Trump And A New Gold-Backed Dollar

Tyler Durden's picture

Submitted by Nick Giambruno via InternationalMan.com,

On August 15, 1971, President Nixon killed the last remnants of the gold standard.

Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases.

Removing the US dollar’s last link to gold eliminated the main motivation for foreign countries to store large dollar reserves and to use the dollar for international trade.

At this point, demand for dollars was set to fall… along with the dollar’s purchasing power. So the US government concocted a new arrangement to give foreign countries another compelling reason to hold and use the dollar.

The new arrangement, called the petrodollar system, preserved the dollar’s special status as the world’s reserve currency.

In short, the US government made a series of agreements with Saudi Arabia between 1972 and 1974, which created the petrodollar.

The Saudis would use their dominant position in OPEC to ensure that all oil transactions would only happen in US dollars. And the US would guarantee the House of Saud’s survival.

It worked… for a while.

The petrodollar filled the void after the US severed the dollar’s last link to gold as the main prop to the dollar’s status as the world’ premier reserve currency.

So far, the petrodollar has lasted over 40 years. However, the glue is losing its stick.

I think we’re on the cusp of another paradigm shift in the international financial system, a change at least as fundamental as what happened in 1971 when Nixon severed the dollar’s last link to gold.

The relationship between Saudi Arabia and the US hit historic lows in 2016. I only expect it to get worse. Trump is the first president since the petrodollar system was enacted to be openly hostile toward the Saudis.

The death of the petrodollar system is my No. 1 black swan event for 2017.

It raises the question: What will fill the void when the petrodollar inevitably dies?

When that happens—and it may be imminent—something has to replace it. I think there are only two options.

Naturally, the global elite want to centralize more power into global institutions. In this case, that means the International Monetary Fund (IMF).

The IMF issues a type of international currency called the “Special Drawing Right,” or SDR.

The SDR is nothing new. The globalists have been slowly building it up since 1969. In the near future, it could be used as the premier international currency—the role the dollar has played since the end of World War 2.

The SDR is simply a basket of other fiat currencies. The US dollar makes up 42%, the euro 31%, the Chinese renminbi 11%, the Japanese yen 8%, and the British pound 8%.

It’s a fiat currency based on other fiat currencies… a floating abstraction based on other floating abstractions.

The SDR is not based on sound economics or the interests of the common man. It’s just another cockamamie invention of the economic witch doctors in academia and government.

The SDR is dangerous. It gives the government—in this case, a global government—more power. It’s a bridge to a powerful global monetary authority, and eventually a global currency.

Most decent people would consider this a bad thing. That’s why the global elite cloud their scheme with dull and opaque names like “Special Drawing Right.”

It’s an old trick. Governments have used it for eons.

The Federal Reserve is an excellent example. After two failed central banking experiments in the 1800s, anything associated with a central bank became deeply unpopular with the American public. So, central bank advocates tried a fresh branding strategy.

Rather than call their new central bank the Third Bank of the United States (the previous two were the First and Second Banks of the United States), they gave it a vague and boring name. They called it “the Federal Reserve” and managed to hide it in plain sight from the average person.

Nearly 100 years later, most Americans don’t have the slightest clue what the Federal Reserve is, what it does, or how it has eroded their standard of living.

I think the same dynamic is at work with the IMF’s “Special Drawing Right.”

The breakdown of the petrodollar is the perfect excuse for the globalists to usher in their SDR solution.

So that’s the first option. It’s the global elites’ preferred outcome. It would be a very bad thing for personal and economic freedom. It means more fiat currency, more centralization, and less freedom for the individual.

The second option is to simply return to gold as the premier international money. Here’s how it could happen…

Trump might play along with the globalists’ schemes, but I doubt it. He’s the first president who’s openly and sincerely hostile toward globalism. He’s denounced it repeatedly.

Trump recently said, “We will no longer surrender this country, or its people, to the false song of globalism.”

