The dollar has lost more than 6% of its value over the past two weeks against a basket of global currencies. Global traders are unsettled with the loose monetary policy in the United States. In 2020 the US created approximately 9 trillion dollars out of thin air amid the Coronavirus pandemic. Meanwhile, two key net buyers of US dollars, China and Russia are turning to alternatives to holding national wealth in US dollars.
China launches the digital yuan pilot program
China is the first country to launch a central bank digital currency or digital currency electronic payment. China has made it known over the years that US debt is toxic. China is doing deals outside of the US dollar. The US dollar is losing its grip on world reserve currency status. China is front and center with many issues directly with the US. The US dollar has dropped 6% recently without much attention.
Russian and Chinese relations have deteriorated with the US
Russia-US relations have deteriorated due to sanctions and political fallout. US-China relations have deteriorated due to trade tariffs, the virus situation, and stock listing threats. Russia needs China for its economic and technological advancements. Trade between Russia and China rose by over 3% in the first quarter of 2020. Recent deals have been struck between Russia and China’s Hikvision and Huawei for 5G and surveillance. In July 2019, Russia and China signed a deal to settle all trade in respective currencies and drop bilateral use of US dollars. It’s not a secret that Russia and China prefer to do more business in the future where the US currency is not involved. China and Russia signed a $400 billion gas supply deal in May 2014, securing the world’s top energy user a major source of cleaner fuel and opening a new market for Moscow as it risks losing European clients over the Ukraine crisis. Meanwhile, years of investigations and misinformation about President Trump and Russia have made stained diplomatic relations between Washington DC and Moscow.
Russia and China have both increased gold reserves over the years
Gold reserves in Russia averaged 900.74 tons from 2000 until 2020, reaching an all-time high of 2,299.20 tons in the first quarter of 2020. Gold reserves in China decreased to 1,948.30 tons in the first quarter of 2020 from 1,948.31 tons in the fourth quarter of 2019. Some think China has stockpiled 20,000 tons. The US claims it has 8,000 tons but our gold hoard has not been audited since the 1950s. Does the US even have all the gold it claims? It’s a known fact that China and Russia have been accumulating over the past decade. China has also drastically increased its mining capacity particularly acquiring gold mines across the continent of Africa. It’s a known fact that China and Russia have been doing deals outside of the dollar for over 6 years. Either way, the price of gold will be an important factor when the new world reserve currency gains control for the next few decades. The US can say it has the gold and China can peg the gold price much higher to make its claim. The race to back up the balance of payments for the strongest currency is on.
Russia and China have both made their desires to sell US Treasurys clear
China is the world’s second-largest economy and the largest US creditor. China owns approximately $1.07 trillion in US Treasury securities and this has been decreasing over the past few years. Russia has drastically sold off its US Treasury holdings over the past few years. If China followed the drastic selloff of US Treasurys that Russia has done, this would be much more devastating. Many experts suggested that Russia may have sold off most of its holdings in response to different sanctions imposed by the US. With the US and China in the news so much lately, possible sanctions against China may entice them to start hitting their sell button more often and more drastically. The US needs to sell Treasurys. Without raising the debt ceiling every so often, the government wouldn’t have enough funds to operate. There seems to be no end in sight for the continued issuance of US debt and the rapid pace of money printing. China, Russia, continued US debt, and continued stimulus is very bad news for the future of the dollar.
Coronavirus has exposed the awful job that bankers and politicians have done over the past few decades. Social unrest and unemployment are making the debt situation worse. The whole world is printing money at an accelerated pace. The entire global debt situation is expanding daily. There is not one strong currency that exists. The Fed has doubled its balance sheet in the past few months. Central banks have expanded their balance sheets to historical levels recently. This stimulus is the only thing holding the entire financial system up at this point. One small positive announcement or jobs figure will not fix this currency problem that is 49 years in the making. The stimulus may hold stocks up for a bit more. The hope that the economy will come roaring back is exactly that, it is just hope. You would have to be brainwashed to gamble your entire nest egg on this market casino. A nice house requires good hazard insurance. A nice car requires solid car insurance. A valuable life requires a heavy life insurance policy. Health requires a good diet and good health insurance. A nest egg that has taken years to accumulate takes good insurance to preserve it. Physical gold has a long track record of preserving wealth. Based on the money supply the price of gold today is as undervalued as it was twenty years ago. As debt increases, as the dollar loses value, as inflation creeps in, and as paper wealth accumulates under an easy monetary policy the price of gold increases. Protect yourself from this upcoming historic loss of wealth. Call Midas Gold Group today at 480-360-3000 and learn how to move certain assets sideways into physical gold that you own and hold. The inventory of gold products is extremely tight as more investors are seeing the real truth behind our global financial system. Nations have had their retirements nationalized in the past. Countries have seen their currencies crumble. For US citizens to think that can’t happen here is a very risky assumption to be making. Diversify today and call a trader at Midas Gold Group at 805-601-6000 or 480-360-3000 and get your portfolio insurance today. This false bounce in the economy and market over the past two months could be your final chance before the real carnage begins. You owe it to yourself and your family to make the right decision.
