Why are Central Banks buying Gold? Pax Americana is dead.
Gold didn’t invade Ukraine. Gold didn’t take Russia’s reserves. Gold isn’t the problem, It’s the solution
- Hedge Against Fiat Debasement
- If You Can’t Touch It, Is it Really Yours?
- No Going Back Now
- Focusing on the Swift side
- The West Stole From Russia
- Gold Solves Problems
- The SOV Problem Solved
- The MOE Problem is Harder
- Golden Guaranteed Fiat Multipolarity
- This Didn’t Happen Overnight
- Bottom Line
- Appendix:The Multipolarity Partnership
Hedge Against Fiat Debasement
Authored by Goldfix, ZH Edit
World governments have accepted and dealt with debasement/inflation risk since the Second World War ended and the USD became its global reserve currency (GRC); First, as MOE, then as Global SOV after 19712
Consider that post 1971 when the US went off the gold standard, no nation went off the dollar standard seemingly until this year. There certainly were inflationary problems between then and now. But those problems subsided as trust in Pax Americana grew and international trade blossomed. So what changed all of the sudden?
Listen: Nixon said he was suspending the Gold window to “defend the dollar”, but what was he really protecting?
What started all this global dedollarization talk? Risk of sovereign wealth theft entered the picture in the eyes of many. That is what changed. Any nation’s money can be confiscated (stolen) now.
If You Can’t Touch It, Is it Really Yours?
Before continuing: Let’s quickly address the What if we gave it back and Russia left Ukraine idea some have put forth as a solution to the current crisis. Here’s why that would not fix things…
No Going Back Now
Focusing on the Swift side
The West Stole From Russia
By de-platforming Russia from Swift via sanctions, two related but separate things were done. Prohibiting Russia’s Swift use for international trade effectively shut them out of dollar denominated trade. That is the first.
More importantly (to us) and less discussed in the West: International confiscation of Russia’s FX reserves was done. This confiscation of Russian assets (a nuclear nation with significant global trade ties4) have thus exploded BRIC perception of risks that were not viewed as material before. Specifically, if they can take Nuclear Russia’s money in the Swift system, they can take anyone’s.
Here’s how G7 politicians frame that concept in Aug 2022:
[Officials] have argued that [confiscating Russian bank reserves] could make nations reluctant to keep their reserves in dollars, for fear that in future conflicts the United States and its allies would confiscate the funds5
Translated: Officials have argued confiscating Russian bank reserves will accelerate nations’ dedollarization. That is just what is happening.
How can these countries do trade efficiently with each other now, let alone be able to do tradewithG7 nations outside of the Swift system someday bilaterally. They need to remove lack of trust from the equation. Enter Gold.
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