In the full panoply of the Biden administration’s foreign policy errors aned gaffes, perhaps none was so stupid as its failed attempt to weaponize the dollar—the world’s reserve currency—against Russia for its invasion of Ukraine.
It’s telling that during World War II, neither the United States nor the United Kingdom—when the British pound sterling was the world’s reserve currency—ever considered weaponizing their currencies against Germany, Japan, or Italy. But wiser heads were running the allied nations then.
But President Joe Biden and Secretary of State Antony Blinken, along with Treasury Secretary Janet Yellen, did exactly that. And they lost. In the immediate aftermath of the Russian invasion, the ruble fell, as expected. But then for much of last year, the ruble actually gained strength relative to the dollar—stronger than it had been before the invasion!
It has only declined again since the winter, after Russian battlefield setbacks in the Donbas and the mutiny of the Russian mercenary Wagner Group.
Far worse, though, is that Biden’s reckless foreign policy failure has damaged—perhaps irrevocably—the status of the U.S. dollar as the world’s reserve currency.
Hitting the USA Like a Ton of BRICS
In August, the BRICS countries—Brazil, Russia, India, China, and South Africa—will meet in Johannesburg, South Africa, and “de-dollarizing” the global economy is on the summit agenda. While nobody expects the dollar to be displaced anytime soon, the rise of digital currencies—and particularly CBDCs, central bank digital currencies—will make it much easier to bypass U.S. Treasury and SWIFT (Society for Worldwide Interbank Financial Telecommunication sanctions, the incumbent means of transferring funds globally) sanctions. At least one study says this could be achieved, given CBDCs and other blockchain alternatives:
“Our analysis suggests that the use of new financial technologies (e.g., blockchain, digital currencies, and cloud-based financial infrastructure) can propel the formation of a revisionist de-dollarization coalition and strengthen the credibility of collective mobilization. Such a coalition could lead to the creation of new market instruments and infrastructure that exclude the incumbent power [i.e., the United States], serve as global public goods with a broader buy-in, and divert global financial traffic away from the incumbent system.”
‘Two Ways: Gradually, Then Suddenly’
Ernest Hemingway’s quote about how one goes bankrupt—“gradually, then suddenly”—seems apt given the rapidity with which de-dollarization has been occurring since the Biden administration imposed its dollar sanctions on Russia.
While there was talk of de-dollarizing for years, geopolitical and U.S. domestic factors over the last nine months have exacerbated it.
First, obviously, sanctioning Russia last year using the dollar and SWIFT has led countries that are less closely aligned to the United States to consider alternatives to the dollar. Then, in October 2022, Brazil’s left-wing president, Luiz Inácio Lula da Silva, who has sought closer ties to China, won a narrow victory (by less than 2 percentage points) over conservative incumbent president Jair Messias Bolsonaro. Then, in November 2022, U.S. elections delivered a Congress narrowly divided between the two major parties. Finally, in January, the failure of the U.S. House of Representatives to promptly elect a House Speaker showed how divided America is not only between the two major parties but even within the majority House Republican party.
Given the circumstances, a whole wave of transactions were announced in the first half of 2023 that sought to de-dollarize several bilateral and regional trading arrangements that have traditionally been conducted in dollars:
- In January, Saudi Arabia said it would consider accepting Chinese yuan for oil sales, although the Saudis will likely rapidly convert the yuan receipts to gold, euros, or dollars.
- In early February, China and Brazil agreed to a clearing agreement to use Chinese yuan in cross-border transactions. By the end of March, the yuan had surpassed the euro as Brazil’s second-leading currency reserve, after the U.S. dollar.
- At the end of March, China and France completed their first liquefied natural gas (LNG) using yuan.
- Around the same time, Russia increased it holdings of Chinese yuan as a reserve currency.
- Just days earlier, Saudi Aramco inked a deal to build a refinery for 83.7 billion Chinese yuan ($12.2 billion) in Liaoning province, China.
