( Substack, Fri. Jan. 10th, 2025) – Most readers will be familiar with the regular news items about strong central bank buying of gold, as well as the steady stream of articles predicting a move away from the dollar as the world reserve currency. Today Philip Pilkington takes a look at that, based on a newsletter article at Global Risk-Reward Monitor.

Soaring gold prices are a bad omen for the dollar

First he reviews what’s known from the past year: Gold prices are strongly rising, based on central bank buying and geopolitical turmoil.

Gold started 2024 at $2046 per ounce. On 1 January this year, it was priced at $2622 — an increase of just over 28%. For context, in that same period the S&P500 index only saw total returns of around 25%. …

Higher gold in 2025 is nothing short of a consensus trade. …, with commodities analysts citing lower interest rates, momentum, central bank-buying, and geopolitical turmoil. But, since the start of 2023, only the last two of these reasons have really driven the gold price. The developments are linked: central banks are buying because the geopolitical climate is forcing them to diversify out of dollars, and gold has become a favourite means to do so.

Leading the pack, as usual, are the Chinese. In fact, the Chinese have been systematically accumulating gold since the mid 1980s. Moreover, China is now the largest producer and has recently discovered what’s reported to be the largest gold deposit in the world.

Pilkington then turns to the question, what would it take for gold to displace the dollar? Is that even possible? The answer he finds is that it is possible, but only if the price of gold hits about $10K. That would ordinarily seem like a long, long way to go, even at present rates of price increases. However …

Asia Times’s newsletter Global Risk-Reward Monitor, which is widely followed in financial circles, is tippinggold to reach $10,000 an ounce by the end of the decade.

The end of the decade is basically 5 years away. What could trigger such a sharp upward move?

What will trigger this move to trade settlement in gold? The newsletter highlights one possibility: the collapse of a bubble in American tech stocks. In the past, America financed its trade deficit mainly by selling Government bonds to its trading partners. While these bonds are still a key component of international borrowing by the United States, around 2018-19 they stopped being the most important source of external borrowing.

For the past seven or eight years, the US has been financing its trade deficit by selling tech stocks to the rest of the world in return for goods and services. If the price of these stocks crashed, the foreign investments would be severely damaged. At that point, investors might start to shy away from the dollar, while any countries already looking for alternatives would be motivated to hurry up.

We have seen something like this before. At the height of the Nineties tech stock bubble, the US financed its trade deficit using international tech stock sales. In the early-2000s, when the bubble burst, international investors could complain all they wanted but there truly was no alternative to the dollar. That is not the world we live in today.Should gold rise to $10,000 an ounce by 2030, those who have argued that the best way to judge the price of the dollar is by the dollar price of gold will finally be vindicated.

So there youu are—something to think about for the next 5 years.

Back on December 11, I cited reports based on government sources that China had basically hacked our entire telecommunications network. Note the timing for the story—shortly before the elections:

Old News, New News

Sometime before the November 5 Presidential election, the US intelligence community discovered (or learned?) that the Chinese had hacked the “backdoor” and have had full access to all US Government-issued cell phones that use a classified app for text and voice communications. A knowledgeable source told me that the compromise started in 2022 and was only recently discovered.

That quote is from a Larry Johnson blog post, but the story was being spread by the FBI and a variety of MSM outlets.

Today MoA casts doubt on this story:

Indictment Debunks China Hacking Claim

MoA first points out that the evidence—the release onto the internet of metadata for communications by Trump and other national political figures—is rather skimpy:

It is totally conceivable that someone got illegitimate access to call record databases. That person could publish selected real records or fake some to make it look as if some person communicated with some other without that having been the case.

To conclude though that some specific actor, for example China, has done such requires some evidence. None of the October reports contained any. The claims of Chinese involvement were solely based on U.S. government sources.

Media repeated those claims without any qualifications.

What has changed since then? The indictment of a 20 year old soldier for hacking into telecom databases, and the account from the NYPost makes it sound suspiciously like the soldier was indicted for the same hack that was being blamed on the Chinese:

Only ten week later the old reports are falling apart. Now a U.S. soldier is accused of hacking into the call data record databases and of publishing parts of them, presumably on his own behest.

The New York Post provides:

US Army soldier allegedly linked to hacked Trump, Harris phone records charged by feds

A Texas-based US Army soldier has been arrested and charged with selling confidential phone records, including material allegedly stolen from President-elect Donald Trump and Vice President Kamala Harris.

Cameron John Wagenius, 20, was indicted by a Seattle grand jury earlier this month on two felony counts of unlawfully transferring confidential phone records information on an online forum and on an online communications platform.
…
An online handle associated with Wagenius has allegedly been linked to several high-profile cyber crimes, which are not detailed in the indictment.

Wagenius reportedly went by the alias “Kiberphant0m” online, which boasted about hacking more than a dozen telecommunications firms and obtaining call records belonging to Harris and Trump.

In November, Kiberphant0m posted unverified AT&T call logs supposedly belonging to the two 2024 presidential candidates and offered to sell the stolen information, according to The Verge.

There is no fact that would associate Wagenius with China or vice versa. The October claims of a Chinese hack just vanished.

There’s a lesson there, I think.