As Donald Trump shatters the global rules-based order, official institutions (and private investors) are scrambling to buy gold: the share of the asset in central banks’ reserves has doubled in the past decade to more than a quarter, the highest level in almost 30 years.
Although this partly reflects the soaring bullion price, experts say central banks are also stuffing their vaults as an insurance policy in a volatile world. Many are also rushing to repatriate gold stockpiles held overseas, and slashing their exposure to the US dollar.
“We have moved from Pax Americana to global discord, geopolitically. It is the law of the jungle when we see what the US are doing,” says Raphaël Gallardo, the chief economist at the asset manager Carmignac.
“Investors – private and sovereign – believe their strategic reserves are no longer safe in dollar terms, as they can be confiscated overnight. The dollar is losing the credibility as the nominal anchor of the global monetary system because the Fed is losing credibility, and US Congress is losing its credibility.”
Its more than just the dollar. The end of the rules based order and a sane and predictable business environment means that all US financials are poisoned. Visa and Mastercard are now strategic liabilities that the world will actively replace. Trading on American exchanges is a liability. Any asset denominated in USD is a liability.
Any past credibility of business friendly law, courts and SEC regulation have gone poof meaning counterparty risk just shot through the roof and is currently on an extrasolar trajectory passing Jupiter at present.
Wall Street is now a sinkhole. Capital Controls in 3…2…