Trade Agreements Mean Nothing for the Dollar

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The gold and silver communities are treated to an almost endless stream of same old same old commentaries about how some Russian or Chinese trade agreement is finally going to be the final nail in the dollar coffin.

These stories, when printed, are suitable for papering bird cages with.

The amount of dollars used in actual trade is relatively insignificant. What the authors of these never-ending Yuan stories fail to realize, or to tell you, is that countries are looking for somewhere to park their money.

The only place big enough for the vast money flows to be parked in is the U.S. Dollar.

At some point the U.S. Dollar will be replaced by something else as the reserve currency, but it won't be because China or Russia sign their billionth trade agreement or because the Yuan becomes gold-backed.

These stories can be only one of two things:

1) Ill-informed;

2) Deliberately misleading in an effort to sell you something

Gold doesn't need these kinds of stories to justify buying and holding some of it.

There is real economic distress in the world. A Sovereign Debt Crisis is coming. It will be that debt crisis that will likely act as an impetus to move away from the dollar. You'll know it is getting nearer if other currencies start cracking up while the U.S. Dollar continues to rise. You'll know it is upon us when the debt crisis explodes and throws the world into a widespread economic panic - aka, a depression.

But, again, the shift from the dollar will have little to nothing to do with trade agreements and they are relatively unimportant. The endless stories covering these types of agreements is a waste of time. Once you read the first one, you have read all of them - and since trade is not the most relevant piece of the puzzle, you probably didn't need to read the first of these stories, much less the rest of them.