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What if you weaponize the dollar?
Typically, gold is highly correlated with U.S. Treasuries and inflation. Measured by so-called “real rates” versus gold. (Real rates intend to track inflation compared to 10Y government bond yields).
However, in 2022, something shifted dramatically. In recent years, both gold and real rates have risen in unprecedented unison. Why?
China and Russia have stacked metric tons of gold over the past decade. Gold is still held by the hundreds of billions by global central banks. And like U.S. Treasuries, gold is a major asset held in reserve by major institutions across the world.
However, a major event in 2022 likely catalyzed world-changing interest in one versus the other. That year, Biden explained in a NPR interview how Russia was effectively blacklisted from the U.S. Treasury system “Making Putin’s $630 billion war fund worthless.”
Years before, Russia had already been divesting its U.S. Treasury bonds while buying gold. Yet it was likely an important signal to allies such as China to start diversifying into the world’s…
