The U.S. Treasury Department’s plans to double its long-term bond buybacks have brought Treasury Secretary Scott Bessent’s de-dollarization warnings back into the spotlight.
In an interview on the Money Maze Podcast from October 2023, Bessent cautioned about Beijing’s gold purchases, while adding that India and China have pathways to pay for oil in rupees and renminbi, which he argued reduces the dollar’s role in those flows.
He also said the idea of a "global South" looking for alternatives to the dollar has become a real consideration, adding that it would be notable if even the French Republic sought distance from dollar dependence. The thrust of his argument was that sanction power and financial plumbing are increasingly linked in ways that can change incentives for countries and companies.
"You have this new term, the Global South, that wants out of the dollar system. It will be very interesting if the French Republic also wants out of the dollar system," Bessent said at the time.
Why Gold Is Regaining Its Lost Luster, According To Bessent
Bessent framed gold as distinct from government-issued money, calling it "not a fiat currency" and stressing its scarcity and long-standing role as a store of value. He said gold’s physical nature matters because it can be held domestically in vaults and transferred when needed.
Bessent said Russia, in his view, mismanaged its reserve shift by moving away from dollars into euros, underestimating Europe’s willingness to align with the U.S. on restrictions. He argued that if reserves had been moved fully into gold instead, the metal’s price could have been higher and the reserves would have been located in Moscow.
He also noted uncertainty around whether China is preparing for a more confrontational posture over Taiwan, while pointing out that the People’s Bank of China has become the biggest buyer of gold. He floated the possibility of a renminbi that could be exchanged into gold, potentially at a premium.
The Shift Towards Alternative Currency Settlements
In Bessent’s telling, the ability to settle key commodities like oil in non-dollar currencies is one of the clearest signals that the global payments landscape is changing. He framed those developments as incremental but important steps that can compound over time.
He added that gold can behave as either a defensive or pro-cyclical asset depending on the environment, while he characterized Bitcoin (CRYPTO: BTC) differently, saying it is "a risk on asset." The contrast was used to separate gold’s reserve-like role from crypto’s more speculative positioning in portfolios.
Why It Matters: The U.S. Treasury’s decision to double its bond buybacks to $4 billion, aims to support the bond market amid rising long-term yields. However, Charlie Bilello, Chief Market Strategist at Creative Planning, criticized the move, arguing it does not reduce the nation’s overall debt.
In a related context, gold prices have been rising, with speculation that the U.S. government, under President Donald Trump, may be quietly purchasing gold. This aligns with Bessent’s emphasis on gold as a stable store of value.
Additionally, Bitcoin’s recent 20% surge has been linked to the Treasury’s support for long-dated bonds, reviving the debasement trade narrative. Analysts see this as a potential shift in macroeconomic policy, further highlighting the evolving financial landscape.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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