The Coming Gold-Based Monetary System Will Have Some Surprises

The comments below are an edited and abridged synopsis of an article by Dr. Stephen Leeb

For gold to soar, it will take a catalyst that implies a major worldwide change. Such a catalyst isn’t far off.

The Coming Gold-Based Monetary System Will Have Some Surprises | BullionBuzz | Nick's Top Six
gold Euro cents metal coins, a metal alloy from which metal cash coins are made for making payments and settlements, the exchange rate plan of these coins is used in the state monetary system of the European Union

The one Leeb is focused on is a new reserve currency based on gold, implying a different role for the dollar than the one it has today. What’s revealing is how the financial markets confirm this insight into the dollar/gold relationship. While interest rates, both real and nominal, often correlate with gold, the dollar has long been the real driver of gold prices. Over shorter- and longer-term time frames, nothing correlates more closely with gold than the dollar.

Today, the dollar-gold relationship is more critical than ever. Right now, it is hard to ignore the fact that over the past month or so, every meaningful gain in the dollar has occurred outside of regular trading hours in US markets. An exception was a few weeks ago following the Fed’s comments about possibly raising rates sooner than anticipated.

Are the recent trading patterns coincidences or actual manipulation? Because the stakes of keeping the dollar from a steep drop are enormous. A major drop in the greenback would have major consequences for the US.

Leeb discusses the Fed’s balance sheet; rising commodity prices; the coming gold-based monetary system; and China fast-tracking its preparation for the coming inflection point.

“It’s restraint so far suggests that China would welcome us in joining a new monetary order that could end up being a win-win. I certainly have no love of China’s authoritarian political system, and if I thought that cooperating with China in any way implies a new form of government for the US, I would never have given this interview. What does worry me, though, and worries me a lot, are the potential consequences to our country’s economic future and standing if we fail to cooperate.”

“For investors, however, the current situation points to one clear message: Buy as much gold as you can.”

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