FameEX Hot Topics | Economist Jim Rickards Analyzes US Dollar Decline and $27,000 Gold Potential

Economist Jim Rickards recently discussed the declining U.S. dollar, driven by sanctions and mounting debt, and the potential rise in gold's value as nations seek alternatives like the BRICS currency. He warns that internal mismanagement is the greatest threat to the dollar’s stability, cautioning the U.S. government: “You’re taking confidence for granted. You’re assuming that people always have confidence in the dollar.”

Jim Rickards, a renowned economist and author of best-selling books like “Currency Wars” and “The Death of Money,” shared his insights on the future of the U.S. dollar and the global financial landscape in an interview with ITM Trading. Speaking with Daniela Cambone, Rickards provided a comprehensive analysis of the economic challenges facing the U.S. and the implications for investors worldwide.

Rickards emphasized the significant threat posed by the overuse of sanctions by the U.S. Treasury and the Federal Reserve. He argued that this strategy drives countries to seek alternatives to the U.S. dollar, such as the rumored BRICS currency. He highlighted the unsustainable trajectory of U.S. debt, with trillions in annual deficits and projections exceeding $100 trillion by 2050. This mounting debt endangers the dollar’s stability and could ultimately lead to its collapse.

The erosion of confidence in the U.S. dollar is another critical issue Rickards addressed. He pointed out that U.S. authorities are taking confidence in the dollar for granted, with the persistent use of the dollar as a weapon through sanctions causing global distrust. International reactions to actions like the seizure of Russian assets are prompting other nations to reduce their reliance on the dollar, further weakening its global standing. He added, “I’ve warned the Treasury. I’ve warned the Pentagon. I’ve been all over Washington on this, and I said: ‘Look, here’s your problem. You’re taking confidence for granted. You’re assuming that people always have confidence in the dollar.’”

Rickards warned of the emergence of alternative currencies and the potential collapse of the U.S. dollar. He stated that the BRICS nations, for example, are working on creating a new currency that could challenge the dollar’s dominance. An expanded BRICS membership would make this currency more useful for international trade, gradually displacing the dollar. Rickards stressed that the greatest threat to the dollar comes from within the U.S., as mismanagement and overuse of sanctions lead to declining global trust and reliance on the dollar.

Additionally, Rickards discussed the potential value of gold reaching $27,000 per ounce. He calculated that if the U.S. needs to restore confidence in the dollar and stabilize the economy by returning to a gold standard, the price of gold would need to reach $27,000 per ounce. He explained his calculation, which involves using the M1 money supply, the U.S. gold reserves of approximately 8,133 metric tons, and a historical backing percentage of 40%. By dividing the M1 money supply by the gold reserves and adjusting for the backing percentage, he arrived at the $27,000 figure. Rickards emphasized that this illustrates the significant role gold could play in a future financial system where confidence in fiat currencies has eroded.

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