- In April, India and Malaysia agreed to conduct trade in Indian rupees.
- In May, South Korea and Indonesia agreed to undertake trade in their respective currencies, cutting out the dollar.
- Also in May, the Association of Southeast Asian Nations (ASEAN ) agreed to de-dollarize commerce among themselves and use their local currencies.
- In June, Pakistan paid Russia for discounted oil in yuan.
To Lead the World, Lead the World
It’s unlikely China, local and bilateral agreements, or even a new currency will supersede the dollar as the world’s reserve currency anytime soon. Global reserves are denominated overwhelmingly in dollars for the time being. That’s because our markets are far larger and better regulated than virtually anywhere else in the world. The dollar is seen as “safe,” relative to other currencies.
Moreover, our per capita GDP is far greater than most any other major economy, although China’s economy is expected to eclipse the United States in pure dollar terms because of its larger population.
But the United States cannot just rest on its laurels, or other countries will continue to lose confidence in our currency. That would have a tremendously deleterious effect on U.S. trade, prestige, and global leadership. It would also undermine what former French president Valery Giscard d’Estaing once called our “exorbitant privilege”—that is, our means of obtaining an interest-free loan from other countries that hold our dollars as reserves.
Summary
We have been reckless in our money printing and deficit spending and our leaders have also failed to create a single, unified set of budgetary priorities to which both parties can more readily agree. All that makes the dollar, over the long term, a riskier bet for other nations to hold as a reserve. So “de-dollarizing” their transactions can serve their interests.
Cartoonist Walt Kelly, creator of the long-running “Pogo” comic strip, wrote, “We have met the enemy, and he is us.” Kelly was talking about climate risk on the first Earth Day. But his comments are equally applicable to the U.S. fiscal and monetary situation. Our deep political divisions, our chronic inability to live within our means, and our reckless tendencies to write checks and make commitments overseas that we cannot cover and cannot meet are the biggest enemy of the dollar’s fiscal integrity and its utility as the world’s reserve currency.
In January, I wrote here about the kind of tough choices the United States needs to make to ease our deficits and help restore the credibility of the dollar, both for our own nation’s betterment and to ensure the dollar’s continuing credibility among other nations as the world’s reserve currency.
But Americans need to do more than that.
Just as we have sworn off the use of poison gas and biological weapons on the battlefield, we must also forever foreswear “weaponizing” the dollar against our enemies and our adversaries. We can certainly embargo critical materials, as we did with oil with Japan when it invaded Indochina in 1941. We can certainly freeze U.S.-based foreign assets of offending nations, as we did with Iran after it seized the U.S. embassy in Tehran in 1979. However, the “unprecedented and expansive” currency and banking sanctions the Biden administration proudly imposed on Russia over Ukraine created a greater threat to the world’s confidence in the dollar as a reliable reserve currency than an impediment to the Russian war machine.
We should never repeat doing so again, absent total war with an enemy.
Article cross-posted from our premium news partners at The Epoch Times.
Why Bullion Beats Numismatics and Collectible for Your Safe or IRA
Precious metals continue to attract Americans seeking reliable ways to protect their wealth amid inflation, geopolitical risks, and stock market swings. Whether stored in a home safe or held inside a self-directed IRA, physical gold and silver deliver tangible value that paper or digital assets often lack. Yet investors must choose carefully between bullion—pure bars and coins valued mainly for their metal content—and numismatics or collectibles, where rarity, history, and collector demand heavily influence pricing.
Advisor Bullion serves as a dependable source for straightforward, high-quality bullion. The company specializes in physical gold, silver, platinum, and palladium, emphasizing transparent pricing and products that deliver maximum metal content for every dollar spent. This approach makes it ideal for both personal holdings and retirement accounts.
Bullion consists of refined precious metals in standard forms like one-ounce coins (American Gold Eagles, Silver Eagles, Canadian Maple Leafs) or bars. Their value tracks closely to the current spot price of the metal. A typical gold bullion coin trades near the live gold spot price plus a small premium. This structure keeps costs clear and predictable.
