Christine Lagarde, managing director of the International Monetary Fund, recently asked banks to start de-dollarizing. What does this mean and how does it relate to you? In this episode of USMR Market Insights, Coy Wells and Patrick Brunson talk about de-dollarization.
Is The Dollar's End Nearing? – Video Transcription
Coy Wells: 00:00
We know that Christine Lagarde, upon her request in the first quarter of 2018, asked the banks to start de-dollarizing. So why don't you kind of explain what de-dollarizing means to the consumer and then we're going to go into what, we just got a current report from the World Gold Council. So de-dollarizing basically means that countries are trying to put themselves in a position where they're reducing their dependency on the dollar. Ever since World War II, the dollar has been the world trade currency. More than 80% of the entire globe use the US dollar to buy goods and services from one another. Well, due to the fact that we have so much debt, that puts the value of the dollar at risk. And if all these countries are holding onto US dollars, they can take it very, very big hit. Right. So the reduction is 38.2% that's nearly 40% reduction by central banks worldwide.
Coy Wells: 00:53
And then, two weeks ago we got a report from the world gold council saying something was changing with the gold market that the average consumer would most likely not understand. The understanding part of what we were going to describe here- the banks, according to the World Gold Council, the central banks just acquired 651 metric tons of gold. That's more than $27 billion that the banks took out of US dollars and converted into gold and it's the largest acquisition since 1971. so why would you think the banks would be doing that? What do they know that I don't know? That's the million dollar question. I mean, the writing's on the wall though. These banks are sitting on so much liquidity that's been created over the last decade. And if the dollar itself is what they're sitting on and it's the value of the dollar that's in jeopardy- If you're sitting on a bunch of dollars and the dollars cut in half, you've just lost half of your buying power.
Patrick Brunson: 02:18
So to protect themselves as an entity or a business or a bank, they have to take large portions of their liquidity and convert it into something that will not go down when the dollar does. Right. So that goes into being proactive as opposed to being reactive. The banks are being proactive, opposed to being reactive. So click on the link below to get our latest report, 25 reasons to own gold now. And you can also get a copy of our other reports that we've done in the past. If you're watching from YouTube, subscribe to our channel so you don't miss a single episode. For US Money Reserve, I'm coy wells. I'm Patrick Brunson. And as always, thank you for watching.