Less than six months ago we celebrated the forty-five year anniversary of the final death of the gold standard in August of 1971. President Nixon abandoned the restrictive link to gold so the U.S. could print unlimited dollars whenever it wished. He was able to get away with this because of a substitute America concocted to maintain strong demand for U.S. dollars.
They called this the “petrodollar system.” The Federal government entered into a consecutive series of special agreements with Saudi Arabia from 1972 to 1974. This arrangement ensured the Saudis would enforce a new rule for all oil trades. They would all be transacted in American dollars.
The deal maintained the dollar’s unique status as the reserve currency of the planet. Countries had no choice but to continue utilizing the now gold-delinked dollars in international trade. In exchange for this accommodation, the American government pledged to protect the survival of the Saudi Royal family and kingdom. This system has successfully endured for over 40 years.
Last year in 2016, the bilateral relations between America and Saudi Arabia reached all time lows. Newly minted President Trump is not going to make it any better either. He is the first American leader who is overtly anti-Saudi royal family since this convenient arrangement of the petrodollar commenced.
This means that the long-lasting petrodollar system Saudi Arabia makes possible is no longer a given. Even if the Saudis never decided to delink oil sales from dollars and to push the rest of OPEC to follow suit, the monopoly of the arrangement has already been compromised. China and Russia already have signed agreements and begun trading oil bilaterally in their own currencies instead of dollars. Other countries have threatened to do the same.
The system may not collapse overnight, but it is already on the way out now. It ensures a currency crisis of some sort is in the future for the American dollar and all investments priced in it. The new system will not favor dollars nearly so heavily as the present one does. When demand for a currency drops, the value of the currency declines alongside it.
There are only two real choices for a successor to the American petrodollar. The worst of the two is the favorite of the globalists like the International Monetary Fund. They have been slowly but steadily building up the SDR Special Drawing Rights currency for decades now, not coincidentally since about the same time as the end of the U.S. dollar gold convertibility.
SDRs do include U.S. dollars in a smaller quantity. Presently the SDR is comprised of 42 percent dollars, 31 percent euros, 11 percent Chinese renminbi, eight percent Japanese yen, and eight percent British pounds. The petrodollar failing is what the globalists need to substitute their SDR unit in the near future.
The other choice is for a revived gold standard. President Trump and some of his advisors like gold personally. He is also genuinely against globalism. His recent statement, “We will no longer surrender this country, or its people, to the false song of globalism” reinforces this idea. This scenario would also make gold the smart choice.
Is Your Retirement Portfolio Ready for the End of American Dollar Dominance?
The declining U.S. dollar will mean your purchasing power for foreign goods is greatly reduced. It likely will spell trouble for the stock and bond markets where most of your traditional retirement account dollars are based. In this case, or the alternative one where a new gold standard arises, gold will be the best place to have at least a part of your retirement assets.
This precious metal outperformed the last time the global currency system changed, with the yellow metal rising more than 2,300 percent from $35 to $850 in the under ten years from 1971 to 1980. You can count on it to hedge your portfolio against any post-petrodollar scenario as well. Ask for your no-cost and no-obligation gold IRA rollover kit from Regal Assets right now by clicking here so that you can learn all you need to safeguard your assets through a partial allocation in physical gold.