Margaret Legum

“At the opening of the IMF meeting on April 21, Russia’s Finance Minister said his country ‘could not consider the dollar a reliable reserve currency because of its instability’. The same day the Swedish Riksbank halved its dollar holdings to buy euro.”

“Gold is now at a 20-year high against the dollar, and the dollar at a one-year low against the euro. The Financial Times of May 16th, under the headline: “Fears for Dollar as Central Banks Sell US assets” reported that ‘central banks sold a net $14.4 billion during the month, the largest sale since August 1998.”

“What is the evidence for the possible imminence of this scenario? Associated Press on May 5 quoted top Wall Street analyst Bill O’Grady of A.G. Commodities: ‘If one day the world’s largest oil producers allowed, or worse demanded, euros for their barrels, it would be the financial equivalent of a nuclear strike.”

“What are we to make of the growing chorus of fears about the possible collapse of the dollar? Is it a case of crying wolf again? Those fears link four elements: Iran’s stated intention soon to open its own electronic International Oil Bourse; its resolve to sell oil there in euros, not dollars; the expectation that the price of oil will rise to over $100 a barrel, triggering world recession; and the demand for gold, rather than dollars, as a store of value.”