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Russia Sanctions Accelerate Risk to Dollar Dominance

This nasty turn between Russia and the West related to sanctions, that can be an accelerator toward a more multicurrency world.”

by Rachel Evans, Bloomberg:

U.S. and European Union sanctions against Russia threaten to hasten a move away from the dollar that’s been stirring since the global financial crisis.

One place the shift has become evident is Hong Kong, where dollar selling has led the central bank to buy more than $9.5 billion since July 1 to prevent its currency from rallying as the sanctions stoked speculation of an influx of Russian cash. OAO MegaFon, Russia’s second-largest wireless operator, shifted some cash holdings into the city’s dollar. Trading of the Chinese yuan versus the Russian ruble rose to the highest on July 31 since the end of 2010, according to the Moscow Exchange.

While no one’s suggesting the dollar will lose its status as the main currency of business any time soon, its dominance is ebbing. The greenback’s share of global reserves has already shrunk to under 61 percent from more than 72 percent in 2001.

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3 comments to Russia Sanctions Accelerate Risk to Dollar Dominance

  • Anon

    Every fiat (paper) currency in human history has failed and collapsed, with an average lifespan of 40 years. The USD/FRN (U.S. Dollar/Federal Reserve Note) is now in its 43 year, since 1971, when Nixon took the USD off the gold standard. It has survived the average, but is living on borrowed time. Once the INEVITABLE occurs – which is the TOTAL COLLAPSE OF THE U.S. DOLLAR – only gold and silver will still retain value. Those who print our fiat currency (USD/FRN) also artificially suppress the prices of both gold and silver – documented fact. So, once the fiat USD totally collapses, their ability to artificially suppress the price of both gold and silver will also be greatly diminished, as true price discovery ensues, where people begin transacting with precious metals as payment, on an agreed upon value for said precious metals, using reckoning that is based upon history, mathematics, and reason, rather than the London “Fix”. History stands FIRMLY on the side of gold and silver, as REAL MONEY. Personally, I like silver over gold, because most gold ever mined is still above ground, and sitting in the personal vaults of the .01/1%. Silver has both a monetary, AND an INDUSTRIAL usage – and is more scarce than gold. With the silver “spot” price currently at $20 per ounce, and the historic ratio of gold to silver at 1 to 15 (ounces), and gold at $1,313 .00 per ounce, then the current price of silver should be $87.53 per ounce (ie, $1,313.00 divided by 15 = $87.53 (And, that is the most conservative metric, based upon an artificially suppressed price for gold!)

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