Much of the global economy is trying to ditch the dollar -- and buy gold instead Bitcoin had its boom in 2018, but this year a different currency is hot: physical gold. In the first half of this year, central banks bought $15.7B of gold -- the largest increase in 19 recorded years of data. So, why are global investors so giddy for gold? Everyone wants to ditch the dollar... The crispy American greenback is the world’s de facto global currency: Dollars make up 62% of all central bank foreign exchange reserves (dwarfing the #2 euro at 21%) and 90% of all foreign exchange trades. But since dollar dominance damages other currencies during domestic downturns (see: the 2008 global financial crisis), other countries resist dollar dependence. In 2009, China spearheaded an effort to replace the dollar with an International Monetary Fund-controlled global currency, but it never got off the ground. Now, China and others are going for -- or back to -- the gold The noblest metal is becoming the gold standard once again: Central banks bought 73% more gold in the first few months of this year than last, led by China, Russia, and Turkey. That’s a return to normal, really: Nearly all global currencies were redeemable for gold before 1944. But in ’44, during a play-date in New Hampshire, world leaders said “America has a sh*t ton of gold and seems stable, let’s just peg all currencies to the dollar. What could go wrong?” (I’m paraphrasing). Of course, things got spicy: America killed the gold standard in the ’70s, leaving the world’s currency reserve backed not by gold but by blind confidence in Uncle Sam... Since that led to inflation and volatility, gold never really stopped glittering as an attractive alternative -- and when the world doubts the dollar, it goes for the gold.
Central Banks all over the world are either BUYING Dollars or aggressively lowering interest rates in order to deflate their native currency versus the Dollar. In other words - the entire world financial system wants a strong Dollar. Exhibit 1: Draghi and the ECB; Exhibit 2: People’s Bank of China Currency Desk.
Ummm... gold AND the USD have risen. There is no doubt. Good there is no byline on that article... they would lose readership!
Unless it can be like this... bitcoin vs gold, something vs gold etc. If it's vs USD, then it's back to square one. There is no escape from USD. Use RMB instead of USD. It's 7+ when it's manipulation or lack off. As long as it's fiat, it's the central bank and politics. Weaker currency = More competitive. True ?
Draghi playbook 101. Schatz Yield -0.850% on freaking Two Year paper. And the ECB has told European Banks to expect lower more negative rates. And it’s working - the € has weakened substantially versus the Dollar and Powell is way behind. More nuanced than Tariffs or a Commie Party Bank Desk buying Dollars but the effect is similar - export competition.