Dollar Danger Zone
Gary Christenson
SilverSeek.com
Friday, May 8th
The US dollar has been the world’s reserve currency since Bretton Woods – about 70 years. The power and importance of Middle-East oil and the US economy and military have supported the dollar for about 40 years. Quick story:
The world buys oil in dollars. (Thank you Saudi Arabia and Kissinger.)
Therefore the world must purchase (support) dollars to obtain oil.
The US supports the oil producing nations with military might.
The oil producing nations collect dollars in exchange for oil and recycle those petrodollars back into US T-bonds and equities thereby supporting the dollar and the US stock and bond markets.
The process works exceedingly well for the US since, as Bernanke noted, we have a printing press and can “print” the dollars to pay for oil and other imported goods.
But how much longer can the US maintain this dollar support process? Consider:
FUNDAMENTAL ISSUES:
AIIB: The Asian Infrastructure Investment Bank is clearly a threat to dollar dominance. Over 50 nations joined, including the UK, France, Germany, and Australia. This will weaken the dollar’s importance in world trade.
China has purchased and imported a massive amount of gold bars in the past 5 years. The magnitude of the gold migration from the west to Asia has been obscured intentionally. Clearly the western central banks and governments do not want the world to know how much gold they have sold to China. China does not want to announce how much gold they have purchased, which might panic the gold market and elevate prices, making additional purchases more expensive. China’s gold hoard will become a threat to the reserve currency status of the dollar, a fiat currency backed only by “faith and trust.”
The Rest…HERE
