We are already living in a new monetary order whose characteristics have yet to be clarified. Jim Rickards’s 2011 best-selling book, Currency Wars, was prescient in its conclusions. He painted a bleak picture of the modern monetary system and the enormous risks posed by the financialization of the economy, warning bluntly that “a new crisis of confidence in the dollar is on the way.” Although the dollar has been strong against most other fiat currencies for years, it has weakened dramatically against gold. Most people think of gold as a derivative of the dollar. Inverting the relationship is another way to assess the value of gold. As it appears, the dollar has lost 62% of its value against gold since 2015. 
Let’s revisit currency wars 15 years after Jim Rickards popularized the term.
Currency wars are no longer a theoretical discussion amid President Trump’s efforts to strike fairer trade deals. One of the best moments in Currency Wars comes from Rickards’ firsthand account of a simulated financial war conducted by the Pentagon in 2009.
Inside the Pentagon
In a secure war room at the Johns Hopkins Applied Physics Laboratory, experts from the military, intelligence agencies and financial sectors gathered to simulate how nations might use currencies, sovereign wealth funds and commodities as weapons in a generalized economic war.
Unlike traditional war simulations, which focus on military conflicts on the ground, this exercise focused on economic attacks.
The US team faced off against opposing teams representing Russia, China and other geopolitical foes.
The goal? To see how a global currency war might play out and whether the US could defend itself in an economic conflict.
Rickards recounts how his team introduced an unexpected parameter: Russia and China would coordinate to weaken the dollar by demanding gold payments for energy exports.
This was a radical departure from the conventional idea that states would act within the existing dollar-dominated system.
The reaction of Pentagon officials was telling – the referees who conducted the match considered the move “illegal” and removed it from the players’ options. Steve Halliwell, a participant in the game, reacted: “This is war! How can something be illegal?”.
This moment underlined a critical reality – while the US assumes that the dollar will remain at the monetary top, opponents can devise alternative systems where gold, not greenbacks, dictates the rules of the game.
The Pentagon’s final conclusion was disappointing. Even if the dollar collapsed in a future crisis, the US still had one trump card: its vast gold reserves, which are stored at military bases such as Fort Knox and West Point.
This underscores gold’s enduring role not only as a store of value, but as a strategic national security asset.
The Cyclical Return to Gold – Lessons from History
Monetary history reveals a consistent pattern: when confidence in government-issued currencies declines, gold returns to the fore.
Gold has served as an international currency since at least the sixth century B.C., during the reign of King Croesus of Lydia, in what is now Turkey.
Nations have repeatedly turned to gold when currencies failed.
During the classical gold standard (1870–1914), monetary stability and price predictability fueled global economic expansion. According to a study by the Federal Reserve Bank of St. Louis, economic performance under the gold standard was superior to the subsequent era of managed exchange rates.
In 1971, President Nixon abolished the gold standard by prohibiting the convertibility of the dollar into gold. This event marked the beginning of the era of free exchange rates, a period characterized by persistent inflation, rising debt levels, and cyclical financial crises.
Currencies as Weapons and the Shift to Gold
Modern currency wars—where nations deliberately devalue their currencies to gain trade advantages—have put the global financial system in a precarious position.
There are historical precedents, particularly in the 1930s, when competitive devaluations deepened the Great Depression. This dynamic is playing out today as countries try to defend themselves against Biden-era economic sanctions and currency manipulation.
Russia and China, for example, have aggressively increased their gold reserves.
The shift is strategic: gold is not subject to counterparty risk or restrictions on political intervention, making it an ideal monetary asset in times of uncertainty like the one we are experiencing. The US is ignoring or exporting gold, confident in the eternal supremacy of the US dollar, while China and other creditors are exchanging dollars for gold.
As President Donald Trump aims to change global trade agreements, leading to a tougher deal for the American worker as he will pay for the underlying inflationary pressures, we will see significant currency volatility.
If economic rivals respond to tariffs by devaluing their currencies (a classic currency war tactic), then investors around the world have yet another reason to hold gold as a hedge against currency volatility.
The collapse of confidence in currency
The main flaw of currencies is their dependence on trust. In the absence of tangible backing for their value, money relies entirely on the trust of governments and central banks.
History shows, however, that trust is fragile. The claim that the dollar is a store of value has collapsed due to a complete lack of trust.
The BRICS countries are exploring alternatives to the dollar, with discussions of a gold-backed trade settlement system gaining traction.
Trump clearly doesn’t like this trend, but it’s one of the costs he will have to pay in pursuing an agenda to refocus the US economy on manufacturing.
Buying more gold is a natural portfolio hedge against foreign trading partners and adversaries. As the cracks in the monetary system widen, gold offers an excellent solution.
Unlike traditional currencies, it cannot be printed at will. It is a finite resource with intrinsic value, making it the ideal foundation for a stable monetary system.
A future economic crisis could force a return to a gold standard, albeit on a much higher basis in terms of locked exchange rates.
