Trump and a New Gold-Backed Dollar
The petrodollar has lasted over 40 years, but the glue is losing its stick. We are on the cusp of another paradigm shift in the international financial system, a change at least as fundamental as what happened in 1971 when Nixon severed the dollar’s last link to gold.
The relationship between Saudi Arabia and the US hit historic lows in 2016. It will get worse. Trump is the first president since the petrodollar system was enacted to be openly hostile toward the Saudis.
The death of the petrodollar system is a black swan event for 2017, and it raises the question: What will fill the void when the petrodollar dies?
Something has to replace it, and there are only two options: the IMF’s Special Drawing Rights (a basket of fiat currencies), or gold.
There’s only one way Trump could fight the global elites and their SDR plan: return the dollar to some sort of gold backing.
Trump has said favourable things about gold in the past, and so have some of his advisors, but it wouldn’t be easy. He’d face a struggle with the globalists, and winning would be far from certain.
No matter what, the death of the petrodollar, just like the end of the dollar’s link to gold, will be good for the dollar price of gold and gold mining stocks.
When Nixon took the dollar off gold in 1971, gold skyrocketed over 2,300%. It shot from $35 per ounce to a high of $850 in 1980. Gold mining stocks did even better.
Gold is still bouncing around its lows. Gold mining stocks are still cheap. Expect returns to be at least as great as they were during the paradigm shift in the international monetary system.