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Gold Coins vs. the Dollar: The Battle Rages On

The single most compelling argument to buy gold coins is the impending demise of the dollar. Yet over the past year or so many investors have been lulled into a false sense of security. That may be highly understandable, but it has put a great deal of wealth at risk.

The dollar’s only salvation over the past decade is its status as global reserve currency. Basically that means when country A buys something from country B it pays in dollars. That made some sort of sense when the US was the sole economic superpower, but today the risk incurred by channeling all the money from global transactions through the US Treasury is both unnecessary and absurd.

Not surprisingly, the emerging economies of the world are setting their own rules for trade among themselves. Bilateral trade agreements, in which countries agree to conduct business using their own currencies, are becoming the norm.

The second and third largest economic powers – China and Japan – recently agreed to eliminate the dollar as middleman. China and Russia now trade solely in their own currencies and China is actively negotiating with South Korea to do the same. Since China has become the largest trading partner with Africa the renminbi is projected to become the medium of exchange for that trade as well within the next few years.

The list goes on. Perhaps the biggest hit will come from the dismantling of the petrodollar system, which is the foundation for the dollar’s long running domination of global trade. The move is already underway and is gaining momentum.

The IMF and other international financial agencies agree that a new monetary system independent of the dollar is essential for global economic stability. In the meantime a growing number of countries are falling back on gold as a medium of exchange and many are considering eliminating money altogether in favor of a barter system.

There is no doubt that the reign of the dollar is rapidly coming to an end. Without that leverage the dollar will be forced to stand or fall only on its merit, just like any another currency.

Left to fend for itself, the dollar won’t stand a chance going up against gold coins.

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