The era of American financial dominance is facing unprecedented hurdlesOnce revered as the backbone of the United States' economic prosperity, the dollar's status has been increasingly threatened by dual pressures both external and internal.

How much longer can the dollar sustain its ambiance of supremacy? Could the so-called de-dollarization indicate the onset of a global economic overhaul?

The Dollar Under Siege

Recent developments from across the United States highlight a significant shiftLegislatures in 47 states have enacted laws designating gold and silver as legal tender, equating these valuable metals with the dollar in both commercial transactions and debt repayments.

Take Kentucky as a case in point; its statute (HB102) explicitly exempts gold transactions from capital gains taxes while granting gold and silver the dual capacities of payment and store of value.

Simultaneously, a global movement toward diminishing reliance on the dollar is also gaining momentumThe International Monetary Fund (IMF) recently introduced the XC digital currency framework, aimed at dismantling the dollar's monopolistic hold over cross-border payments through a unified ledger.

Countries in Europe and Japan are championing domestic currency-centric payment systems, seeking to liberate themselves from the dollar's graspThese signals collectively denote a declining aura surrounding the dollar's previously unfaltering dominance.

The American Debt Crisis

According to estimates from the Congressional Budget Office, the United States is projected to accumulate a staggering $13.8 trillion budget deficit over the next decadeBy 2049, the national debt could swell to a staggering 2.3 times the GDP!

What does this mean? It implies that for every dollar earned, $2.30 is owed! This unchecked debt growth raises alarm bells among U.S. debt holders and significantly undermines global confidence in the dollar.

America's debt dilemma transcends mere economic implications; it's, in essence, a "credit crisis." Should U.S. debt lose its appeal to global buyers, the dollar's value structure could face a dire collapse.

Recently, a multitude of nations, including our own, has begun liquidating their U.S. debt holdings—an appalling development for the United States, compounding its financial woes.

A Multinational Counteroffensive

On the international front, there is a palpable pushback against the dollar that's hardly subtle.

For instance, Germany and France are advocating for the euro to serve as the principal currency for energy trades, establishing a crude oil pricing benchmark based in euros;

In a similar vein, the Bank of Japan is spearheading the creation of an alternative payment system akin to SWIFT, collaborating with nations like Iran to circumvent the dollar.

Figures show that by 2024, the proportion of global trade settled in dollars is projected to plummet from 65% to approximately 59%, a trend that appears to be accelerating.

Interestingly, even Japan, a close ally of the United States, has initiated subtle moves in this direction.

In response to the sharp depreciation of the yen, Japan is establishing its cross-border payment network, leveraging digital currency to enhance trading flexibility.

Moreover, the IMF’s XC currency system directly undermines the convenience of dollar transactions by integrating central banks' digital currencies from various nations.

Gold's Resurgence

In the ongoing financial skirmish, gold has once again emerged as a focal asset.

In 2024, global central bank purchases of gold hit an all-time high, with our own country being a significant player, having augmented its gold reserves by a notable 40.26 tons in the past year alone.

In stark contrast, the proportion of dollar assets in foreign reserves continues to dwindle, and the reasoning is simple: gold requires no trust, whereas the dollar does!

Domestic unrest within the United States further accentuates gold's perceived value.

The German central bank has persistently demanded the return of 1,260 tons of gold stored in New York, often met with evasiveness from the Federal Reserve

Advertisements

Advertisements

Advertisements

Advertisements