Rise of the Petroyuan
For nearly 50 years, global oil supplies have been traded in US dollars. After the greenback departed from the gold standard in the mid-70s, the government sought to maintain the dollar’s hegemony by encouraging oil-producing nations to trade exclusively in USD. The strategy worked perfectly, but China has been waiting patiently to supplant the dollar’s control.
In 2018, the Chinese government established a plan to shift the global oil trade towards the petroyuan. Recently, news broke of Saudi Arabia’s consideration of accepting Yuan in lieu of the dollar which would rock the greenback’s foundation, further reducing domestic and global confidence in its performance.
Russia Kicked from SWIFT
After the invasion of Ukraine, the West took unprecedented action to punish Russia with an onslaught of economic sanctions. Among the more severe was the restriction of Russian banks from using SWIFT – the primary international transfer system. This blockade is forcing the Kremlin to consider alternatives.
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There are growing fears that Russia will find a way to circumnavigate these sanctions and decouple its economy from the US dollar out of sheer desperation. This would send shockwaves through the world signaling to countries in similar positions that economic stability is achievable without the US dollar.
Where does this leave gold?
Gold has been a reliable hedge against inflation for centuries. As the performance and dominance of the US dollar fluctuates, this precious metal has always been a safe haven for investors looking to protect their assets. But, how will gold react to the unprecedented sanctions against Russia, the specter of a Petroyuan, and other global economic pressures?
Generally, bad news for the US dollar is good news for precious metals which rise in proportion to a devaluing dollar. Analysts expect central banks across the world to pour their assets into gold, commodities, and other inflation-proof assets in anticipation of a rapidly declining US dollar valuation. Some experts even anticipate gold to rise above $10,000/oz in the future.
What investors should know now.
We might be witnessing the beginning of the world economy’s decoupling from the US dollar. The greenback is quickly declining in value and prominence as countries lose confidence in its performance. As demand dips, inflation rises. Smart investors are turning to gold and other precious metals to protect their assets. If you’re looking for some clarification and guidance regarding the potential collapse of the US dollar, Get your FREE COPY of our Currency Wars Exposure Report today!