Eric Sepanek
SBC Founder
Eric Sepanek is the founder of Scottsdale Bullion & Coin, established in 2011. With extensive experience in the precious metals industry, he is dedicated to educating Americans on the wealth preservation power of gold and silver.
A famed financial author recognized for accurately predicting the 2008 housing market bubble has recently called gold the “real play” in de-dollarization. Nassim Nicholas Taleb, a once-staunch Bitcoin supporter, has thrown his weight behind the yellow metal amidst a global shift away from the dollar. His advice reflects a growing consensus of economists, banks, and other experts pointing to gold’s strength and the dollar’s relative weakness.
Who is Nassim Taleb?
Taleb is well-known for calling the 2007-2008 financial crisis and developing the Black Swan theory — a model highlighting the financial impact of unpredictable events. Accurate economic forecasts and astute observations have made Taleb a trusted voice in financial markets.
What did he say about gold?
In a recent X post, Taleb points out that “de-dollarization [is] in progress”, referring to the global pattern of countries reducing their reliance on the US dollar. The author highlights that “central banks (particularly BRICS) have been…putting their reserves in gold.” Although many international transactions are denominated in USD, Taleb highlights that the true underlying value lies in gold, as it’s where fiat currency ultimately converges.
Central Banks Dump the Dollar, Gobble Up Gold
In response to Taleb’s gold-praising post, the founder of Forest for the Trees Luke Gromen, provided the following graph, illustrating the decade-long shift away from the dollar to gold.
Source: Kitco
The economic analyst explains that “[De-dollarization has] quietly been underway for 10 years; got much louder post-2022 sanctioning of Russian FX reserves.” As the graph shows, 2014 saw a clear divergence between central bank holdings of US Treasuries and gold. That inverse trend spiked following a gauntlet of Western sanctions against Russia.
BRICS Lead the Charge
Taleb’s brief mention of the BRICS block is a crucial piece of the de-dollarization puzzle. Originally composed of Brazil, Russia, India, China, and South Africa, this rapidly expanding group of emerging economies is dealing the biggest blow against the greenback. The collective group is at the helm of gold demand and dollar shedding. Their collective effort in both endeavors is building considerable momentum that was absent in the past, threatening to supplant the dollar altogether.
Bitcoin Criticisms
Taleb’s praise of gold is significant because the financial author used to be an unapologetic Bitcoin supporter. His eventual disillusionment with the cryptocurrency reflects a growing trend as broad swathes of investors see Bitcoin falling short of their high expectations. People tend to focus on the promise of exceptionally quick and high returns while ignoring the flip side of equally volatile drops. Now, Taleb calls Bitcoin a “malignant tumor” of the economy due to its explosive popularity yet disastrous consequences.
Gold Still Preferred
The world economy might have severed ties with the gold standard decades ago, but gold is still the clear preference among nations. Bitcoin is only officially held by a handful of countries with El Salvador being the strongest proponent. (Unfortunately, the crypto experiment seems to have been a failure.) On the flip side, gold is held by every single nation plus recognized territories.
De-Dollarization Hits Home
As central banks abandon the dollar, American investors stand to suffer the brunt. USD underpins the majority of investments people have in their portfolios, savings accounts, and retirement plans. Taleb calls gold the “real play” during this process of de-dollarization due to its tendency to keep pace with inflation. Historically, physical gold has increased in value as the US dollar has fallen. That’s precisely what’s playing out now as the yellow metal hits all-time highs and the greenback buckles following aggressive rate cuts.
Follow Central Banks
Experts across the financial spectrum aren’t pointing to central bank behavior for nothing. They understand that these market heavyweights have an unrivaled impact on economic activity. The near-universal rush into gold and exodus from the dollar is mirrored in the yellow metal’s record-setting rally and the greenback’s weakness. Taleb joins major banks such as Goldman Sachs and Bank of America in advising investors to follow the lead of central banks.
“The bigger central banks…and nations…are buying a ton of gold. Take a page out of their book.”– Eric Sepanek, founder of Scottsdale Bullion & Coin