BRAZIL AND ARGENTINA ARE LAUNCHING A COMMON CURRENCY?

The Financial Times reported on January 21 that Brazil and Argentina will announce the creation of a common currency this week.  

Many experts are declaring this new currency to be a pipe dream of the two largest South American economies.

Unfortunately whether or not this currency succeeds is largely beside the point.

The fact that South America is doing everything in its power to de-dolarize is the real story here.

At this point everyone knows about the immenent Chinese/Russian commodity backed currency that is in the late stages of developement.  India and Saudi Arabia have both pledged to participate in this new currency.  You can be sure thqt Brazil and Argentina will be more than happy to participate if thier own common currency sputters.

Why de-dolarize?

Quite simply the United States is no longer the force for stability in the global economy.  Our own political system nearly collapsed a few months ago.  Just because that narrative is inconvenient to some here doesn't mean it hasn't been noted by every competing economy around the world.

Our own economic system, though still the largest and most sophisticated in the world, is now at the mercy of the vicissitudes of an unstable political system.

And worst of all we've committed the cardinal sin of a reserve currency, by weaponizing the currency against enemies of the United States.  

It began with tarrifs and then moved to sanctions and the freezing of dollar denominated assets.

It may have made some political sense in the short run to do so.

In the long run it provided our competitors with the most compelling reason to ditch the dollar as the currency of last resort.

Who knows how successive administrations will seek to attack enemies real and perceived with tarrifs,  sanctions, confiscations and economic isolation.

Whatever emerges to compete with and attempt to replace the dollar in global trade - especially in commodity trading - the result will be to strengthen the commodity currency that has ruled global trade for the last 5000 years

Gold

Central Banks around the world understand this and have been amassing gold at a furious pace.

Wealthy investors around the globe have been doing the same.

Imagine when ther mass investing class catches on.

That's when the real move in gold will begin.