Several economists have been warning about the death of the dollar for months now; however, the media had not given significant attention to the topic until Robert Fisk published his “The demise of the dollar” article with The Independent.

The main takeaway from the article is that countries (Gulf Arabs, China, Russia, Japan and France) are working to end use of the dollar for buying / selling oil, instead using a basket of currencies for the purchase. Such a move would, essentially, end the dollar as the world’s reserve currency.

While world governments came out with strong denials of such a plan, the gold and silver markets seem to believe there is weight behind this story. Since the story broke gold has moved from $990/oz to $1050/oz; likewise, silver has jumped from $16.50/oz to $17.79/oz.

Now, it seems, the media is finally starting to pay attention.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

Dollar facing ‘power-shift’: analysts

“Three conclusions stand out very clearly. Firstly, the shift in economic power away from the G7 economies is continuing. “Secondly, there is a growing acceptance amongst those winners that one consequence of this power shift will be to strengthen their currencies.

“And finally, as long as the US economy is not strong enough for any rise in interest rates to be conceivable for a long time, the dollar’s underlying downtrend will remain in place,” added Juckes.

Think the media is slow to respond on this?  Yeah, you don’t say.  People who’ve raised concerns about the dollar are once again chiming in on the situation.

First up, former George Soros hedge fund partner, Jim Rogers:

“Is it going to happen? Yes,” Rogers says. “I don’t like saying it [and] I’m extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was].”

Rogers didn’t offer a timetable, and its likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status

Second up we have, Max Keiser, who believes gold will have a large role in the currency basket that may replace the dollar.

When there are a few people all pointing to something, but the masses are not giving any attention to the subject, it makes sense to give the topic some respect.  Even if the few are wrong, it doesn’t hurt to run scenarios on how such an event could impact you. In this case, I have the opinion that Rogers, Fisk and Keiser are closer to reality that anyone else.

Yesterday I raised the question “what’s up with the mix signals on the economy?” The economic numbers just didn’t seem to match what the Federal Reserve was saying. I simply couldn’t see how the world is ending mentality gave way to a 6 week market rally and the Fed to say things are fundamentally sound.

Jim Rogers, a one time monster hedge guru, just isn’t buying the economic and stock market recovery:

I am not buying U.S. companies mainly because I think we may have seen a bottom but I don’t think we have seen the bottom. I am skeptical about the rally, the world economy for the next year or two or three. But if stocks go down, I can make money with commodities. In the 1970s, commodities went through the roof even though stocks were a disaster. In the 1930s, commodities rallied first and went up the most long before stocks pulled it together.

Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn’t last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.

It’s laughable on its face, but politicians think they’ve got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.

For the record, I do think that mark-to-market rules need to change but they would not solve the problem.