Hedge fund manager David Einhorn predicts a historic shift in global reserves as central banks move away from U.S. dollars toward gold, citing unstable U.S. trade policy and soaring deficits. His warning comes as gold recently topped $5,300 an ounce before easing, while the dollar still holds a majority share of reserves. Former Congressman Ron Paul also renewed his decades-old critique of fiat currency, calling the U.S. economy a 'fraud' since abandoning the gold standard in 1971.
Einhorn predicts shift to gold reserves
David Einhorn told CNBC he sees central banks replacing U.S. dollars with gold as the primary reserve asset, driven by unstable American trade policy and ballooning deficits. Gold prices surged past $5,300 per ounce last month before settling near $5,100, as investors sought safety amid President Trump’s tariff threats. Despite the dollar still making up a majority of foreign exchange reserves, Einhorn argues that fiscal and monetary policies are eroding global trust in U.S. assets.
Deficit fears and rate cut outlook
Einhorn likened current U.S. fiscal and monetary policies to structural vulnerabilities, with the Congressional Budget Office projecting a deficit-to-GDP ratio of 6.7% by 2036. He believes the Federal Reserve will implement more interest rate cuts than currently expected, calling it one of the best trades available. Einhorn’s stance reflects his view that gold is a hedge against policy mismanagement rather than inflation alone.
Ron Paul calls economy a 'fraud'
In a 90th-birthday interview with Tucker Carlson, Ron Paul declared the U.S. economic system fraudulent since the 1971 end of dollar convertibility to gold, calling it the nation’s 'first declaration of bankruptcy.' He warned that persistent money printing and deficits have created a fragile order headed for collapse, echoing predictions he made in 2002 about credit expansion, rising gold, and increased government control. His critique resonates with voters wary of federal spending and interventionism, though mainstream economists like Ben Bernanke and Paul Krugman have dismissed gold standard advocacy as impractical.
Clashing views on gold and fiat currency
Paul’s long-standing opposition to fiat currency and military adventurism contrasts with mainstream economic opinion. Bernanke argued in 2012 that a gold standard would limit the ability to address unemployment, while Krugman noted post-crisis inflation fears proved unfounded. Paul frames the potential collapse of the current system as both a crisis and an opportunity for advocates of sound money and limited government.
Source：https://www.msn.com/en-us/news/insight/einhorn-sees-gold-replacing-dollar-as-reserve/
