The U.S. dollar will be dethroned as the sole global reserve currency, leaving a bifurcated monetary system with the BRICS (Brazil, Russia, India, China, and South Africa) and their allies using a reserve currency backed by gold, alongside Western countries retaining the U.S. dollar.
That is according to Frank Giustra, CEO of the Fiore Group and Founder of Lionsgate Entertainment.
Giustra, who also chairs the International Crisis Group and is Founder of the Quantum Gravity Institute, made the forecast of a global monetary reset several years ago, and observed that de-dollarization trends have accelerated since Russia’s invasion of Ukraine.
Speaking with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, Giustra suggested that sanctions imposed on Russia, including banning it from the global SWIFT system and weaponizing the U.S. dollar, had hastened Russia’s search for an alternative to the dollar to clear international transactions.
“It really has picked up steam since the Ukraine invasion, because that really was the catalyst for everybody, especially Russia and China, to start thinking about moving this faster than they would otherwise have moved it,” he claimed. “Finding ways to get around the SWIFT system, and get around using the U.S. dollar as a settlement currency… those conversations are becoming more and more common.”
The BRICS’s future use of gold as a reserve asset is implied by recent central bank gold purchases, which were the second highest on record in 2022. China, in particular, bought 6.6 tons of gold, an increase of 67 percent from 2021. Although the People’s Republic claims to hold 2,010 tons of gold, it has been notoriously secretive about precisely how much gold is stored in official vaults.
“China has bought most of the gold over the last number of years, but they haven’t declared it,” Giustra observed. “I think the 2,000 tons they’ve declared is just a part of it.”
The Threat of AI
Giustra also sees artificial intelligence and automation leading to a bifurcated global workforce, with potentially billions of workers made redundant by new technologies.
“It [AI] is terrifying in the sense that, where does that leave 8 billion people, soon-to-be 9 billion people, if in the next thirty to fifty years, AI and robotics can do everything?” He suggested. “I think it creates a bifurcation of society [into] the haves and the have nots. It’s basically something that looks like 1984.”
The novel 1984 by George Orwell is about a future in which mass surveillance and censorship combine to bring about a totalitarian dystopia, enabled by technology.
Giustra said that he is particularly worried about the future of the next generation.
“I worry about my kids,” he said. “It feels as though AI could dominate it [jobs].”
CBDCs and Digital ‘Control’
Giustra suggested that the mass joblessness that AI causes could pave the way for a universal basic income, which would be distributed via Central Bank Digital Currencies.
Over 100 countries are developing CBDCs, programmable tokens that operate like fiat money, and which are issued and controlled by central banks. Critics of CBDCs claim that governments can use them to control people’s spending, and to crack down on political dissidents.
Giustra said that a future world with AI and CBDCs is “scary as hell.”
“If governments, using AI and surveillance, implemented that around the world, and had access to your bank account, and could either punish you or reward you for your behavior through Central Bank Digital Currencies, what a scary world that would be,” he said. “In the end, the government will have more control over its population… and governments are controlled by politicians, and politicians have their own agendas.”
Giustra claimed that CBDCs are “going to happen,” and that there are no means to stop their implementation.
“The Central Bank Digital Currency, that’s a runaway train,” he asserted. “I don’t think there’s much you can do to stop it, except protect your personal wealth.”
He forecast that it would take, “at most a decade,” for CBDCs to be fully implemented.
The Importance of Gold
Giustra remains confident in gold and gold mining stocks. He stressed the importance of investing in physical gold as a hedge against financial instability, and as a long-term inflation hedge.
“Gold is one way to protect it [wealth],” he said. “Diversification [is another]… you should have assets in different parts of the world, and different asset classes.”
“I gave my kids gold coins recently, and gave them a long lecture as to why they need to own gold,” he recalled. “I hope that one coin resonates with them, that it’s important to have gold in your portfolio.”
He added, “I’m playing defense. Now is not the time to be bold.”
Source: Kitco News
