Most people understand that as the reserve status of the US dollar declines foreign countries will no longer need to hold as many dollars in order to affect their international transactions. This is one of the most worrisome aspects of the dollar – that foreign central bank holdings of US treasury obligations will diminish, leaving the Fed as the buyer of last resort.
What many people are not seeing is the next move down the chessboard for these same central banks, who have been accumulating gold as a hedge against the decline of the dollar. It makes sense that as the need for dollar reserves diminishes so will the need for the hedge.
This is not to say that gold’s value as an asset or as a hedge against inflation in the US (and in any nation whose currency is pegged to the dollar) will diminish. It’s simply to say that the utilization of gold as a hedge against F/X positions will diminish along with dollar supremacy.