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Egypt does not appear to like the idea that its currency should be pegged to the U.S. Dollar. The new central bank governor and his team are already working on a new set of currencies and gold that would form a new currency indicator. In order to change the notion that Egypt is pegged to the dollar, it will create a new index that uses these currencies and gold to make an index for the Egyptian Pound.

Egypt and America are not major trading partners. It makes little sense, therefore, for the Egyptian currency to be pegged to the dollar. Even in the absence of a true peg, the idea that the pound is somehow pegged to the dollar seems irritating to Egyptians. They want their currency tlo be seen against every currency, not just the king dollar.

The commentary out of Egypt may be the latest salvo in the war against the dollar. For some time now, nations across the globe have expressed the desire to move away from the dollar as the global reserve currency of choice. Some countries, such as Russia, have already established means of transacting commodities, such as crude oil, not in dollars but in other currencies. Although the dollar is still considered to be the global reserve currency of choice, its days are likely numbered.

The dollar has not shown much weakness in recent months, that’s for sure. The Dollar Index now sits around the 112 level, an area it has not visited for many years. The Fed’s aggressive rate hikes and hawkish rhetoric have likely been a major catalyst for the dollar rally and could continue to act as such as long as the Fed maintains its current stance. If or when the Fed does reverse course, however, the dollar could find itself a long way from fair value with nothing to hold it up.

As a dollar denominated commodity, gold has a strong tendency to move in the opposite direction of the currency. As the dollar has risen in recent months, gold has lacked any upside and has declined. Should the dollar reverse and start declining, however, gold could find its way and return back to all-time highs or beyond. A major decline for the dollar could also drag treasury yields down along with it, also possibly boosting gold in the process.

The dollar has been the topic of much discussion in recent months, perhaps for the wrong reasons. Although the rally in the greenback has been impressive, the dollar could run into trouble. The U.S. remains in massive, massive debt with a tidal burden of over $31 trillion at this point. With rising interest rates, it may only be a matter of time before that debt becomes unserviceable. At that point, the U.S. could choose to default or to debase its currency. A currency debasement would lead to significant losses for those who are long dollars. At the same time, it could send gold skyrocketing into new all-time highs that could see the metal hit $3,000, $5,000 or even $10,000 per ounce in a very short period of time.