TINA is a Lie
For decades, the retort to this line of thinking was simply TINA. There is no alternative. If other countries abandon the dollar, what will they use instead? Another currency of another government that is even worse than the US at fiscal discipline? The truth is there may be no other viable fiat alternatives in the currency world. But there ARE alternatives and the world is turning to them. What does that mean for you? It means there could finally be an escape hatch from inflation.
There Is No Alternative? Oh really?
It's not so much TINA as the Dollar Is The Least Awful Fiat Currency Available (DITLAFCA?) which is a terrible acronym, and a less and less appealing value proposition for the rest of the world.
And we just made it a lot worse by weaponizing the dollar against a major superpower.
Sanctions against Russia and many many other countries have pushed enough of them off of the global cool kids table that they are all but forced to set up their own parallel systems. They can either figure out their own alternatives or bow to our demands.
The TINAs are not considering cryptocurrencies and a return to precious metals as alternatives, but many countries are. The market always finds a way. Eventually.
BRICS Bucks
BRICS nations (Brazil, Russia, India, China, South Africa) are in serious talks about setting up their own currency and trade agreements. A BRICS currency could be similar to the Euro but supported by larger economies not joined by borders. A BRICS currency's footprint would span the globe and represent a very diverse ecosystem of goods and services produced by the member nations, increasing its appeal to outside countries as well. If this were to materialize, it wouldn't dethrone the dollar overnight, but because these countries together have a larger GDP than the entire G7, it could set up a multi-polar economic playing field.
In fact, BRICS nations have already set up their own competition for the IMF called the NDB, the New Development Bank. They've promised that 30% of their loans will be in the local currency of the country they are lending to. This is very appealing and promises like these are driving the expansion of the BRICS+ bloc. It now includes Egypt, Bangladesh and the UAE. Argentina, Algeria and Iran have also formally applied. Uruguay, Turkey, Indonesia, Mexico and Saudi Arabia have all indicated interest as well. That is a stunning list of countries looking to de-dollarize.
Gold-backed Currencies
Could we really go back to the gold standard? Gold and silver are enjoying renewed interest as a stabilizing factor for state economies. And, the US Constitution allows for it.
"No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts..."
US Constitution, Article I Section 10
Arkansas has passed legislation affirming gold and silver as legal tender, and other states are following suit. Utah, Wyoming and Oklahoma have also done so, while Maine and South Carolina have efforts underway. 42 states have eliminated sales tax on gold and silver bullion, which is a step toward treating gold and silver as money once again.
Gold-backed Digital Currencies
Another effort to keep an eye on is the move toward gold-backed cryptocurrencies. Zimbabwe is introducing a gold-backed crypto soon to help relieve its hyperinflation and offer an alternative to the US dollar.
The state of Texas has introduced legislation to create a state-based gold-backed crypto. Keep an eye on that effort. Texas (and one would also assume Zimbabwe) would need to hold enough gold in reserves to back the currency, which could boost demand for gold. If efforts like these take off, that could really boost demand for gold.
Positives for gold
The dollar bulls may have a point that governments and politicians tend to spend with impunity at the expense of their fiat currencies. That's a given. But that doesn't mean we are stuck. Emerging technologies have shown different ways to transact, and gold is still gold. Gold has been used as money for thousands of years of human history and has the unmatched benefit of stable value. No one particular country mines or controls all the gold. Gold doesn't care about your politics. Gold has no agenda. The efforts towards de-dollarization and competing currencies have these values in common. Gold is one very obvious answer.
We anticipate further efforts to de-dollarize could be very positive for precious metals, making them an excellent investment and store of value today. Call us when you're ready to lock in your price on gold and silver.