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What does de-dollarization mean for you?

by Rachel MillsMarch 26, 2024

It can mean price explosions! Gold can help!

The concept of de-dollarization has gained traction in recent years as nations seek to reduce their dependence on the dollar in international transactions. The imposition of sanctions by the United States, coupled with growing geopolitical tensions, has accelerated this trend.  

Since February 2022 in response to the invasion of Ukraine, the US has applied thousands of sanctions against Russia, mainly targeting its money and its war machine. Half of Russia's foreign currency reserves have been frozen. 70% of the assets of Russian banks have been frozen or excluded from SWIFT. Russian weapons technology exports have also been banned, as have the imports of gold and diamonds. Flights from Russia have been banned and certain oligarchs have even been personally sanctioned, including the famous yachts that have been seized.  

The world is watching. In response, countries such as China, Russia, and Iran are actively promoting bilateral trade agreements denominated in their respective currencies, bypassing the traditional dominance of the dollar in global commerce. Moreover, initiatives such as the Chinese-led Belt and Road Initiative and the creation of alternative payment systems such as the Russian-developed SWIFT alternative, are further examples of the momentum towards de-dollarization. The erosion of the dollar’s dominance in global trade poses significant challenges for individuals, particularly in terms of the purchasing power of their savings. As demand for the dollar abroad lessens, that avenue to "export" excess inflation closes and our economy has to absorb excess dollars here at home.  

In a nutshell: de-dollarization abroad means price explosions at home. 

As the dollar’s influence wanes, individuals are wise to seek alternative stores of value to safeguard their wealth and hedge against currency depreciation. (Have you considered a Gold or Silver IRA?) The US is now involved in several high stakes global conflicts and more could be on the horizon.  

The Ukraine-Russia situation really put the dollar in danger in two ways -  

First, funding Ukraine has been incredibly expensive and we have nothing to show for the billions we flushed into their defense efforts. 

Second, the sanctions against Russia really kicked global de-dollarization into high gear when Russia and her allies had to figure out alternatives after being shut out of the dollar.  

The Israel-Palestine conflict is continuing to heat up, Red Sea shipping disruptions threatening to send shipping costs soaring, which can compound the effects of inflation and rising prices. 

This year we may even see China make moves against Taiwan.

How can gold help you navigate this storm?

All of this instability and conflict is dollar negative. Where would we get the money to fund our involvement in these violent world affairs? If history serves, it will likely be printed right out of thin air. And you know what that means. Inflation.

What can YOU do about this? You can protect some of your hard-earned savings with the time-tested power of gold and silver.

Did you know you can own precious metals in a tax-advantaged IRA? In fact, gold and silver IRAs are one of our specialties. If you are concerned about the dollar's purchasing power and want to explore this option, call us today.

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