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Posted on 10/01/2024 10:19:22 AM PDT by delta7
According to Bank of America, gold has overtaken the euro to become the world’s second-largest central bank reserve asset.
With the central bank gold buying spree over the last several years, along with the rapid rise in price in 2024, the yellow metal now makes up about 16 percent of total reserve assets, just ahead of the euro.
The dollar’s share of reserves has dropped to 58 percent.
There appears to be a movement to replace fiat currencies, including the dollar, with gold, especially in emerging market countries in the East.
Central banks globally added a net 483 tons of gold through the first six months of this year, 5 percent above the record of 460 tons in H1 2023, and aggressive buying has continued in Q3.
Last year, central bank gold buying of 1,037 tons fell just 45 tons short of 2022’s multi-decade record.
Central bank gold buying in 2023 built on the prior record year. Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971.
Meanwhile, the share of dollars making up global reserves has dropped by 14 percent since the turn of the century, according to data compiled by the Atlantic Council.
As of 2002, dollars accounted for 72 percent of global reserves. Today, dollars make up about 58 percent of reserves.
This doesn’t mean the dollar is about to collapse. It's more like a death by 10,000 paper cuts. But it does reveal a slow drift away from dollar dominance as other countries seek to minimize their dependence on the greenback and cut the monetary strings the United States often pulls on to advance its foreign policy goals.
Analyst Dave Kranzler warns that the recent monetary policy “recalibration” could put further downward pressure on the dollar.
“The Fed has painted itself into a corner. It’s under enormous pressure from the market and Wall Street to cut interest rates. But if it does that, it risks a rapid sell-off in the dollar.”
The dollar isn’t in imminent danger of collapse, but any weakening of the greenback is problematic for the U.S. As Kanzler pointed out, “A falling dollar and lower interest rates will make it even more difficult to attract foreign interest in funding additional Treasury debt – something which has already become problematic.”
Falling demand for Treasuries could drive interest rates higher despite the Federal Reserve's efforts to push them down. That's a problem given that the debt-riddled U.S. economy struggles to operate even in a normal rate environment. Rising interest expense is also a big issue for the federal government. In fiscal 2024, Uncle Sam will pay over $1 trillion in interest expense. It's the biggest spending category behind Social Security.
As demand for dollars declines, it could eventually lead to a dollar glut.
The dollar’s role as the reserve currency means there is a constant demand for the U.S. currency. This allows the U.S. government and central bank to create far more dollars than it otherwise could. The world soaks up those extra dollars, somewhat mitigating price inflation due to rampant money creation. In effect, this allows the U.S. government to borrow and spend more than it otherwise could. It also enables the massive U.S. trade deficit.
So, what happens if the world no longer needs dollars?
Continued de-dollarization of the world economy would cause the value of the U.S. currency to crash and could ultimately spark a currency crisis. This would further erode the purchasing power of the dollar and drive prices even higher. In the worst-case scenario, it could even lead to hyperinflation.
Thanks Joe, the USD is walking dead, with 159 countries applying for Brics- 70 percent of the worlds population- we shall see.
It all comes back to gold. The USA has destroyed the value of paper money thanks to congress spending it like lunatics.
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For me its "a people get the government they deserve."
Americans were sold progressivism and socialism, and many of us happily signed up. Over decades, that grew the bloated DC Fed.gov welfare-warfare state, and they and their corporate-leftist cronies took over control of politics, spending and the economy.
Congress obliged, because most Americans demanded it.
Wash, rinse, repeat.
“The USA has destroyed the value of paper money thanks to congress spending it like lunatics.”
The USA has destroyed the value of paper money thanks to THE Feds
I heard China has been stock pilling gold hand over fist in an attempt to knock the USD off as the reserve currency with a gold backed Chinese currency.
Currently over US$2,600 a troy oz
I’m kicking myself. I was going to buy some gold yesterday but I was greedy hoping for further declines, and then today gold shoots up. Argh!
Dmm Nixon!
Dmm Nixon!
************
What should Nixon have done?
Answer: Turn into Rumpelstiltskin & spin straw into gold./sarcasm
We didn’t have the gold reserves to pay off our European financial counterparts on their $ holdings.
Not devalue the Currency.
Monday, the US Dollar (USD) broke under 100 for the first time in about 15 months.
I expected some real damage, but USD recovered, and has been bouncing around 101 for most of Tuesday.
Too bad the U.S. no longer has any gold.
To me, that indicates soft demand for short term US Treasury debt, which I find surprising.
That means the Treasury has to pay 2.5% above the inflation rate to sell its short term debt.
This guy's past reports on his channel are worth following to get an idea of where the world's financial undercurrent is rapidly going, to our determent.
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Currently over US$2,600 a troy oz
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When it breaks $3,000 ,$5,000 plus is a given. The most stable currency in the world , the Swiss franc just finally hit an all time high.yesterday. People just can’t figure out Gold doesn’t change- the amount of dollars to purchase it requires more- which means the USD is declining in value. The amount of Yen and amount of Aussie dollars required to buy an ounce of Gold hit all time highs awhile ago. Gold is and has been a measure of nation’s currency.
Throw in a USD currency crisis and 10,000 USD to purchase an ounce of gold just may be the norm. …… all eyes on the Brics Summit the 22nd of October., they will announce their “ Unit” will be backed by 40 percent gold….and 159 countries have applied for admission.
I fully expect Gold to hit ridiculous prices ( in USD’s) after Brics instates its MBridge Unit….why else is the entire world’s Central banks buying Gold in historic amounts? ….they know something the sheeple don’t…..even US banks have been recently instructed to establish GRA’s- Gold Revaluation Accounts.
Good luck folks, most have no idea what is being cooked up.
We didn’t have the gold reserves to pay off our European financial counterparts on their $ holdings
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Can you say Default? I can.
Arbitrage. Our Comex is being depleted, deliveries are being taken, then shipped to China and sold- the Shanghai Gold Exchange spot is getting 7-13 percent higher than our crooked Comex and LMBA….and not a word said by MSM.
They are depleting the West’s holdings.
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