Is the US Dollar Headed for a Major Fall?

By Julian Phillips

One of the facts of life over the last 40 years has been that the U.S. dollar is the world’s sole global reserve currency. This is despite the fundamental factors underlying the U.S. balance of payments, which has been awful over that entire time. Nevertheless, the dollar ruled the global monetary system through these four decades and appears to be doing so still. But is that coming to an end? Next week there is a meeting of the BRIC nation over the use by the U.S. of the SWIFT system to block Iran from selling its oil. The BRIC nations are buyers of that oil. Their views on Iran’s nuclear policies do not go as far as refusing to buy their oil. The SWIFT system is the system used to make international payments and covers most acceptable currencies.

This use of the international monetary system as a war machine has surprised and angered these nations who are meeting next week to discuss this and, no doubt, to work out ways to prevent the U.S. from exercising such power. If they succeed, they will have formulated a way to bypass the U.S. dollar as the dominant currency with which to pay for oil. Once this hold has been broken, we may see a steady move away from the U.S. dollar as the sole global reserve currency.

It is critical for investors to understand the importance of this and how the situation came about in the first place to understand the full ramifications to the gold and silver price. These will be dramatic!

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