May 24, 2023

All That Glitters

Timothy Birdnow

We knew it was coming. Countries around the globe are dumping the petrodollar and moving their assets elsewhere.

In Poland they are buying gold in large quantities.

From Zerohedge:

(Bank of Poland President) Glapiński also hinted that worries about the stability of the US dollar were driving the decision to increase the country’s gold reserves.

Gold is characterized by a relatively low correlation with the main asset classes – especially the US dollar dominating the NBP reserve portfolio – which means that including gold in the reserves reduces the financial risk in the process of investing them.”

The trend toward de-dollarizationhas only accelerated since Glapiński made these comments.

End excerpt.

And Poland isn't alone:

Central banks around the world have been piling up gold over the last two years. After a record-setting 2022, central bank gold reserves increased by 228 tons through the first three months of 2023,a Q1 record. This was 38% higher than the previous first-quarter record set in 2013.

Total central bank gold buying in 2022came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. It was the 13th straight year of net central bank gold purchases.

According to the World Gold Council, there are two main drivers behind central bank gold buying — its performance during times of crisis and its role as a long-term store of value.

End excerpt.

So world governments understand the U.S. dollar is failing and are seeking to protect their assets. Wise.

Meanwhile U.S. Residetn Joe Biden continues to demand a "clean" debt ceiling increase, meaning he wants to continue spending at the rate he has been. It's only May at we reached the debt ceiling and he wants more money to blow. The Federal government has plenty of money to pay unpaid bills. What Mr. Biden wants is money to spend on frivolities and politically popular programs (and to launder money so it winds back up in the Democrat's coffers).  He and his friends see no problem.

Well, if foreign countries are stockpiling gold it means THEY see a problem. A huge one.

The U.S. economy is going to collapse. Unless adults get in power the spending will continue and the dollar will lose it's reserve status. Once that happens (and it's happening right now) the U.S. will become a very unwelcome negative on the books. Nobody is going to want to invest in America, or lend us money.

This is what happens when you elect a senile machine politician to the highest office in the land - at a time when sound economic thinking is needed. Biden has never run a business, or kept books, or done anything outside of government. He was a Senator, meaning he knew how to get money for his own state from the Federal treasury.

Donald Trump ran a multinational corporation; he knew how money worked.

Elections have consequences. America hated Trump's mean tweets. How much money out of your pocket is it worth to have a guy who doesn't call people names? I don't know about you but I would rather put up with some acrimony and a full wallet.

Posted by: Timothy Birdnow at 09:49 AM | No Comments | Add Comment
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