What Dethroning the US Dollar King Means for Gold

It’s day three at the Sprott-Stansberry Natural Resource Symposium in Vancouver, Canada.

And if you thought day one and two sounded ‘gold’, I’ve got more to tell you…

It starts with China.

Shaun Brodwick, Resource Strategist and Editor of The Oxford Club’s Resource Explorer, believes that China wants the yuan to become the world’s reserve currency.

I, and many others, agree.

But, it will take time.

It’s well known that China’s gunning to provide the world’s fifth reserve currency — this would put it in the international spotlight. To do this, the first step is to become a key member of the International Monetary Fund (IMF). The larger the weighting your currency exposure is at the IMF, the more say you get with its policy. And the policies have historically changed the world, economically and geopolitically.

At the moment, the US dollar, euro, Japanese yen, and the UK pound are the top four members. And it’s been well documented that the Chinese want to become part of the ‘club’. This shouldn’t be surprising. China has the second largest economy in the world. So why shouldn’t they get more of a say?

It’s likely that sometime next year, we’ll see the Chinese join the club. But if you ask me, they won’t get the exposure that they want and deserve. Of course, the decision will be entirely political. The US, being the top dog in the club, has the most say. And by authority, it can dictate the terms — and has been for years.

Not surprisingly, the Chinese have had enough with the US trying to police the world.

And realising the US’ immense power, China is doing everything it can to persuade Washington. In fact, Shaun believes that China didn’t report its true gold reserves to the world last week. And it never has for one simple reason — it doesn’t want to scare off the US.

So will it ever admit its true gold position?

I’ll get to that later…

The US dollar is king…for now

But before I do, I’ll say that becoming the fifth member of the IMF is just step one. That is, to dethroning the US dollar king from the position of the world’s reserve currency.

But let’s step back a bit here…

If you didn’t know, the US dollar’s only strong because it serves as the world’s reserve currency. And it has for the last 40 years. This is a privilege of having the largest economy and the most open financial markets in the world.

Indeed, thanks to the liquidity of the US financial system, punters fly into the US dollar for safety when times get tough like they are today.

In fact, today’s ‘flight to safety’ has only just started.

I’ve long told Resource Speculator readers that the sovereign debt defaults will see the US Dollar Index skyrocket to $1.60 into 2017. It’s now at 97.47 US cents. So you’re looking at a 60% jump in less than two years. This in theory should send commodity prices down 60%. But it won’t, as I’ve outlined to readers many times. If you want to find out why, go here.

Indeed, the US dollar bull will become a disaster.

Ironically it will destroy the US economy as its goods (exports) will become too expensive and, by association, unattractive to the rest of the world. And when the world’s number one economy gets squashed, the global economy will blow up.

Trillions of dollars will be lost from savings and pensions worldwide. And Kris Sayce over at Tactical Wealth is right. In Australia, the dead broke government will come after your super, stealing it all. He explains more about this threat here.

This is what’s coming our way in the next couple of years.

Are you prepared?

Resource Speculator readers definitely will be…

And so will China…

The second step to dethroning the US dollar king

China is ready. When the US falls into deep recession, China will open its arms to the world.

Indeed, Shaun believes that the China will then — and only then — reveal its true gold position.

Confidence in the US dollar will be lost. And gold will rally against the US dollar. That’s right, the US dollar will start to die in your lifetime.

But realise, the first step is for China to join the international currency system. It also then needs to overtake the US economy in size. Which by some reports, it already has. The BBC wrote in December last year, ‘the Chinese economy is now worth $17.6tn, slightly higher than the $17.4tn the International Monetary Fund (IMF) estimates for the US’.

So big changes are coming. And with it, an exponential increase in poverty.

If you want to survive and prosper in the future, owning commodities will come in handy —especially gold. That said, if you want to maximise your exposure and gains, you need to buy gold at the right time. For 18 months I’ve argued that gold will fall to US$931 per ounce or below.

Why buy now when there are better opportunities available down the road?

If you want to know how to tackle the gold market and profit more than most in the years ahead, you can see here more details.


Jason Stevenson,

Resources Analyst, Resource Speculator

From the Port Phillip Publishing Library

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