Taleb is directionally correct, but there's a nuance to be considered. The USD is still the 'reserve currency'. By that I mean it will, for the foreseeable future, still be the currency in which countries/companies transact. However, it (and treasuries, by extension) is no longer the 'reserve asset'. So the world has moved to a place where it transacts in dollars and saves excess liquidity in gold.
This is important when considering Citi's position which seems to be driven by a US centric view that somehow our fiscal/debt issues are on course to a positive resolution and that, therefore, the pressure to hedge against negative outcomes via gold will abate. It misses the reality that: 1) no such resolution is yet a given (quite to the contrary), and 2) that regardless of how responsible the US suddenly becomes the world is breaking free of US Dollar/Treasury dependency/lock-in and is liking it. The horses are not getting back in the corral. As such, central banks will keep buying gold, potentially to a point where, in the case of China, they back their currency with it and eventually displace the dollar as the reserve currency.
VBL- Excellent analysis Vince. This brings to mind another post on metals, specifically copper buying in China. About the time you discussed other China entities entering/shifting to other metals (all) slowing with gold,specifically, copper! imo was the quintessential moment seek alternate metals and producers.
Taleb is directionally correct, but there's a nuance to be considered. The USD is still the 'reserve currency'. By that I mean it will, for the foreseeable future, still be the currency in which countries/companies transact. However, it (and treasuries, by extension) is no longer the 'reserve asset'. So the world has moved to a place where it transacts in dollars and saves excess liquidity in gold.
This is important when considering Citi's position which seems to be driven by a US centric view that somehow our fiscal/debt issues are on course to a positive resolution and that, therefore, the pressure to hedge against negative outcomes via gold will abate. It misses the reality that: 1) no such resolution is yet a given (quite to the contrary), and 2) that regardless of how responsible the US suddenly becomes the world is breaking free of US Dollar/Treasury dependency/lock-in and is liking it. The horses are not getting back in the corral. As such, central banks will keep buying gold, potentially to a point where, in the case of China, they back their currency with it and eventually displace the dollar as the reserve currency.
Well written TP.
VBL- Excellent analysis Vince. This brings to mind another post on metals, specifically copper buying in China. About the time you discussed other China entities entering/shifting to other metals (all) slowing with gold,specifically, copper! imo was the quintessential moment seek alternate metals and producers.
a lil pump for resources (all producers) to go with a shopping list, A?