Will Gold Replace US Dollar In 2020?
Will Gold Replace US Dollar In 2020? Dr. F.T. Dao for Gold-Eagle
Gold versus Currency
Recently there is a hot topic: When will gold bullion replace US dollar as the major reserve currency? Will the replacement be realized in 2020? Given the printing press and the global turmoil with Covid-19 pandemic and warring factions including the Indo-China border and the Korean peninsula troubles, the decreasing role of the US dollar is a matter of time.
In this article we study the role of gold bullion and fiat currencies from a historical perspective.
Gold Rules as Supreme Disciplinarian
Chart 1 – Gold Price in Various Currencies: 2001 – 2019
From the above chart, we noted that very soon gold will emerge another historical height in values in various fiat currencies. This is Nature’s way of correcting the unceasing printing of currencies, with no solid economic background. The following section, we demonstrated the broad trend from history.
Learning from History
We showed following two charts with centuries of monetary data showing deep depreciation of all monetary fiat currencies again gold.
Chart 2 – History of Depreciation of Currencies Relative to Gold
1900 – 2017
The above chart showed one depreciation after another when the currency does not match the economic growth.
History of US Dollar Relative to Gold
US quickly emerged as a dominant economic power since World War I. However there are hiccups along US history as shown in the following chart. The most notable event is in 1971 when US took the US dollar off the gold standard.
Chart 3 – History of Depreciation of US Dollar Relative to Gold
1790 – 2019
It is reasonable to argue that given the expanding global commerce and trade, the old gold standard format needs to be modified as proposed by a few analysts. It is inevitable that gold be a major part of the new monetary standard in the coming reset in the 2024 time frame.
Important Signal from Silver Price
We believe an important signal as to the timing of gold emerging as a major component of global reserve currency comes from the rising price of silver. In our earlier articles, we have discussed the Gold-to-Silver Ratio (GSR) and that Silver will also emerge with gold as a safe-haven asset and a de-facto monetary unit. The following chart reinforces the important role of Silver.