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Good-bye US Reserve Currency

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April 24, 2009 – Comments (17)

I have predicted that the US will no longer be a reserve currency and that gold will become the reserve currency.

Well, today I saw a post that seems to be pointing that way...

China has secretly been stocking up on gold.

 

17 Comments – Post Your Own

#1) On April 24, 2009 at 10:15 AM, mark91055 (< 20) wrote:

China has also made agreements (not secret) with several countries to do their trade in their own currencies and not use dollars.

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#2) On April 24, 2009 at 10:21 AM, kaskoosek (92.46) wrote:

I am amazed why a currency collapse hasn't happened any sooner.

Holders of US dollars don't know whats coming to them. There is going to be an avalanche that will wipe all their wealth.

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#3) On April 24, 2009 at 10:26 AM, catoismymotor (38.90) wrote:

Very, very interesting.

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#4) On April 24, 2009 at 10:27 AM, XMFSinchiruna (27.97) wrote:

dwot, I had no idea you were such a gold bull. :)

I'm not sure that a simple gold reserve will be practicable. There is so much debt and fiat currency out there that the price of gold would have to be in the many thousands of $ per ounce, and that would make it tricky.

Some other scenarios are far more likely, including at least an attempt at creating a basket of fiat currencies with gold included in the basket. This is what China and Russia are pushing for through the IMF SDRs as I discussed here.

Another possibility would be a poly-metalic standard that each fiat currency would then lock to. A ration, so to speak, of perhaps the big three: gold, silver, and copper. I think this is the only way that a non-fiat regime could gain acceptance and remain practicable.

I seem to remember some time ago you were very critical of the miners. Does that mean you've come around on that one, too? :)

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#5) On April 24, 2009 at 10:34 AM, alstry (35.03) wrote:

Guess who is the largest holder of Gold in the world????

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#6) On April 24, 2009 at 10:58 AM, ClandPhoenix (86.08) wrote:

I would have to weigh what I have buried in the back yard but it's either me or the US government.

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#7) On April 24, 2009 at 11:03 AM, kaskoosek (92.46) wrote:

Alstry

 

I agree with you there. That is why a lot of people do not like gold that much.

Still, at current prices gold is not that expensive.

 

A play on the Euro or Cad could be smarter here.

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#8) On April 24, 2009 at 11:21 AM, dwot (97.03) wrote:

A gold mining company is not gold.

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#9) On April 24, 2009 at 12:20 PM, whereaminow (42.76) wrote:

dwot

How do you feel about the yuan currency?  Under the gold-exchange standard, currency valuations were driven by the amount of gold in a country's reserves. Would you make the case that the yuan is undervalued?  I haven't analyzed it myself.  Just thinking out loud right now.

David in Qatar

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#10) On April 24, 2009 at 12:51 PM, XMFSinchiruna (27.97) wrote:

dwot

It's not?

Are not a miner's reserves more secure than GLD reserves? A mere selling spree is enough to unload bullion from GLD, while a miner controls the rate and timing of its own production.

 

 

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#11) On April 24, 2009 at 2:20 PM, OleDrippy (35.19) wrote:

"Another possibility would be a poly-metalic standard that each fiat currency would then lock to."

 

Like gold-pressed latinum?

 

I agree.. Something pegged to a basket of commodities makes more sense. Why move currency control from one oligarchy to another?

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#12) On April 24, 2009 at 2:25 PM, wjmwestoak (< 20) wrote:

The sky is falling, the sky is falling.  c'mon guys.

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#13) On April 24, 2009 at 3:22 PM, XMFSinchiruna (27.97) wrote:

wjmwestoak

OK, let's hear your thesis for how the USD will retain its role as global reserve currency? I've delivered plenty of specifics for why it cannot, so I would appreciate contrary specifics if you're going to try to dismiss such discussions as paranoia.

I'd like to get a dollar bull's perspective...

How do this plus this = anything other than this?

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#14) On April 24, 2009 at 6:32 PM, TigerPack1 (99.02) wrote:

Didn't any of you watch 60-Minutes last Sunday?

The most valuable commodity in the world (not radioactive of course) in 5-10 years is going to be Palladium.  I have been following the cold fusion experiments behind the scenes for several years now, and if it plays out as a battery/energy provider, the incredibly scarce palladium resource of the world will jump 1000% or more in price and value soon.

Why do you think Russia has been buying up all the palladium mines in the world the past several years?  Cleaner energy, cold fusion, and many alternative energy creations coming to market the next few years REQUIRE palladium to work.

Gold will double in price over the next 5-10 years, but palladium will become "the" commodity of value to own.

PAL and SWC are the best North American miners of palladium, but their output and control of this market pales when compared to Russia, Zimbabwe and South Africa's ownership of the stuff.

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#15) On April 24, 2009 at 6:40 PM, davejh23 (< 20) wrote:

If gold does become the reserve currency, I don't believe it would be good for the value of gold.  The value of gold could return to $70/oz. and become highly regulated.  If you really believe that this is coming, I would not be holding any gold right now.  Even if you don't believe this is coming, there's a good chance that the price of gold will swing back to around $300/oz.

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#16) On April 25, 2009 at 1:32 AM, kaskoosek (92.46) wrote:

davejh23

 

???????????????????????????????????????

What are you talking about. Gold as a reserve currency will create more demand for it.

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#17) On April 26, 2009 at 10:53 PM, huddaman (97.35) wrote:

I disagree with you all. US$ will continue to remain the reserve currency, and Yuan is not ready yet for primetime. You have to go back and find out why US$ first of all is the world currency, and see if the reason no longer exists?

 In order to be world reserve currency, you have to be the world's "largest and most powerful economy and country". Do you know anyone else that passes this test? I don't for the forseeable future. China supplies the world with cheap manufactured goods, that is not good enough to become world's reserve currency.

 

Having said that, sure, in 20-30 or 50 years, such a possibility exists, but before that I predict Armegeddon, that is how difficult it will be to replace world reserve currency with something else.

 If I were a nation to accept Yuan, I would only be interested in exporting goods for Yuan to the extent I am going to spend it to import from China, as I don't expect all nations would want to accept Yuan, as many nations especially poorer ones don't benefit much from cheap exploited Chinese labor. But almost every nation still needs things that countries like US, Canada, Japan, Korea etc manufacture. Those require the greenback. Not gold, or Yuan. 

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