As China continues its “insurgency” against the U.S. dollar and more lawmakers push digital currencies, many are beginning to wonder how to best prepare their portfolios for a world of currency that isn’t even established.
In August we covered China’s and Russia’s efforts to dethrone the U.S. dollar as the foremost world reserve currency and, true to this goal, China is continuing to gain ground by pushing toward a digital currency. Reuters recently reported that an article published by the People’s Bank of China said, “the rights to issue and control a digital currency would become a ‘new battlefield’ of competition between sovereign countries.”
The article also said that “China needs to establish a new payment system network to break the dollar monopoly as a key part of the yuan internationalization.”
According to Forbes, “A successful launch [of the digital currency] will further burnish China’s reputation as the global leader in financial technology … by creating a technologically superior form of money.”
Forbes also noted that control over a widely-used digital currency would provide better control of its economy, bolster its own economic growth and “provide ample messaging opportunities to discredit the U.S. and expand China’s global footprint.”
China has met little resistance in this endeavor. As of October 5, the digital yuan had been used for more than 1.1 billion yuan worth of transactions in pilot programs.
Although the U.S. has been slow to respond to this threat, the digital currency discussion hasn’t been altogether tabled by our lawmakers or those of other major nations like the U.K. In March, some U.S. lawmakers were pushing a national digital currency to enable faster distribution of the pandemic stimulus. Meanwhile, others have watched Facebook’s Libra develop with mixed support.
Even if China doesn’t unseat the U.S. dollar as the top world reserve currency just yet, one has to wonder what the dollar will look like in just a few years’ time. As China continues to charge forward with its digital currency it seems that the world’s other major nations will have no choice but to follow suit, if only to protect their own sovereignty.
And if digital currency is a non-negotiable for the future, what does that mean for privacy? Whether block chain or a “central ledger” as proposed by the U.S., digital currency does not afford the opportunity for anonymity, privacy or user control. Every transaction, all growth, and all loss will be easily tracked and could easily be manipulated.
So, how can we prepare our portfolios for a lack of privacy? For government control? For a dollar that doesn’t yet exist?
The answer to all of these questions is physical gold and silver.
It’s true, they act as a hedge against uncertainty – market fluctuations, recessions, inflation, deflation; but they can also be a hedge against the uncertainty of an all-new type of currency.
Physical gold and silver are fully private and untracked, and they can’t be manipulated or hacked by governmental powers – friend or foe. They are possessed directly and privately by you (or held in a depository in the case of an IRA).
These metals have stood as stores of value for centuries and will continue to stand – possibly even stronger – in a digital wallet world. They are not just wealth insurance against the future of the economy, they are wealth insurance against the future of currency itself.
Contact us today to learn more about what switching to a digital currency would mean for us as Americans and individuals, and to discuss the role both gold and silver can play in protecting our portfolios in a digital wallet world.