There is no quick decoupling from the USD. Everyone holds long term USD instruments. Nobody wants to lose their money. The US is still the world's largest economy - by a lot.
Gold isn't that much more expensive than it was in e.g. 1980. It is pretty much just saying there's risk in other places at the moment and people are nervous. You should buy gold if your prediction is a complete collapse of economies along the lines of the great depression. I think this is extremely unlikely.
Short gold ;)
I've always wanted to get some physical gold just because it's so nice and shiny. But I'll wait for the price to go a little down. Maybe Costco selling gold bars is what's pushing up the price/demand?
If US economy collapses - and given the people who are now in charge, it doesn't feel all that unlikely anymore - this very economic dependency means that the crash will likely be global. On top of that, I think that it makes a major war that much more probable.
The nice thing about physical gold compared to just about everything else is that it has a non-zero bottom. You put money there not because you expect growth, but because you want to still be holding something once this is all over.
A bit longer term, investment in stock markets was the best thing to have value survive the last two world wars. During and directly after war, who would want gold. You want food/goods.
It’s going to be interesting to see how we would deal with international stock ownership once we are at war with previous partners. An example might be how stock ownership of Russian shares was dealt with in the west.
Because most public companies have been surviving wars just fine so far in history? I also didn’t say anything about US stocks specifically. I consider it irrational to only invest in one geographic region.
It is simply a historical fact that nothing preserved value over time better than broad stock ownership. Not gold. It mostly carries psychological value.
After I got a divorce I was bored and melted down my wedding ring with a MAPP torch. Molten gold is simply beautiful. Liquid like mercury but shiny and glowing at the same time.
Anyway, ditto to everything you said. Fade the doomers who are calling for the collapse of the USD. There simply isn't an alternative. China won't give up the control as they would need to do to be the holder of the next reserve currency. The EU is a fractured joke of a union that can't be trusted to manage it either. The US continues to be the least bad option. We have deep markets to provide liquidity needed for the global economy. We still have, more or less, the rule of law and a system of checks and balances. The USD will eventually be replaced but it will likely take decades.
> Everyone holds long term USD instruments. Nobody wants to lose their money. The US is still the world's largest economy - by a lot.
Sure US share of world gdp is hovering around 25% for decades. But, world gdp share of what I would call US adjacent economies, like EU, JPN, UK etc., is decreasing with rise of chinese economy. US could comfortably run petrodollar and global reserve currency with the help of these adjacent economies by exporting US deficit, by forcing these adjacent economies to make concessions like plaza accords when running deficit dollar becomes tough.
China on the other hand is making moves to make maintaining deficit dollar impossible in long run, non-floating yuan, export dumping, belt road etc. We are running in to situation where deficit dollar and global economy decoupling could happen from both sides US and other countries. This is one way triffn dilemma could get resolved.
Gold is being bought by central banks around the world massively. The biggest buyers are China and Russia. The US weaponized the dollar during the Ukraine invasion and countries have taken the decision to lower their exposure.
Gold is likely in a structural bull market. It thrives in times of uncertainty and the world is far from certain.
Gold/M2SL(Billion USD) is currently around 0.12. In 1980, it peaked around 0.45. Monthly average since 1960 is 0.11. In late 2011 it peaked around 0.18.
Gold / Global M2 would be a better metric, but I haven't analyzed that yet.
It's the triangle thing: Quick, cheap, minimal side-effects, but you can pick at most two. There's loads of ways the world may do "quick" if we all find we have to, but it won't be good — and not just because of the various reasons why we might find we have to do it quick.
No, it’s not. It’s just a different perspective. In some aspects it does reveals real economic power, but in other ways it can vastly exaggerate a country’s economic power.
Having hundreds of millions of poor near-subsistence farmers will add quite a lot to a country’s GDP (PPP), but does not make that country more powerful on the international stage.
I’d argue that PPP is more misleading than meaningful.you
Like, you can get an apartment built really cheaply in China. Yes, your money goes further there. But there’s also a much higher risk that the building is very low quality and will fall apart in a short time. And what’s more, you’re not actually buying and fully owning it. The land is leased from the government
> Having hundreds of millions of poor near-subsistence farmers will add quite a lot to a country’s GDP (PPP)
In what sense? By definition, subsistence farmers primarily produce for their own consumption rather than for the market, meaning their output is largely not captured in official GDP statistics.
For a lot of things, yes; but — genuine Q because I'm not economically trained — on the question of dollar dominance in international trade… is PPP genuinely more relevant than nominal? I mean, this does seem to be a question about the currency itself?
Or should the question draw the boundary differently, and be asking about the size of the dollar economy rather than the US economy, with e.g. all international trade that is denominated in USD being counted?
Suppose China and the U.S. each produce 10 tons of steel. GDP PPP would consider both economies equally sized (and they arguably are), but nominal GDP would favor the U.S. because steel costs more there. GDP PPP is more useful if you want to compare standards of living or consider consider a country's ability to sustain a war for example.
That's the positive argument for PPP that I'm already aware of.
Thing is, to quote @YZF a way up chain: "There is no quick decoupling from the USD." — I'm curious about the dollar itself in this case, rather than about the goods.
Is it? China unlike US has a declining population. Also it takes a while to catch up even if you’re growing at 5% and your opponent at 3% when the starting base is much lower.
Of course this might be entirely moot since US is in the process of committing economic suicide for no apparent reason.
I think its going to happen. We keep underestimating China. US manufacturing is in the gutter. And it certainly doesn't help that we keep deporting our best minds back to China. They already have 5x the US population. They have a lot of room to grow still.
Gold isn't that much more expensive than it was in e.g. 1980. It is pretty much just saying there's risk in other places at the moment and people are nervous. You should buy gold if your prediction is a complete collapse of economies along the lines of the great depression. I think this is extremely unlikely.
Short gold ;)
I've always wanted to get some physical gold just because it's so nice and shiny. But I'll wait for the price to go a little down. Maybe Costco selling gold bars is what's pushing up the price/demand?