In my view, there’s only one way Trump could fight the global elites and their SDR plan: return the dollar to some sort of gold backing.

Trump has said favorable things about gold in the past. So have some of his advisers.

It wouldn’t be easy. He’d face one hell of a struggle with the globalists. And winning would be far from certain.

No matter what, the death of the petrodollar, just like the end of the dollar’s link to gold, will be very good for the dollar price of gold and gold mining stocks.

When Nixon took the dollar off gold in 1971, gold skyrocketed over 2,300%. It shot from $35 per ounce to a high of $850 in 1980. Gold mining stocks did even better.

Gold is still bouncing around its lows. Gold mining stocks are still very cheap. I expect returns to be at least as great as they were during that paradigm shift in the international monetary system.

All this is why what happens after Trump’s inauguration could change everything… in sudden, unexpected ways.

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One-Eyed-Thong's picture
One-Eyed-Thong (not verified) Jan 20, 2017 6:15 PM

will this involve counting the gold at fort knox ?

 

(Ha Ha Ha !!!!!! - i know, i know,  he-he-he )

Winston Churchill's picture

Only if Helen Keller is the counter.

tribune's picture

Bitcoin just made the SDR redundant. bitcoin cannot be abused

Troy Ounce's picture

 

Goldman can buy Bitcoin with fiat that costs them next to nothing till it goes to $15,000. Then dump. Buy to $15,000. Then dump. Buy to $15,000. Then dump. Buy to $15,000. Then dump.

Rinse, Repeat.

 No abuse? .  

robertocarlos's picture

So you Americans have at least 30 ounces of gold. That's 666 billion USD an ounce.

QEsucks's picture

Retard. That's 3 kilo bars. Bow down to your Masters. We're Rich!

Radical Marijuana's picture

Money is measurement backed by murder.

Gold backed money is measurement of gold, backed by murder.

Eeyores Enigma's picture

Money will be backed by whatever the US military, both overt and covert, on every continent on the planet, with twice the hardware as the rest of the world, damn well says it is backed by.

or...

We might just throw up our hands and say "we give up, do what you will...".

HRH Feant's picture
HRH Feant (not verified) Jan 20, 2017 6:32 PM

The SDR is a fabrication. Gold is real. If anyone can put the US back on a gold standard it is Trump.

sessinpo's picture

The people will never be free of this tyranny.

Winston Churchill's picture

In theory the IMF has 8000tonnes of gold to back the SDR, but then again so does the $,in theory.

Joebloinvestor's picture

All they really have to do to raise the price of gold is to outlaw the paper representations like ETF's and the "fix".

SirBarksAlot's picture

I hope so.

This is like having Zig Zigler or Norman Vincent Peale or some other motivational speaker as president. Truly inspiring!

SilverCyprus's picture

Surely the USA would need some actual gold before they can have a gold backed currency.

VWAndy's picture

 They have better luck looking in lakebeds.

Winston Churchill's picture

Minor problem, its not like Uncle Scam or the FedRes has ever lied to us.

I need to puke after writing that.

s2man's picture

I predict they will back it by gold in the ground,  yet unmined.

HRH Feant's picture
HRH Feant (not verified) s2man Jan 20, 2017 7:41 PM

I agree. Plenty of gold in the US that is located where? On Federal land. Where? Nevada, Utah, and New Mexico. Who woulda thunk that by confiscating that land, oh, oops, turning that land into a "national park" would make that land (and the PMs beneath the surface) inaccessible?

I can't wait until President Trump (damn that sounds too perfect) uses his pen and reverses the created "parks" and allows the US citizen to access, mine, and use, our own fucking property. Not only to use that land but to profit from that use. It's about time!

Common_Law's picture

Here's an executive order petition that is a step in the right direction by allowing gold/silver to be used as money and compete against fiat dollars. Let the market decide!

https://www.change.org/p/president-donald-trump-make-money-great-again?r...

