Johnson Challenges Gold-Dollar Dichotomy

Financial expert Brent Johnson has challenged the conventional wisdom that gold and the US dollar are mortal enemies. According to Johnson, founder of Santiago Capital, investors should stop focusing on how the monetary system 'should' work and instead study how it actually does.

In his framework, a strong dollar can be more destabilizing than a weak one, as it makes servicing debt in other currencies more expensive, leading to credit crunches and defaults. Johnson points out that countries owe each other at least $80 trillion in dollars, which cannot be printed.

Gold's recent strength challenges the assumption that bullion requires currency failure to rally. Since the global financial crisis, the dollar index has strengthened while gold has multiplied in price. Central banks accumulate gold precisely so they can sell it in a crisis to obtain dollars.