THE DEBATE RAGES ON: WILL GOLD CONTINUE TO MOVE IN ON THE DOLLAR AS AN ALTERNATIVE RESERVE CURRENCY IN THE WORLD?

For decades, the US Dollar has been king of the jungle as the world’s reserve currency, an edge that has every major commodity denominated in US Dollars -- from Crude Oil to Gold.

As a result, the United States has enjoyed attracting greater liquidity for funding our consumption and growth, with artificially lowered interest rates for the government to borrow.  It essentially forces sovereign investment, because of the pegged status to commodity resources. 

But have we gone too far?  Have we been abusing our privileges?

Many economists and countries think so, including China who, by the way, is the biggest foreign holder of our US Treasuries.  The most recent Treasury report shows that China holds nearly $850 Billion in US Debt ... that we are aware of.  The real total is believed to be higher, but is not disclosed by SAFE, China’s investment administrator.

These holdings were at over $900 Billion earlier this year, and so it appears that China is lightening up on its appetite for U.S. Debt.  They have repeatedly warned the US Administration to rein in the mounting deficit that continues to spiral out of control.  The rhetoric out of China makes perfect sense -- they're trying to protect their investment.  However, they’re compelled to continue to support Treasury purchases because of the high dependence on their exports we consume stateside; it is indeed a tricky tight rope to walk.

Gold has always been famously known as an inflation hedge because of its finite, indestructible, inherent value against fiat currencies, such as the US Dollar, which is simply a guarantee or note backed by the federal government.  Money can be created virtually at will.  However, Gold is a precious limited resource that supply cannot be so easily manipulated.