Goldman Sachs Warns Dollar Could Lose Its Reserve Status
For years, Peter Schiff has been warning about a dollar crash and the end of the greenback’s role as the world’s reserve currency. Suddenly, the mainstream is starting to see that possibility as well.
In a recent research note, Goldman Sachs warned that the dollar’s role as the world reserve currency is at risk.
Combined with a record level of debt accumulation by the US government, real concerns around the longevity of the US dollar as a reserve currency have started to emerge.”
Peter said almost exactly the same thing when he recently appeared on the Joe Rogan Experience.
The debt’s never going to go down. The debt’s going to keep on rising and rising and rising until the dollar implodes. See, that is the real crisis that we’re heading for. It’s going to be a collapse in the value of the dollar. Because right now, we’re printing money and the government is sending it out and the people are able to buy stuff with it. But that’s going to come to an end because the world is no longer going to accept US dollars as the reserve currency.”
In the note, Goldman Sachs analysts reiterated their view that gold will be the currency of last resort.
Goldman also raised its price forecast for gold to $2,300 within the next 12 months.
Goldman is worried about all of the money-printing and the potential for inflation. The note emphasized that gold is the best hedge in the current environment because inflation will be driven by currency debasement.
“When discussing the drivers of investment demand for gold and commodities, it is important to distinguish between debasement and inflation. The key is that the current debasement and debt accumulation sows the seeds for future inflationary risks despite inflationary risks remaining low today,” the analyst wrote.
As Peter pointed out in a recent podcast, only “crackpots like me” were saying the US dollar could lose its reserve status five or 10 years ago. Others were saying, “That’s impossible.”
Well, now the possible has become the probable,” Peter said. “Because the people who were saying it will never happen are now contemplating it happening.”
Peter said interest rates are even lower than the mainstream thinks. They are calculating real interest rates using CPI, a measure that grossly underestimates the actual inflation rate.
So, interest rates are much more negative than what these guys think. But even with the rates that they believe, they’re saying, ‘Hey, the dollar can’t be the reserve currency if this is going to be our monetary policy.’ So, they’re already accepting that reality. And they are contemplating the fact that gold will supplant the dollar, which is what I’ve been saying the whole time. Because they realize, correctly, that the euro is not ready to take the dollar’s place. That the pound or the yen or the Chinese RMB, these currencies are not ready to supplant the dollar.”
Keep in mind, gold was there before the dollar. The dollar replaced gold and did a lousy job.
And now gold is taking its spot back. Gold is going to replace the dollar,” Peter said. “So, the world’s going to go back to what works and reject what didn’t.”