DarkPurpleHaze's picture

At some point authors of stories like this will be proven right but we're nowhere close to a USD collapse happening anytime soon. Reading about the death of the petrodollar for the last few decades is something that definitely makes my eye's glaze over.

"The death of the petrodollar system is my No. 1 black swan event for 2017.

 

Since 2008 the DXY/USD is up over 40%! That's not a collapse and it's found considerable support at a 100 handle just as the euro's fate is being openly debated.

Believe what you want but a collapse in 2017 or anytime soon is just as laughable as the predictions how...

the gold market will break in 2016....

http://www.silverdoctors.com/gold/gold-news/andrew-maguire-craig-hemke-m...

 

Not My Real Name's picture

You can't use the dollar index to devine the true state of the dollar.

The collapse will come against gold, not other fiat currencies.

JailBanksters's picture

But the US doesn't have any Gold remember, it's a relic, it's worthless, the Rothschilds have it.

 

Justin Case's picture

The Gov't can back the currency in a percent of gold but maybe not 100%. While on the gold standard inflation never went above 4%.

One of the chief virtues of a gold standard is that it serves as a restraint on the growth of money and credit. It makes runaway government deficit spending and major monetary catastrophes such as hyperinflation practically impossible.

musimann's picture

problem with the gold standard is we have no gold. Not in Ft. Knox not anywhere. The FED has all our gold and we let the ghews steal it. Only thing they are really good at.

mosfet's picture

Gold backed Dollar?  Aahahahaa...riiight.  Once they go cashless there will never again be a need to back any currency by anything.  Just keep removing zero's off the end with the click of a mouse.  It's one big wealth extraction scam to prevent us from building/storing wealth so we have to work until the grave.

Your average Joe: Oh but then confidence in the currency will be lost.

The Fed: Who gives a shit, cashless gives us total control over your ability to earn and purchase.

Your average Joe: But then I'll just buy Gold & Silver.

The Fed: Again, who gives a shit,  We'll keep smashing the price down.  And if it manages to gain a foothold we'll put a 90% tax on it.

wisebastard's picture

thats a good way to get the bankers to kill your ass....so we can add donald trump to the list....

ToSoft4Truth's picture

The gold policy is the exact opposite of bailouts.  If you have a paid off house right now and gold, when the system flips you'll be well off. 

If you are in debt clinging to a busted-out pension system, you're hit.  

 

Moreover, the gold is gone.  The generations that came before us traded it all for oil from the foreign ones.  

jfb's picture

Backing the USD with gold? WHICH GOLD???? wishful thinking. Central banks don't want it, the establishment doesn't want it, Trump never claimed that he will do it (nor even a full audit), and the gold is no longer there.

 

Justin Case's picture

"Central banks don't want it"

Where do you get yoar information from, Faux News? You know nothing about gold or central banks.

Kirk2NCC1701's picture

Rx = $1,000 Gold backed US Dollar from the US Treasury.

Globalist fucking heads would explode, like in that scene of Mars Attacks.

ToSoft4Truth's picture

Gold can be revalued.  Why not a soybean backed dollar?  We can all be involved. 

 

You'd be busting your ass in the front yard tending a soybean crop.

 

Korea needs soybeans.  We need OLED panels.  Trade!

 

 

devo's picture

ZH, you're entitled to your opinoin and interpretation, but deducting that there's a chance of a gold standard from that quip is irresponsible and you know it. The odds of a gold standard are slim. Stop trying to get grannies to panic buy gold based on quips that can be interpreted many ways.

galant's picture

There is nothing irresponsible about this writer's history of the dollar or his predicted failure of the petro-dollar and its possible consequences.

The writer's argument is clearly presented and largely free of opinionated gold-buggery.

His reasons to consider a gold-backed dollar -- or yuan or ruble for that matter - cannot be denied.

