Gold Becomes The De-Facto Global Reserve Currency Once More

Central Banks Now Hold More Gold Than Dollars, But This Is Only The Beginning

Right now, I’m in a secret mountain location with my good friend Tom Bodrovics of Competent Investor—but unfortunately my Wi-Fi signal has been a bit spotty. As such, I haven’t been able to upload any videos this week so apologies for that. I’ll be heading back to the farm tomorrow however, so will be sharing our members’ Q&A along with an important video related to this article — which I’ll (try) to keep brief (for a change).

What I wanted to comment on is something quite profound that happened this month: for the first time in 30 years, central bank gold holdings outside the U.S. now collectively exceed their U.S. dollar holdings.

Let that sink in for a moment — and consider what it means. U.S. debt has long been the base layer of the global financial system. Commodities are priced in dollars; global interest rates are benchmarked to U.S. Treasuries. The dollar and U.S. debt were once considered the most pristine collateral imaginable. This was all accepted as a given. No questions asked. Well, at least not by the mainstream.

This is despite the fact America runs massive twin deficits, is the largest debtor nation on earth, maintains the most expensive military in the world, and carries over $200 trillion in unfunded liabilities. Debts that can never be repaid. Or at least not honestly. None of this is new however — I’ve been pointing to this elephant in the room for years and long since predicted that this system would eventually unravel and that the world would be forced to return to gold.

To me, this outcome was obvious. For 5,000 years, gold was money. Only in the last 50 years have we had a fully fiat system — and that system, built around the dollar, was already showing cracks by the year 2000. Since then, gold has outperformed every major asset class, not just marginally but by multiples. U.S. and U.K. housing have lost roughly 80% of their value against gold since 2000. The Dow-to-gold ratio has dropped from 40 to 12. And gold now buys more barrels of oil than at any time in history.

It was never credible to me that “this time would be different.” That debts didn’t matter, or that gold was some outdated “pet rock.” China’s accumulation of roughly 40,000 tonnes of gold was a massive signal of where things were headed — at least for half the world: a monetary reset anchored to gold.

Still, I never saw that as the endgame. The reset couldn’t stay regional — it was always destined to go global. The Western system, built on layers of debt and denial, would eventually be forced to face the same truth. And when European central banks began restocking their vaults, the writing was on the wall.