Russia Ditches Dollar in Response to US SanctionsPaul-Martin Foss
Russia has announced its decision to forgo use of the US dollar in response to US sanctions against the country. While the Russian government would prefer not to have to take that measure, it feels that it has no option, seeing what has happened to Iran and not wishing to be cut off from world financial markets if it continues to operate with dollars and rely on US banks or their correspondents. Some of its recent sales of arms and goods to other countries have taken place in rubles rather than dollars, and while the ruble won’t dethrone the dollar anytime soon, the continued increase in non-dollar-denominated international trade over time could result in the dollar eventually losing its place as the world’s reserve currency.
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Russia and China in particular have been upset at the United States attempting to throw its weight around since President Trump took office. The two countries have vowed to establish a yuan-ruble payment system that would bypass not only the dollar, but also the Belgium-based SWIFT system. As SWIFT has been forced by the United States to adhere to US sanctions and cut off Iranian banks from the system, Russia and China are preempting the US government’s ability to do that to any of their banks.
With those two large economies and trading partners creating a payment system, other countries could join too, especially those who don’t want to remain dependent on the dollar or on the United States. By throwing its muscle around and pressuring SWIFT, the US government has inadvertently spurred the development of a competitor, one which could end up playing a large role in international trade, especially trade not denominated in dollars.
While the dollar’s eventual demise will be a long time in coming, when it happens it will greatly devalue the worth of dollar-denominated assets, including houses, stocks, and bonds. Some experts have estimated that the dollar could lose as much as 20% of its value once it no longer serves as the world’s reserve currency, making things far more expensive in the future.
Investors need to look long into the future to see not what the dollar’s role is today, but what the dollar’s role will be in the future. Protecting themselves now by investing in assets such as gold that aren’t dependent on the dollar for their value is an important first step in safeguarding their wealth. Gold is in demand internationally, as it has been for thousands of years, making it a highly liquid and constantly demanded source of wealth. When the dollar is ultimately dethroned, gold will maintain its value.
By investing in a gold IRA, investors can take advantage of gold’s ability to maintain its value despite currency collapse. They can even roll over existing retirement assets into gold tax-free, making it quick and easy to invest in gold and benefit from its protective status. Don’t wait until it’s too late to make that choice to invest in gold – do it today and keep your hard-earned assets safe from the dollar’s eventual and inevitable weakening.