Gold Exchanges and Dollar Death

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Happy 4th to all.

Here’s the last piece of content we promised you this holiday. A podcast on gold exchanges and dollar dominance.

A month or so ago, Tom Luongo and VBL had a chat about manifestations of Dollar demise as exempllfied in global exchange volumes. Tom graciously let us rehost that pod HERE

Friday Tom B of Palisades had both of us back to revisit this concept and the Geopolitics driving policy decisions right now. When that Pod is posted we will send a link

Which brings us to this post, an outgrowth of that awesome conversation with the Tom/Tom Club

What is this Post?

The purpose of this is to give a reliable framework in which to see how Dedollarization will play out. In doing so we will look at:

* Crisis driving Geopolitical change, in this case GRC

* How financialization makes change inconvenient.

* How changes in business behavior predict Geopolitical change

* Exchanges are the last link in dollar GRC status

Why now?

The conversation surrounding Dedollarization and Geopolitics is peaking. We are starting to see two camps form: Those saying the Dollar will die and those saying the dedollarization is hype. Both camps are right, neither label matters in our opinion.

Recently the listing of new contracts on non-western exchanges in regions of demand have sprung up. We view that as almost the last signpost confirming what most of us sense. And so this recording was made

Incidentally, Vaults moving to Singapore in 2013 was the first signpost

NOTE: Recording volumes are choppy, apologies as this was recorded early AM on a walk. The content should be worth it however. Enjoy…

0:00-7:00min: Warm up/ Background

Change comes out of necessity, not desire

* Geopolitical change comes from need, not desire

* GRC Born out of necessity

* Once the world changes GRCs in response to a crisis, infrastructure/ conveniences gets built up around the new GRC further cementing the GRC

Financial and Physical Trade

* Financialization is in response to real trade

* Financialization makes things smoother, more efficient, and more convenient

* Noone changes GRC unless there is a crisis

* Financial tethers make it too convenient unless a crisis occurs

* If a real crisis of confidence emerges, then existing Financial conveniences can only slow the change, not stop it

Bottom Up: How business practices effect Geopolitics

7:00-14:00 min: Gold Supply-Chain Migration from US to China

How the trade flows determine GRC.

Changing econmomic power as mirrored in changing supply chains

* Supply> shipping> storage> refining> financialization> Exchange listing> GRC change

The customer is always right

Demand determines delivery

Eventually, the USD remains GRC out of convenience not necessity.

When a crisis arises, you get acceleration of the whole process.

Pricing is the last Domino to fall.

14:00-21:00 Exchanges Announce the Winner

New GRC created in practice but not name

Bottom line: if your money is the undisputed global lreseve currency, exchanges do not list contracts in local currencies for globallly traded ccommodities.

Once they start to do that: it is a sign of change in economic dominance, tradeflows, and ultimately power.

For a country to do this, to challenge the incumbent power without fear of reprisal several things are likely. Chief among them are: established trade realtionships, economic might, and a desire forpricing power.

The only thing stopping this process is another crisis that makes people back off

BONUS:

* GSTrader European markets

* JPM ETF guide