All the currencies of the world today are derivatives of the dollar, including the Russian Ruble and the Chinese Yuan, and even the miserable currencies of Venezuela and Argentina. As long as they can be used to purchase dollars, either officially or through the black market, they will continue in circulation.
The Mexican Peso circulates and has value, because Mexicans have always been able to purchase dollars with pesos (except for a few days during the Mexdollar crisis of the early 80s). The price of the dollar in pesos has varied, but at any rate it has (almost) always been possible to obtain dollars in exchange for pesos.
If the new Islamic State ISIS should wish to have its own currency, it would have to be possible for its currency to acquire dollars, either directly or through some other currencies. (Just by the way, a 1/10 ounce silver coin would be the equivalent of the dirham, prescribed as money by Islam, and its value would not depend on the dollar or any derivative of the dollar. Maybe someone else will tell ISIS about this; I do not want to get mixed up with these people.)
Even in the case of a fiat currency to be used exclusively within national borders, with no plan for commercial purposes outside of its own zone, such a currency would have to be issued with a value that could not be other than an external reference either to the dollar, or to some currency derived from the dollar, which would amount to the same thing. A fiat currency cannot be born out of nothing; it has to have a parent and in our times, that parent must be, in the last analysis, the fiat dollar.
The same principle prevails in the case of the dollar.
The existence of fiat currencies depends on their ability to acquire dollars. In the case of the fiat dollar, the dollar will continue to exist as long as dollars can be used to acquire gold.
The condition under which no quantity of dollars can acquire a gram of gold, is known as permanent backwardation. (There will always be individuals who will be disposed to part with a small quantity of gold, in exchange for dollars or other fiat currencies. But the purchase of gold in quantity can only be done on world markets, and while backwardation is temporary. This possibility disappears when backwardation becomes permanent).
In backwardation which has presented itself momentarily, in recent times gold goes into hiding (its owners do not wish to part with it) and in the markets there has been no one willing to purchase gold for future delivery, even though its future price is lower than the price of physical gold for immediate delivery. So far, this condition has been temporary and not permanent.
When backwardation imposes itself permanently, the dollar is finished.
The process will be as follows: at some future date, gold for future delivery will cost less than gold for immediate physical delivery, that is to say, it will be in backwardation. However, the normal condition, which is called contango and which is the opposite of backwardation, will not be re-established. The price of gold for future delivery will stagnate at a low price apparently very attractive but the price of physical gold for immediate delivery (spot gold) will begin to rise. Backwardation will not disappear because the world wants physical gold, received in hand at the moment of payment, and not a promise of future delivery of gold.
When the price of physical gold for immediate delivery is superior to the price of gold for future delivery, and this condition becomes permanent, it will mean that the dollar is no longer acceptable: the price of future gold may be extremely cheap, but the market is not interested in that offer, because the market wants physical gold in hand, immediately.
The price of physical gold for immediate delivery spot gold will rise to the thousands and thousands of dollars, and the backwardation will remain permanently. Finally, the price of gold in dollars will be so high that there will be no further quote in dollars or in any derivative of dollars, of course.
The dollar will have died.
When the economic and financial crisis in the world explodes as it will have to explode the reaction of States around the world will have to be to print up enormous quantities of fiat money, because that is all they know how to do.
This will give rise to a huge run into gold from the dollar and every derivative of it.
This will bring about permanent backwardation of gold and will put an end to the world-wide empire of the fiat dollar.
It will then not be possible to obtain gold except by the delivery of things or of services in exchange. In other words, gold will once again be the money of the world.
When will this happen? It is not possible to predict a date. All we can note is that the total of world debt calculated in fiat dollars is now astronomical; since the financial debacle of 2007-2008 world debt has not been paid down, on the contrary, it has been increasing by leaps and bounds and is absolutely unpayable. So the situation today is even more critical and unstable than it was six years ago, and an economic and financial collapse is inevitable, sooner or later.