Is the Dollar in Danger?

Has the weaponization of the dollar put it in danger?

The short answer is yes.

De-dollarization sounds like a wild conspiracy theory, but it is happening. In this episode of the Money Metals' Midweek Memo, host Mike Maharrey explains what's driving de-dollarization, the possible ramifications, and why gold is a big part of the equation.

Mike opens the show by reminiscing about the 1960s TV series Lost in Space, specifically Robot flailing about warning, "Danger Will Robinson!"

"I think we need a robot yelling, 'Danger Will Robinson' anytime somebody mentions the dollar.

"Because the dollar is in danger. There is an undeniable de-dollarization trend around the world. And by de-dollarization, I mean a lot of countries are trying to minimize their dependence on the greenback. Now, that’s tricky business in a world that uses the dollar as its reserve currency, but a lot of people are trying."

Mike asserts that while de-dollarization might sound like some kind of wild conspiracy theory, it is happening. 

"Countries worldwide are clearly trying and the dollar’s clout is slowly ebbing. Now, am I saying the dollar is on the verge of collapse? It’s more like death by a million papercuts. It’s a slow inexorable process. But as the saying goes, things happen slowly, and then all at once. So, it’s probably wise to be aware of something during the slow phase so you aren’t completely flat-footed when the all at once rears its ugly head."

Mike uses a post on X by Nassim Taleb as a jumping-off point to discuss the threat to the dollar. 

Taleb wrote, “People are not seeing the real de-dollarization in progress.” He pointed out that global transactions are still generally labeled in dollars “as an anchor currency.”   

“But central banks (particularly BRICS) have been storing, that is putting their reserves, in Gold.”

In other words, the dollar still serves as the primary medium of exchange, but more and more countries are turning to gold as a store of value.

Mike says this trend makes sense given the U.S. government's constant devaluation of its currency and the persistently high levels of borrowing, spending, and debt. 

The share of dollars in international reserves has been dropping for decades, but the trend accelerated significantly after the U.S. and its allies slapped extensive sanctions on Russia after it invaded Ukraine. 

"So, what’s the correlation between Russian sanctions and de-dollarization? Well, to put it simply, the world is watching how the U.S. handles its privilege of issuing the world reserve currency, and a lot of people don’t like what they’re seeing.

"Why?

"Well, the U.S. has effectively weaponized the dollar. What do I mean by weaponized? Exactly what it sounds like. The U.S. government is using the dollar as a weapon – kind of like a war hammer. Or to put it more diplomatically, the U.S. uses its currency as a foreign policy tool."

Mike goes on to explain exactly how the U.S. has weaponized the dollar, pointing out that it is increasingly used as a tool to achieve foreign policy goals. 

"Now, you might think this is a justifiable and effective policy. And you might be right. That’s a different debate. But it’s important to understand that the U.S. is playing with fire. And the rest of the world is watching."

Mike points out that de-dollarization is most apparent in the East and emerging market countries.

"They’re diversifying their reserves to minimize their dependence on dollars – and ostensibly minimize U.S. control over their foreign policy. And they’re turning to gold."

The shift to gold is evidenced by the high levels of central bank gold buying. Mike shares some of the numbers. 

"The skyrocketing price of gold confirms the wisdom of these central bankers. And it is a tangible sign that the dollar is losing value - and status."

Another impetus behind de-dollarization is the rise of the BRICS economic block. Mike notes Turkey recently expressed interest in joining the bloc.

"Turkish membership in BRICS would be another boost to an economic cooperation bloc that many see as a potential challenge to Western economic hegemony."

So, why does any of this matter?

"Because the U.S. depends on demand for dollars to maintain its profligate borrowing and spending. The only reason the U.S. hasn’t turned into a hyperinflationary hell-hole is the dollar’s role as the reserve currency. The world needs dollars. But what happens when the world needs fewer dollars? A de-dollarization of the world economy would cause the value of the U.S. currency to crash and likely spark a currency crisis. Americans would feel the impact through more price inflation eating away at the purchasing power of the dollar. At the extreme, it could even lead to hyperinflation."

Mike concedes that this won't happen overnight. But he thinks now is the time to act.

"If things happen slowly and then all at once, you want to be prepared before the 'all at once' hits."

That leads to a call to action: get real money -- gold and silver -- today. Call 800-800-1865 and talk to a Money Metals' precious metals specialist.