According to Brent Johnson, Founder and CEO of Santiago Capital, gold will rise with the dollar as the ‘severe’ global debt crisis unfolds. Johnson predicts that the rumored de-dollarization will take at least a decade.
The dollar will gain strength compared to other currencies along with gold
The dollar, along with gold, will strengthen relative to other currencies as a “severe” global debt crisis unfolds. This is according to Brent Johnson, Founder and CEO of Santiago Capital. Johnson, who created the Dollar Milkshake Theory, says there is “no alternative to the dollar” when it comes to international trade and debt deals. In this context, Johnson makes the following assessment:
I think in this scenario (a global sovereign debt crisis), despite all protests to the contrary, the dollar would be seen as the cleanest dirty shirt. Investors and organizations around the world will seek the dollar as a safe haven in this environment.
A global sovereign debt crisis is highly likely!
Brent Johnson says a global sovereign debt crisis is highly likely, following a “world debt increase” and a credit crunch. He argues that the combination of low global economic growth, high interest rates, significant debt burdens and high inflation will trigger the crisis. Johnson explains his views as follows:
Once a credit crunch occurs, it can feed on itself. Also, you can get into a situation like we had in 2008.
There’s still time for the dollar’s reign to end!
The dollar’s share of global reserves was 73 percent in 2001, according to the Royal Bank of Canada. However, now that rate has dropped to 58 percent. The trend towards de-dollarization is further heightened by the BRICS alliance (Brazil, Russia, India, China and South Africa), which will meet in South Africa this August to announce plans for a reserve asset to rival the dollar.
cryptocoin.comAs you follow, Russia started to invade Ukraine in 2022. The West responded harshly to this attempt. Accordingly, it banned Russia from the SWIFT international payment system. Responses, including this sanction, caused worldwide trepidation. Many feared that the “dollar arming” after these sanctions. Johnson also acknowledges that there is a trend towards disarmament of the dollar. However, Johnson estimates it will take “at least” ten years for this to fully materialize. In this context, Johnson says:
I do not believe that the dollar will be inflated and the dollar index will fall against foreign fiat currencies, we will go into hyperinflation and other currencies will remain strong.
Foreign political leaders are trying to get rid of the dollar and negotiate bilateral trade deals. However, Johnson adds that there will be a ‘pushback’ against it from business leaders. Based on this, he makes the following statement:
Most [işadamı] He wants to be paid in dollars. The purchasing power of the dollar is better than the purchasing power of the Brazilian real, Kenyan shilling or Turkish lira.
“As this chaos unfolds, gold will rise much higher.”
According to Brent Johnson, gold will rise as the dollar rises against other currencies. In other words, Johnson does not see an inverse correlation between the dollar and gold in this process. He explains the reason for this as follows:
I think the dollar will become so strong that it will destroy the current global monetary system. As the dollar rises and the system comes under threat, as all this chaos happens and a new monetary system is proposed, gold will trade at $5,000 or $8,000… The more this chaos unfolds, the higher the gold will go.
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