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The Future Global Currency Will Be Backed By Gold and Silver

By: Steve Johnson

7/14/2009 - 38 Comments

One by one the emerging nations are losing faith in the dollar and looking to take advantage of the global recession by gaining economic influence. 

In the process, the idea of a global currency is gaining support from a growing list of nations like Russia, China, India and Brazil.

The idea is to create a new currency to replace the dollar as the global reserve currency, based on a basket of currencies from these nations.  Today these nations only make up 20-30% of the financial transactions, while the dollar makes up 44% - primarily because it is used for all oil transactions. 

The emerging nations would like to extend the use of their currency and decrease the use of the dollar, so that the dollar would be only 25% of global transactions, while their currencies would make up the other 75%. 

Recession Is An Opportunity

These nations see the recession as an opportune time to make their move and push for more financial influence, as the US economy continues to struggle in a deepening recession and the national debt puts tremendous downward pressure on the dollar.

At the same time, these nations don’t want the dollar to sink overnight because large portions of their savings are invested in dollars and many assets around the world are prices in dollars.  A quickly sinking dollar would disrupt the global economy.  This is why they continue to give mixed signals about the dollar.

It may take a few more years to work out the details and implement a transition plan, but in the end they will need to create a global central bank with power over all national central banks.  

Controlling interest rates and currency supplies will likely be their hardest problem to solve, which will lead them to link the currencies to gold and silver as central banks have done time and time throughout history. 

Linking paper currency to gold and silver is the only way to protect money from government manipulations, just as the dollar was linked to gold until 1971.  That gold backing was the reason that many nations linked their currencies to the dollar. 

But, the US government needed more money and therefore the link was removed and the printing of money began.  All nations that resorted to increasing the supply of money have ended badly and the dollar is on its way.

Global Economic Expansion Supported The Dollar

The last several decades of global economic expansion and the increase in demand for oil and allowed the dollar to continue its support for nearly 50 years, even as the supply of dollars continued to increase. 

Today two-thirds of the dollars in circulation are used outside the US.  That is a lot of money that the US government was able to print and spend.  The expanded use of oil has given the US dollar a tremendous economic advantage. 

Beside the economic advantage from oil, the US enjoyed the dollars global Reserve status by not having to maintain a sovereign wealth fund to support the dollar in case of a currency crisis. This is why Russia, China, India and many other nations have a large sovereign wealth fund and we do not. 

Dollar Is In Danger

The US needs to realize that the world is lining up against the dollar and needs to prepare for a currency crisis by building our own sovereign wealth fund.  Within the next few years, the dollar could be facing a currency crisis – that will make the US recession look like a walk in the park.

The world will have no choice but to turn to gold and silver to stabilize the global financial system with money that everyone can agree on because no government or nation can increase or decrease the supply of gold and silver.

Gold and silver are the only constant money source that cannot be manipulated by a government and the only way to bring together sovereign nations under a common currency system that can survive wars and national bankruptcies. 

This is why investing in gold is not just a speculation; it is the only way to guarantee your money will retain its value until the transition to the new currency is complete.

Make no mistake about it; the real financial crash is still to come when the world drops the dollar. It's easy to see this coming, you can read about it almost daily, so I don't want to hear anyone say 'we didn't see it coming'.

The housing market and stock market collapse are just the beginning of our financial troubles and the deepening recession will prove to be the last straw pushing world leaders to abandon the dollar as the world reserve currency.


In the last few weeks I participated in several blog carnivals

They all did an excellent job and as usual, there are tons of great articles. I highly suggest you skim through them.

The 208th Carnival of Personal Finance

The Festival of Frugality

Money Hacks Carnival 68- Stanley Cup Final Edition

The 210th Carnival of Personal Finance

The 212th Carnival of Personal Finance - Global Independence Day Edition

Festival of Frugality - Barbecue Edition

Carnival of Money Stories #10 - A Tribute to Billy Mays

Carnival of Personal Finance: New Zealand Edition!

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