Numismatic coins and collectibles add substantial value from factors such as age, rarity, minting errors, or historical significance. A pre-1933 U.S. gold coin or graded proof piece can carry premiums of 30%, 50%, or even 200% above melt value. While this appeals to hobbyists, it creates complexity. Pricing depends on subjective grading, collector trends, and auction results instead of daily spot prices.
For investors focused on wealth preservation and retirement security rather than building a collection, bullion often delivers better results.
Lower Costs and Better Liquidity for Home Storage
When keeping metals in a home safe or private vault, liquidity and efficiency count. Bullion offers clear benefits:
- You acquire more actual gold or silver per dollar invested. Numismatics divert a large share of your money into rarity premiums and massive sales commission, reducing your metal exposure.
- Selling bullion involves tight bid-ask spreads, so you recover nearly full spot value with minimal fees. Collectibles require finding the right buyer and may sell at a discount if demand for that specific item weakens.
- Bullion prices remain transparent and update with global spot markets. You can track gold near current levels or silver accordingly and know exactly where your holdings stand. Numismatic values are priced by the Gold IRA companies with hefty margins applied.
- Standardized coins and bars store efficiently and divide easily for partial sales. Rare coins often need protective slabs and controlled conditions, adding hassle and expense.
- Bullion enjoys worldwide acceptance. A 1-oz Gold Maple Leaf or Silver Eagle sells quickly to dealers anywhere. Niche numismatic pieces may appeal only to limited buyers, slowing liquidation when speed matters.
In times when quick access to value becomes important, bullion’s simplicity stands out.
Stronger Fit for Precious Metals IRAs
Precious metals IRAs continue gaining traction as investors diversify retirement portfolios beyond stocks and bonds. IRS rules permit certain bullion products in self-directed IRAs if they meet purity standards (.995 fine for gold, .999 for silver) and are held by an approved custodian. Eligible items include American Gold and Silver Eagles plus many generic bars and rounds from recognized mints.
Numismatic and most collectible coins generally face heavy scrutiny from custodians due to valuation disputes and elevated markups. These higher premiums mean less actual metal ends up working inside the account.
Bullion avoids these issues. Its value links directly to verifiable spot prices, which simplifies reporting and lowers the risk of regulatory challenges. More of your IRA contribution purchases real metal instead of dealer profits or speculative upside. Over time, owning additional ounces that appreciate with the metal itself can create meaningful outperformance compared with high-premium alternatives that deliver fewer ounces.
Regulatory guidance from the CFTC and state securities offices repeatedly cautions against aggressive sales of expensive numismatics or “semi-numismatic” coins for IRAs. For retirement planning, transparent bullion from established providers reduces risk and aligns better with long-term goals.
How to Get Started with Bullion
Begin by clarifying your goals. Are you protecting savings in a safe, or moving part of a retirement account into a precious metals IRA? Focus on the number of ounces you can acquire at current prices rather than chasing marked-up collectibles.
Diversify sensibly: use gold for core preservation and silver for its blend of industrial and monetary qualities. Mix coins for easier divisibility with bars for lower per-ounce costs on larger buys. Arrange secure storage—whether at home with proper insurance or through professional facilities.
As economic uncertainties linger and faith in conventional assets erodes, bullion continues proving its worth as a dependable store of value. Its direct approach avoids the hype that sometimes surrounds collectible markets and keeps the focus on the metal itself.
For investors prepared to strengthen their portfolios, Advisor Bullion supplies the expertise and selection needed to acquire high-quality bullion efficiently. Whether building personal holdings or integrating metals into an IRA, their emphasis on transparent, investment-grade products helps secure more ounces today that support greater financial security tomorrow. In a complicated financial landscape, bullion’s clarity and reliability make it the smarter foundation for protecting what matters most.