The writer Avery Goodman (unashamedly a Gold-Bug)  recently wrote  how Vice President Elect Mike Pence views gold from the standpoint of a person who does not want the large corporations and government to have complete and detailed control over the economy.

 http://averybgoodman.com/myblog/2016/12/09/the-most-influential-person-in-the-trump-administration-turns-out-to-be-gold-standard-fan/ 

 

Silver Savior's picture

I bought a gold coin today. Does that count? Actually it was just to hedge against Trump. My bi monthly 10 ounce silver bar is on my mind too.

Heavy's picture

well...he could end the fed first, then...

radbug's picture

You gotta do it. You know you gotta do it. And you know you gotta do it today. You gotta pull the needle out.

ali-ali-al-qomfri's picture

I don't know how much money I have, I know how much it weighs.

~R. Swanson

mtanimal's picture

Take all the Fed members to Jekyll Island, then lock them in a room with a few of us Deplorables.

Then announce a return to the gold standard.

David Wooten's picture

Assuming the Treasury really does have 261m ounces of gold, it would be very easy to return to the gold standard and very stimulating to the economy as well.  You just have to set the price high enough so that the 261m ounces backs up all the 'printed' dollars.  I've heard estimates that about $11k/oz might do it.

Declaring the dollar to be worth 1/11000 of an ounce of gold would be highly inflationary as holders of gold would suddenly have $11k per ounce instead of on $1200.  Gold miners would go into overtime to dig up more 'dollars' thus greatly increasing the money supply.  Prices of other things would rise although how much is uncertain.  This might be the cure for a deflationary down spiral should one occur as debt could be repaid with cheaper dollars - which is better than not being repaid at all.

The main drawback would be a sharp rise in interest rates which are still very low by historical standards.

Silver Savior's picture

Then what would silver be in price?Not that I would sell any for fiat currency but it would be interesting. Yeah I could live with 11k gold before it jumps to 50k longer term. I am totally bullish on all the metals. Nothing else.

Justin Case's picture

estimates that about $50k/oz

David Wooten's picture

Estimates that high are looking at credit created, not money printed

Not My Real Name's picture

At the moment, $11,000 would only back about 20% of the currency supply. Multiply your number by 5 -- or a bit more -- to get 100% backing.

Silver Savior's picture

I for one hate fiat dollars. I can't wait to turn a good portion of my earnings to gold or silver. If the dollar was backed I would feel better but it's backed by nothing but faith and the faith is long gone. I trust gold and silver as my money. Fiat does not cut it 

MEFOBILLS's picture

i for one hate fiat dollars.

 

When the gold coin first got its stamp, it became fiat.  The King would stamp the coin, and it then had legal value.  Clipped coins would still circulate at their face value.

Since you hate fiat dollars, you also hate stamped gold coins.  

Maybe we should go back to gold by weight?  It was actually the Temple priests who first issued metal by weight.  The metal was to subsititute for barley weights on temple priest ledgers.

I see that the ZH crowd is growing more ignorant as time passes.

All money is law, and it doesn't make a damn what it is made of.  It's volume can be restricted by law.  

 

www.sovereignmoney.eu

MASTER OF UNIVERSE's picture

The IMF, & World Bank, along with the Bank for International Settlements, are the same individuals that brought us the European Union, and the Giant Vampire Squid(tm).

 

No basket of turds offered up by these institutions will be worthy of the paper it is printed on. The days of Christine Legarde so-called 'elite' rulers is over, and has been over since March 10th 08 Bear Stearns time New York shitty-er. Christine Legarde has failed, and so has Timmy Geithner, Paulson, Bernanke, Kashkari, Yellen, Rubin, Greenspan, Volker, Sachs, Friedman, and Strauss.

 

I assumed complete control March 10th 08. The so-called 'ruling elites' are fully under the control of the New World Disorder which is not unlike The BORG in so far as it is the new paradigm, and resistance is indeed futile.

 

The elites & CFR agenda are anathema now. Neocons & neolibs were failures. Strauss UofC was their guiding light.

 

Professor Emeritus Strauss may figuratively lick my balls in deference to my intellect & intelligence over his own.