The Canary in the Gold Mine: What the Price of Gold Reveals about the International Monetary System and the Role of the US Dollar

Gold, the basis of money for millennia, is making a comeback: official and private investors alike are buying as trust amongst countries suffers from geopolitical rivalries, trade and investment frictions and the increased use of sanctions by the US and its allies. Trump Administration policies are ringing alarm bells about US willingness to underwrite global security and support free trade and capital flows. The surging price of gold signals doubts about the central role of the US dollar in the international monetary system; the absence of another currency with sufficient size and credibility to take on its mantle; the start of a transition from a hegemonic, unipolar international monetary system to a multi-polar one; but probably not a return to a gold-based system. This transition will likely occur only slowly and in stages, most likely beginning with cross border payments, heavily influenced by technological progress.