The Gold Report: One of the themes of the Sprott-Stansberry Vancouver Natural Resource Symposium at the end of July is “the global currency war.” From your perspectives, who are the major stakeholders in this war and what can investors do to protect themselves?
Porter Stansberry: The three major stakeholders in the currency war are the United States, China and Europe. The volatility in those currencies over the last 18 months has been historic. It has resulted in even greater volatility in more minor currencies, including the huge moves that have occurred in the Swiss franc. I expect to see China and the yuan join the International Monetary Fund (IMF) currency basket, which will lead to a very significant and large move of reserve currencies into the Chinese yuan. That will definitely have the impact of weakening the euro and the dollar.
TGR: Do you expect the yuan to replace the U.S. dollar as the world’s reserve currency or will there be a dual reserve currency?
PS: I do not believe that the U.S. dollar will be replaced in the short term. What is significant is that the amount of dollars held as a reserve around the world has been reduced and continues to decline dramatically. Twenty years ago, U.S. dollars made up more than 80% of all reserve currencies around the world. Today, that number is closer to 60%. I think after the inclusion of the yuan, we’re going to see the dollar drop below 50%. This means at the margin it will become harder for the United States to borrow abroad and it will become more difficult for the U.S. to finance its debts.
is July 28–31