Cracks in Dollar Getting Larger

The comments above & below is an edited and abridged synopsis of an article by Jim Rickards

The wheels are coming off the petrodollar plan, and the world is losing confidence in the dollar. China just announced that any oil exporter that accepts yuan for oil can convert the oil to gold. The straight-through processing of oil-to-yuan-to-gold eliminates the role of the dollar, marking the end of the petrodollar system worked out in 1974.

Russia and Venezuela are now pricing oil in yuan instead of dollars, and Russia has banned dollar payments at its seaports.

There are many stories from around the world showing how the dollar is being pushed out of international trade and how payments are to be made by yuan, rubles, euros or gold.

Rickards believes gold is heading to $10,000 an ounce, or higher. He says it’s the implied non-deflationary price of gold. Everyone says you can’t have a gold standard, because there’s not enough gold, but there’s always enough gold, you just have to get the price right.

The analytical question is, you can have a gold standard if you get the price right; what is the non-deflationary price? What price would gold have to be in order to support global trade and commerce, and bank balance sheets, without reducing the money supply? The answer is, $10,000 an ounce.

It is also worth noting that you don’t have to have a gold standard, but if you do, this will be the price. The question is, are we going to have a gold standard?

We don’t know for sure what will happen in 2018, but eventually a tipping point will be reached where the dollar collapse suddenly accelerates. Investors should acquire gold and other hard assets before that happens.