Gold prices will benefit when the US and China ‘battle’ to become the world’s leading economic powers. Geopolitical tensions between the two countries could create economic uncertainty, boosting gold’s reputation as a safe-haven asset.
The COVID-19 pandemic has only intensified the rivalry between the US and China, where each intends to weaken both the supply chain connections and other important relationships between the two countries. This effort aims to make the economies of the US and China no longer interdependent as before, especially in global trade.
Additionally, one of the topics that is causing increasing geopolitical tensions in the US is the use of the US dollar in global trade transactions. Several rival superpowers to the US accuse that the use of this currency only benefits Uncle Sam’s country unilaterally.
Although the US only contributes 20% to global trade volume, 80% of all trade transactions are conducted using the US dollar. The use of the US dollar as the world’s reserve currency increases the economic power of the US since only the US central bank, namely The Fed, has the authority to print US dollars.
Therefore, if the US can easily print more money to boost its economic growth, other countries that also need to print their money (to drive their economies) will face the risk of weakening their currency value, which will ultimately disrupt their domestic economic stability.
Some countries have already made efforts to weaken the US dollar factor towards their countries. Russia has begun using gold as its main reserve asset, while China seems to be promoting the use of the Yuan in bilateral trade with its major trading partners.
If more countries reduce their dependence on the US dollar, then gold could benefit because this precious metal has indeed become a widely accepted reserve currency. In essence, this situation is reminiscent of history, considering that gold has been known as a currency since ancient Egypt.
As the world’s political stage divides into several poles, gold prices should continue to demonstrate their strength in the future.
The ongoing geopolitical tensions between the US and China are part of a broader trend of increasing multipolarity in global politics. As other countries assert their influence and challenge traditional power structures, the dynamics of international relations are shifting. This shift is reflected in the growing use of alternative reserve currencies and the diversification of central bank reserves away from the US dollar.
In this evolving geopolitical landscape, gold is likely to play a key role as a store of value and a hedge against currency depreciation. Its historical role as a stable asset in times of economic uncertainty and political turmoil makes it an attractive investment option for central banks and investors alike. As more countries seek to reduce their reliance on the US dollar, the demand for gold is expected to remain strong.
Furthermore, the increasing adoption of digital currencies and blockchain technology could also impact the price of gold. While digital currencies offer new opportunities for financial innovation and efficiency, they also raise concerns about privacy, security, and centralization. In this context, gold’s status as a physical asset with intrinsic value could make it an attractive alternative to digital currencies for investors seeking stability and security.
In conclusion, the predictions for gold investment in 2030 are influenced by a complex interplay of geopolitical, economic, and technological factors. While the future is inherently uncertain, gold’s historical role as a safe haven asset and store of value suggests that it will continue to be a relevant and valuable investment in the years to come. Are you starting to become interested in investing in gold? Do it now to reap big profits.
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