Over the course of history, we have read about the rise and fall of empires and the transition from one era to another. Today, we see more of things like the dollar unfold before our very eyes.
Dollar, whenever mentioned, most often than not, the concepts supremacy, wealth, gold and the like are the first things that come to our mind. The US dollar occupied the dominant spot the world over as the global reserve currency.
Its strength lies in the fact that gold backs it. Literally yes, every dollar had an equivalent gold. The United States of America had the most significant gold reserves. This makes the US the most powerful nation early in the 2oth Century.
This hadn’t changed for about a century until the Federal Reserve started to print money without gold reserves to back it in the late 1940’s.
Then came the inflation which prompted the start of a vicious cycle of printing more and more money without the equivalent gold reserves compounding the problem.
This then led to the upsurge of the market value of gold thereby reaching the point that the US currency stopped being backed by gold. Gold price tripled, a scenario inversely proportional to the rapid drop in dollar value.
Global Currency Reset
Global currency reset became the new reality, the birth of the petrodollar, a somewhat political move.
In the past, the US was the most prominent importer of oil from Saudi Arabia, which allowed them to politically have the price of oil based on the US dollar.
This necessitated all other countries to comply.
However, rapid turn of events did happen when Russia took over the limelight when it replaced Saudi Arabia as the major oil producer globally by 2017.
Together with this, China had replaced the spot of the US as it became the most prominent importer of oil recently as well.
The players of the oil market have changed, so much that they wanted to have the Yuan to back the price of oil.
As the dollar supremacy fades in the scene, the Yuan, on the other hand, is promising.
Over the years, China and Russia have been buying gold and now decided to use it to back the Yuan.
This is a game changer. Other countries are set to reconsider as the dollar had gained $123 trillion in debt rather than gold reserves.
Many other nations have followed the game plan of Russia and China.
In fact, European countries such as Hungary and Germany had fortified their gold reserves. Others followed soon, creating a hundredfold rippling effect in a global context.
Indeed, this is the most profound financial change. Today, in the oil market, the dollar is joined by a basket of currencies including euro and the yen.
The dollar is slowly losing its global position in contrast to the gold becoming more significant in the global market more than ever.
This is “gold rush” in a different perspective.