The US dollars’ reserve currency status is challenged by the Chinese yuan and gold, said experts in the financial industry.
At the SkyBridge Alternatives Conference, Eric Sprot, an investment manager, said gold is already the world’s reserve currency.
He said people would soon take money out of banks which are too leveraged and exposed to dangerous mortgage investments. They will then put money into precious metals.
“If you have a fear of the banking system, you go to things like gold,” he said.
Meanwhile, a Bloomberg survey showed that 50 percent of financial professionals see the Chinese yuan becoming a reserve currency within a decade (19 percent think it’ll take just five years). Many economists believe China’s economy will then overtake the US economy soon after that.
After the financial crisis, the status of the US dollar as the world’s reserve currency has come under attack because of the expected decline in the US economy relative to several emerging market countries and the Federal Reserve’s policy of devaluing the dollar.