We’ve written for years about persistent efforts to dethrone the US dollar as the leading global reserve currency and the main medium of exchange. At the same time, we’ve said that such processes don’t happen overnight, but happen slowly and incrementally.
The dollar’s slow displacement
The dollar displaced sterling as the leading reserve currency in the 20th century, but it took 30 years, from 1914 to 1944, for that to happen. It started with the outbreak of the First World War and the UK’s liquidation of assets and money printing to finance the war. It ended with the Bretton Woods agreement that cemented the role of the dollar linked to gold as the new global standard. Even after the gold link was broken in 1971, the dollar standard remained because there was no good alternative.
Still, the erosion of the dollar’s role has begun and is visible in many metrics. The dollar’s share of global reserves has fallen from 70% to 60% in the past 22 years. The dollar price of gold (an inverse measure of dollar strength) has gone from US$250 per ounce to over US$2,000 per ounce between August 1999 and August 2020 (it’s about US$1,900 per ounce as of this writing). The IMF’s special drawing right (SDR), Bitcoin [BTC], and gold (again) are waiting in the wings to step up as the dollar falters further.
The Russians are moving quickly to protect themselves from this inevitable decline. Russia has already increased gold as a percentage of its reserves to 20% (only the US, Germany, Italy, France, and the Netherlands have higher percentages of gold among the 20 largest developed economies).
Russia’s exit plan
Now, according to this article, Russia will completely eliminate dollar holdings from its US$119 billion National Wealth Fund, which is a sovereign wealth fund that holds oil wealth for the future benefit of the Russian people. Russia will be able to execute this plan without severe disruption either to the gold market or the dollar market.
By itself this move does not mean the end of the dollar as the leading reserve currency. But it is one more step on the slow path toward the dollar’s inevitable decline as a trusted medium of exchange.
When the rush for the exits begins in earnest, you don’t want to be the last one out the door. It’s a good idea to diversify into gold for about 10% of your investible assets if you haven’t already. That way you’ll be keeping up with the Russians and be one step ahead of the dollar’s decline.
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Meanwhile…
More proof that ‘climate change’ is not about climate; it’s about power
This article was written by a climate change activist, but it inadvertently reveals why climate alarmism is a global hoax.
First things first. Climate change is real, but it happens over hundreds, sometimes thousands of years for reasons that science does not completely understand. I lived for 10 years on Long Island Sound, a beautiful body of water where locals enjoy fishing, sailing, swimming, and other water sports. It has a rocky coast because 10,000 years ago it was a glacier. (A glacier pushes rocks out of its way, and they accumulate along the edges in a formation called a moraine.) Going from a glacier to a waterway is the result of real climate change, but the process took 10 millennia, not 10 years.
The idea that cities will be inundated by rising oceans in 10 years, a stock claim of climate alarmists, is nonsense. (By the way, the alarmists made the same claim 20 years ago, 15 years ago, and 10 years ago, and they’ve been dead wrong every time; they’re still wrong.) Climate changes due to sunspot cycles, volcanic activity, and extreme geological events such as saltwater invading glacial seas when land barriers erode or vice versa.
Still, the climate change narrative persists because it provides political cover for global government, global taxation, open borders, and other facets of the globalist agenda. You can’t impose global solutions unless you concoct a global ‘problem’ and climate change as the alarmists define it fills the bill.
Ignore propaganda, stick to science
This hidden agenda is revealed by author Kemal Dervis in this article. He writes about ‘framing climate change mitigation’. Why do you have to ‘frame’ anything if the story is true? Framing is a form of propaganda, the climate alarmist’s favourite tool.
He goes on to write that, ‘When the climate policy debate began, the prevailing narrative was that economic growth faced new constraints.’ Again, you don’t need a ‘narrative’ if you have good science on your side. The facts will speak for themselves.
Finally, Davis says that the growth constraint narrative was not proving popular. So, he calls for ‘new framing’ based on supposed economic growth that can lead to a ‘new, more positive climate narrative’. Whenever you see words like ‘framing’ and ‘narrative’, you can be sure you’re being fed propaganda, which is what this article presents. The best advice is to ignore propaganda, stick to real science (when you can find it), and make long-term investment decisions that don’t rely on false predictions of climate doom.
Regards,
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Jim Rickards,
Strategist, The Daily Reckoning Australia
PS: This content was originally published by Jim Rickards’ Strategic Intelligence Australia, a financial advisory newsletter designed to help you protect your wealth and potentially profit from unseen world events. Learn more here.
