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So many cross-currents to this shit its impossible to figure and trade, I agree if there's more gold derivatives that imparts less dollar demand.
One paradox I'm considering though might be that if gold rips in such a scenario, the dollar might benefit still if Bessent et al are more successful than other CB's in re-collateralizing. The big moves of gold from London to the US last year suggests there may be something to this.
Fun to speculate over the details of milestones while we hang in the waiting room for Stage 4 consensus 😂
One paradox I'm considering though might be that if gold rips in such a scenario, the dollar might benefit still if Bessent et al are more successful than other CB's in re-collateralizing.
Certainly the move would be for Treasury to revalue gold certs and mark-to-market. Suppose Gold hits $10K, treasury could do accounting trick and capture all that upside by simply moving away from the $42.222/oz statutory price set in 70s.
From that perspective, high Gold price helps US balance sheet.
Also private gold indirectly helps GDP via the wealth effect, the US being the capital for capital gives the government an incentive to ramp Gold and Bitcoin since an out-sized share of both are domiciled here.
My expectation first came to me before I came over to the dollar milkshake view, but I don't think they're incompatible.
This gold-token system might reduce the extent of dollarization, compared to what it otherwise would have been, and increase the adoption of dollar alternatives even after it fails.
The dollar probably will survive this gold-token but will be weaker on the other side than it would have been if all these countries had just kept their current fiats.