Kitco News: Massive U.S. Dollar Dump? BRICS to Launch New Currency Causing Tsunami of Inflation
Most Americans overlook the fact that the U.S. dollar is the world’s reserve currency. That means it’s the currency of choice for global trade. In turn, there’s a strong demand for U.S. dollars.
Even though the dollar has weakened over time, it’s held up better against most other currencies. That’s made it a relative value, akin to being the best house on the block. However, with U.S. government debt rising rapidly, and interest rates rising too, other currencies may look more attractive.
That’s partly why many central banks around the world have been diversifying their reserves. That includes the reduction in dollar holdings, as well as an increase of other fiat currencies as well as gold.
Dollar demand in global trade has been declining in recent years. This trend has picked up in recent years, a process known as “dedollarization.” The U.S. dollar could even stop being the currency of choice for global trade in assets such as oil.
This is a trend, not something that will immediately change overnight. But the process is in motion, and there could be more inflation stateside if there’s less demand for U.S. dollars overseas.
Investors will want to own real assets if inflation is going to stay higher for longer. That includes precious metals, as well as real estate and quality stocks that can pass on higher costs to consumers.