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.”
This is exactly where the US is weakest and where we’ll be hurt the most. If the value of the dollar drops significantly and/or the market for Treasury Bonds collapses, the US is FUCKED.
the opposite is the case: if the Dollar drops significantly, it makes exports more desirable and that creates jobs in the US.
except that pissing off most of the world leads to boycotts
If the exports weren’t mostly products made with components and raw materials that were imported, you’re thinking would be sound if we were considering the issue in isolation
The USD has dropped significantly already. A year ago 1€=1.0279$ today it is 1€=1.1595$. That is a nearly 13% drop in value.
tbf i think it should drop by sth like 90%.