The US dollar as the world’s reserve currency is getting long in the tooth. If it was a horse, you’d probably shoot it.
Students of monetary history know that reserve currencies have a lifespan between 80-110 years. Right now, the dollar is over 80 years old – assuming you start its birth as a reserve currency in 1944, at Bretton Woods, NH.
Maybe the dollar will hold onto reserve status for another few decades – but there’s little question that some time in the coming years, the tenure of the dollar will end.
It happened with the British Pound – in 1944. It happened with the Dutch Guilder in the 18th century as Britain emerged. It happened with the Portuguese Real in the 16th century as the Dutch reigned supreme.
All three of those nations had the same thing the US has now: the world’s most powerful military and a superior navy to secure trade routes, upholding its reserve currency status.
They also went into the same decline we’re witnessing now brought on by a shift from production and exports to consumption and imports. They all saw their currencies go from favored and preferred – to unwanted. All within a matter of decades – within a human lifetime.
Today, we’re years into a decline of US Treasury ownership by our two largest creditors and trade partners: Japan and China.
China cut its Treasury holdings nearly in half over the past 11 years, and instead has been buying gold – along with many other foreign central banks. Japan pared back its Treasury holdings by about 10%, and has been buying its own assets.
We long ago went from a leading exporter to a leading importer, becoming the largest debtor in world history in the process.
And none of these facts are a secret. Even America’s largest investment banks see and say exactly what’s coming.
Fortune magazine quoted JP Morgan today – saying that the only likely path out of our massive debts is inflation.
The dollar is on the exact path that the stewards of the Pound, the Guilder and the Real took…
What would you do with a time machine that could take you to 1930s Britain, or late 1700s Netherlands, or Portugal in the 1600s?
What would you tell the people who live in those places? You’d probably tell them to get out of their currencies as efficiently as possible, and into precious metals or other real assets.
If you’re in the US, you don’t need a time machine. You’re here, now. What do you say? What will you do?
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
P.S. If you’re looking for a path out of the dollar, you should take a look at my latest investment brief all about a completely new monetary order that is just getting started. It’s called “the Beaver Creek Accord” and I believe it’s a vital read if you’re trying to protect and grow your wealth during the demise of the dollar.