Not About Gold—All About The Dollar

The comments below are an edited and abridged synopsis of an article by Kelsey Williams

There is much talk about the US dollar and its ultimate demise as the world’s reserve currency, and also about what this means with respect to gold.

Not About Gold—All About The Dollar - BullionBuzz - Nick's Top Six
Gold and Dollar Concept

The gold price tells us nothing about gold. The only thing a continually rising gold price tells us is that the dollar continues to lose purchasing power.

The US Dollar Index is at the same level today as it was 35 years ago (1987). It has risen 40% from its low point in 2008. The dollar has risen 25% since mid-2014 and appears to have established progressively higher levels of support.

The Chinese yuan has been mentioned as an alternative to the dollar. As China’s role in international trade has grown, so too has the attention paid to its currency.

The yuan has also been suggested as an alternative to the dollar for international pricing of gold. Whether this transpires or not is irrelevant as far as any expected changes in gold.

The dollar is the world’s reserve currency and that isn’t likely to change soon—unless there is a calamitous implosion of the dollar. A calamitous implosion implies outright rejection and repudiation.

That could happen, but there isn’t another currency that could take the dollar’s place. By the time any calamity becomes a reality, any possible candidates would likely be in worse shape.

Other alternatives have been suggested, such as cryptocurrencies, but those are not currencies or money. They are processes for the private transfer of money. The privacy feature will not be a factor for long, as governments and regulators continue to act with the intention of exerting control over the processes.

All currencies are substitutes for real money, i.e. gold. And because all governments inflate and destroy their own currencies, the possibility of gold reasserting itself as the international medium of exchange continues to increase.

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