If you look at the DXY the US dollar has increased relative to a basket of other fiat currencies from 80 to 100 since 2011. So if you think inflation is tough in the US, think about all these other currencies where their money has decreased relative to the US dollar by about 25%. So that 18% inflation you have heard about is much less than the rest of the West.
Now consider this, who buys US treasuries, our allies or our enemies? Obviously it is our allies, if they have just lost 25% purchasing power relative to the US dollar can they continue to buy up our ever increasing debt?
Also, consider this, we used to sell 10yr treasuries, but now we are selling 1yr, 2yr, and even shorter duration. As a result we aren't refinancing 10% of our 34.5 trillion debt each year, it is now close to 33%. So in 2011 the US had a national debt of $14 trillion and they had to finance about 10% of that each year, or $1.4 trillion. Now in 2024 we have to finance about $10.5 trillion in addition to the $2 trillion in deficit spending. Who is buying it? They have lost 25% of their buying power relative to the US dollar in the same time frame.
If you look at Brazil prices have gone up 100% relative to the US dollar since 2011. However, the dollar has gone up 3x relative to Brazil's currency. So for the vast majority of Brazilians they are much poorer today than in 2011, but for those few rich people keeping their wealth in US dollars their net purchasing power has increased. In most countries the dollar has increased in value relative to their currency at a greater rate than inflation.
So for countries like Brazil it makes sense to store your wealth in treasuries because it is increasing in value relative to your local currency, it is increasing your purchasing power and you get 5% on top of all that. However, gold has increased by about 65% since 2011 and that is in US dollars. So that is close to a 5% annual rate of return, like treasuries, but without the risk of the US default and losing all its value.
Obviously you can't just use gold coins in most retail transactions, but if a bank were holding their wealth in gold they could exchange that for the local currency at any time that it is needed. Yes, a local currency is far more convenient, but far less reliable. Germany, Venezuela, Argentina, and many other countries have seen the collapse of their currency at some time in their history. But gold and silver have stood the test of time. Especially now that US debt is so high.
So go back to our example of Brazil, they have joined BRICS. It isn't because gold is doing better than the US dollar, for them the two are comparable. For most countries Gold is doing better, but even if gold is giving you the same return as the US dollar you don't have to worry about the US government seizing your assets like they are threatening to do to Russia. Nor do you have to worry about US printing money to pay off their debts.
