For most Americans, the dollar has reigned supreme on the global stage our entire lives. Here are the latest indications that the countdown on our currency is reaching its end.
The American people are very concerned about ISIS, and rightfully so. This shadowy terrorist group is, by all accounts, more brutal, more violent and better equipped than any of the groups we’ve fought in the Middle East before. They’re worse than al-Qaeda, worse than the Taliban, by far. They behead people on camera so they can brag about it. They have American-made tanks and control of multiple oil refineries, netting them millions of dollars every day to spend on stoking fear.
Surely this is a real threat we have to deal with this time; not like last time, or the time before that or the time before that when we were promised our military adventures in the Middle East would make us safer, would prevent just the sort of scenario we are facing today. Why does it seem to be the case that the more we fight terror, the more terror there is to fight? The more we bomb them, the more terrorists pop up? Perhaps our foreign policy is just a little like our monetary policy: Where we try to solve a problem – like terrorists or inflation – by inadvertently making more of it?
Many analyses of previous wars reveal a link between the military action, and oil and dollar supremacy. These military actions are always sold to a public in existential terms: These people are terrorists who hate us because we are rich and free, and they will find a way to attack us at home if we don’t fly over there right this minute and preempt their intentions. Your very existence is threatened by these people. We must act now to keep you safe. Simple.
But is that really the truth? The truth, in fact, is much more complex than that.
Syria is an important route for a particular pipeline for oil, and recently partnered with Russia for offshore oil exploration. Additionally, while it has not traditionally been a major player in oil production, it does have some refineries.
At the same time, in what may not be so much of a coincidence, Russia is purportedly seeking to create a regional reserve currency, and to abandon the dollar for oil trading.
It is tricky to guess what might be going on behind the scenes as far as oil and currencies, dollar reserve status and the dollar’s lock on the oil markets. But what has been clear is that any entity attempting to trade oil for currencies other than dollars – in other words, threatening the dollar’s place in the world as we know it – has been eventually (and very nastily) dispatched. Saddam Hussein was trading oil for Euros and food, and was hung gruesomely for all to see. Libya’s Ghaddafi had serious ambitions for a gold-backed currency for Africa. He was attacked by an angry mob and shot, with all of it caught on video.
Is Syria’s Assad about to meet a similar fate? Are his actions perceived as partnering with Russia to build a new oil trading bloc outside the dollar? We can’t predict, but the actions of the military telegraph quite a bit. The second air strike on Syria targeted critical oil refineries. Our military said these were controlled by ISIS and were an important and lucrative funding source, but this critical infrastructure could have and maybe should have been preserved for the benefit of the Syrian people. Instead, they were a priority target for destruction by the U.S. military.
Also interesting, the U.S. military has also used ISIS as an excuse to get highly involved in alternative digital currencies like Bitcoin, also a potential challenger to the dollar.
Here’s the takeaway: Dollar supremacy is hanging on by a thread. That thread is military might supported by a weak economy. That weak economy keeps trying to tell everyone that things are actually fine and getting better, but underlying facts do not bear this out. Recent unemployment figures show that fully a quarter of Americans in their prime working years are still unemployed after unemployment benefits run out. This is abysmal.
Something has got to give in the future. It can’t continue that every world leader that challenges the dollar’s status is deposed. Sooner or later, a bona fide nuclear power, like Russia, will challenge the dollar head to head, and it could be a disaster.
If you take some time to really ponder our current place in history, your thoughts will likely add up to one thing for you and your family: Protect your life savings with gold. A little bit of gold in your portfolio will go a long way as crises like these deepen and spread. Don’t be caught on the wrong side of the currency wars. Always hold something of real, tangible value, no matter what.
When you’re ready to move some of your savings to gold, or to move more of your savings to gold, give us a call. You can also watch educational videos on precious metals on our YouTube channel.