The Shift Towards a Multipolar Reserve Currency World

US Treasury Secretary Janet Yellen all but admitted to the US congress this week that we are heading into a more multipolar reserve currency world. A future that will depend much less on our currently still dominant fiat US dollar Federal Reserve note and offshore eurodollars for global trade settlements. Coupled with already dwindling external reserve currency holdings, more data related proof on that statement in a few minutes.

First, let us all have a listen to how Janet Yellen expressed where the fiat US dollar's global market share will continue trending.

Changing gears is unlikely given past and current global macro economic trends.

These two world international reverse charts are provided by ongoing IMF data and Dan (co-pes-ku's) Popescu's twitter handle.

On the left hand side we see how world central bank reserves or government savings were comprised at the end of the year 2000, and then on the right we see how they were reported at the end of last year 2022.

Even with the spot gold price having risen over six fold in this 22 year time span, and central banks massively net buying gold bullion since the 2008 global financial crisis onwards. Official gold reserve holdings have still fallen in comparison to a myriad ramp in fiat currency debt IOU notes and bonds held by the world's collective government central banks.

From IMF fiat denominated SDRs, to other competing fiat currencies like the fiat Chinese yuan. The world's currency holdings are likely to only get more diversified and localized based on direct trade settlements without fiat US dollars continuing to receive intermediary demand, as the Bank for International Settlements begins implementing its coming direct mCBDC and CBDC trading settlement platforms across the world.

Imagine how this chart is going to look if we go out two more decades after the spot price of gold has ramped and we find ourselves in a fully implemented mCBDC and CBDC trading world. One that will likely prove all time secularly bearish for fiat US dollar demand globally.

If we in the USA don't change the debt and deficit financing path we are on. And it's been obvious for decades running that we have a captured leadership unwilling and unable to do so. Well I argue the quickening of this coming technological payment settlement change will likely prove to not be all that slow in its effects.

The fiat Federal Reserve knows the damning fundamentals at hand, and they now blatantly resort to premeditated planting supposedly tough questions like this one in their rate hike skip Q&A's to look try and pose impartial and tough. Even though they will eventually have to resort to monetizing our growing debt and deficit piles by blowing out their balance sheet many multiples as this decade progresses into the next.

Nothing that Powell or Yellen said this week changes the damning data's past nor that gold coming mania phase seems inevitable.

These simple charts cut through their propaganda, all their fiat currencies devalue vs bullion overtime.

The current fiat US dollar has already lost -98% vs gold bullion since the start of 1970. 

It is a similar story for all the myriad fiat currencies that have flooded the world the last five decades plus. Just wait until we go even more digital and they begin monetizing their coming record IOUs further.

Take the long view and get your prudent bullion position secured soon.

Silver and gold spot prices had choppy sideways price action through various Fed rate hike skips, and jobs report interventions.

The bullion buying public has basically disappeared and premiums have been falling across the bullion industry as inventories build for the next big buying wave impetus.

The spot silver price closed above $24 oz an ounce in both bid and ask while the spot gold price closed just above $1,960 oz ask.

The spot gold silver ratio closed flat at 81.

Since last year 2022, government central banks have been buying and declaring adding to their official gold bullion reserves at historic record pace.

Yet one major gold bullion buying central bank has been forced to sell off some of its gold bullion reserves of late, as its local fiat currency goes into an exponential price inflationary climb.

Bloomberg reports,

Turkey’s central bank has been selling off its gold reserves to meet local demand, which has surged as citizens seek to protect themselves against inflation or currency depreciation before elections next month.

The central bank started to meet demand for the precious metal after Turkey suspended gold imports in February, according to a person with direct knowledge of the matter. The monetary authority has also begun to accept liras in transactions for gold sales, aiming to ease pressure on the local currency in the spot market, the person said.

The central bank declined to comment.

The central bank’s gold reserves have been tumbling over the past seven weeks, according to official data, which show a decline of 9% during that period.

Following twin earthquakes on Feb. 6, Turkey issued a regulation forcing a pause in gold purchases from abroad that fall into the category of “cash against goods.” At the time, gold imports were among the biggest drags on Turkey’s external finances. 

Turkey was the biggest buyer of gold among central banks last year, according to World Gold Council data. The nation’s gold holdings were at a record level before the quakes.

During the last major commodity bull market of the 2000s, there was a time in 2008 when the fiat lira almost reached parity with the then fiat US dollar.

Not anymore obviously. Next month I plan on reporting to you from Istanbul, when I last visited that city between Europe and Asia the fiat lira to USD exchange rate was just over 8 to 1. 

Later next month I will bring you a first hand account of what I witness.

Now to close this week's SD Bullion update. As I personally prepare to make a platinum bullion buy, the World Platinum Investment Council updated their latest forecasts showing deficits for the platinum world through this year all the way out into 2027.

While they do project that South Africa, the world's dominant major minor of platinum will grow in their supply output, much of that coming output will be swallowed up by automotive demand.

Mirroring the current physically available silver bullion market, above ground platinum bullion inventories are also dwindling and are projected to continue falling in the years to come.

Where has most of the world's remaining platinum bullion inventory gone?

Since the COVID 2020 shutdown, China has basically squeezed platinum bullion, much likely to be used in building out its hydrogen fuel capacity.

All that platinum bullion that came flooding into the NYMEX during Covid 2020, went sucking out the backdoor headed east to China.

They know a cheap precious metal sale when they see one, and they need that precious commodity to support their growing middle class car buying future.

While platinum may not be money per say it still can prove to be a precious store of value.

Thus far during this 21st Century platinum has had long runs of time outperforming gold and perhaps not this decade but next we will see something akin.

While my expectation is gold will continue to be priced at a premium over platinum, I can't ignore the great fundamentals for platinum nor the fact that platinum is basically near half the price of gold at the moment.

So that is all for this week's SD Bullion Market Update.

As always to you out there, take care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...