A New Global Economic Shift away from Euros and Dollars
While the threat of hyper inflation in the United states is a bit far fetched, there are warning signs that indicate it could happen. One of the most troubling signs is the fact that China’s economic output has eclipsed that of the US. This means the world is no longer as dependent upon US made products as it once was.
Other troubling signs are the moves being made by European banks in Switzerland, Belgium and numerous other countries seeking to repatriate their gold.
Keeping an eye on Switzerland
When most people think of Switzerland, they envision cheese, chocolate and the Swiss alps. However, the financially savvy also associate the European nation with their strong banking system. This is why recent Swiss gold referendum is being watched by people the world over.
Five million Swiss voters are poised to decide if their government should triple its gold reserves. The save Our Swiss Gold Initiative would pressure the Swiss National Bank to convert 20% of its assets to gold before the turn of the decade. Organizers of the referendum have made it known that the move is intended to protect Switzerland’s security and independence in “times of Uncertainty.”
The move may be to safeguard against the depreciating value of the Euro, but there may be other motives as well. If the US dollar does loses its status as the world reserve currency, the economic impact could be tremendous, and gold has always been a safe way to guard against inflation. The economic collapse of 2008 saw many people lose their fortunes, but they could have retained their wealth had their money been invested in gold. The moves being made by the Swiss banks imply they fear another meltdown, and other countries are taking note.
World Wide Gold Recalls
Belgium is also considering a massive gold recall, stating the uncertainty of the euro as the motive. However, the recent change in the world’s economic landscape may play a role as well. The Netherlands also repatriated some of its gold earlier this year as did Germany. Now Belgium may follow suit but officials are concerned about the practicality of the move. Belgium now owns more than 227 tons of gold, most of which is stored in English banks.
This gold gives the banks capital upon which it can grant loans. when so many countries begin to repatriate their gold, the world’s central banking system feels the effects. This move doesn’t bode well for the US, but it’s even more disturbing for the nations in the Euro Zone. However citizens of the US should also concern themselves with this recent news, because China’s economic boom means the dollar is no longer as important as it once was.
The Myth of Dollar Invincibility
Anyone who thinks the US dollar is invincible should consider this. The Taj Mahal is one of the biggest tourist attractions in the world and it no longer accepts the US dollar. This is a sign that people no longer have faith in the dollar and they’re looking to back a new currency. If this happens, a new “winter of discontent” could befall the US. The last time a currency lost its status as the world reserve currency was in the 1970’s with the British Pound.
Inflation in England spiraled out of control and the government could no longer afford to pay its employees. Crime skyrocketed and trash littered the streets as police and garbage men alike were laid off. However, the recent moves made by the European banks spell more trouble for the Euro than they do for the dollar.
The news of the mass gold recalls has many people on edge because gold is the one true safeguard against inflation which means European banks are preparing for hard times. The only thing that’s certain at this point is that the price of gold will remain steady as long as banks continue to repatriate it.
Gold might be the best asset to buy at the moment, having hit a bottom from the last few years of frenzied buying and it’s very cheap right now. Piling into a Gold IRA could also have major tax benefits in the short and medium term as well, and remains a viable investment tool in a larger well balanced retirement portfolio.