Gold and the Fall of the US Dollar

Gold and the Fall of the US Dollar

Gold and the Fall of the US Dollar

$OIL, $GLD, $SLV, $USD, $CNY

China, Russia, and Saudi Arabia are aligning in response to trade sanctions and political discord from the West.

Together, they may bring an end to the global supremacy of America and the USD, according to analyst Peter Reagan.

China, Russia, and Saudi Arabia’s latest steps to dethroning America and the dollar.

Over the last 50 years, China, Russia, and Saudi Arabia had little incentive to be allies. But over the past few years, that all started to change, they began to see the US as “the enemy.”

The Big Q: What happened to make US relations with these 3 big nations so tenuous?

The Big A’s:

  1. China, accusations of currency manipulation, threats of increased trade tariffs, and opposition to Beijing’s “One China” policy, the nation’s legal push to classify mainland China and Taiwan as a single entity brought US-China relations to an all-time low.
  2. Saudi Arabia relations cracked in Y 2014, when The Obama Admin refused to slow Iran’s growing power in the Middle East, while actually attempting to restore US-Iran relations. Saudi leaders viewed this as a clear affront to the Y 1945 meeting between President Franklin D. Roosevelt and King Abdulaziz, which established an agreement to exchange protection from the US for unencumbered Crude Oil trade between the 2 countries, while also setting a new precedent that Saudi Crude Oil trade be brokered primarily in USDs, giving rise to the Petrodollar, and
  3. Russia, the US earned its last foe by levying massive sanctions against Russia in August of this year.

As the US ‘blew up” its relationships with these 3 nations, a retaliation plan took shape, and was implemented.

The leaders in Russia, China, and Saudi Arabia have gone public with their plan to dethrone the power of  US, killing the USD.

Energy is King, so Crude Oil is the tool of choice.

The USD’s hegemony as a vehicle for Crude Oil trade (Petrodollar) is 1 of its Key support structures.

It is not a Q of if but when the world’s 2 largest Crude Oil exporters, Saudi Arabia and Russia, decide to accept payments in the RMB Yuan the USD will loose it place a the world’s reserve currency and fall against its peers.

Russia’s 3rd largest Crude Oil producer, Gazprom (OTCMKT:OZPY), is already settling the entirety of its transactions in RMB Yuan.

And China is negotiating similar agreements with other producers located in the world’s large Crude Oil exporting countries, using a new RMB Yuan-denominated Crude Oil futures contract directly convertible to Gold.

Plus, Saudi’s King Salman just visited Russia for a meeting with President Vladimir Putin where  Crude Oil and energy topics weighed heavily on the agenda:

“Following the meeting, the two countries launched a joint energy investment fund worth $1 billion. The fund could include investments in natural gas projects and petrochemical plants.

“Saudi state oil firm Saudi Aramco signed a deal with Russian Direct Investment Fund (RDIF) and gas processing and petrochemicals company Sibur on joint projects in the area of oil refining.

“The two countries also agreed to cooperate in nuclear energy, agriculture, information technology; trade, investments and social development.”

So, what we are seeing is a 3-way alliance between China, Russia, and Saudi Arabia to topple the Buck and US economic supremacy.

The Really Big Q: What then should Americans consider before this alliance escalates?

The Really Big A: As these 3 powerful countries move forward toward their goal, there are 2 Key threats to American’s savings:

  1. Reduced Spending Power: What is happening today could result in 1 of the most dramatic devaluations the USD ever, and the RMB Yuan will increase in value. Since a vast majority of the goods we buy on a daily basis are imported, Dollars stand to lose real-world spending power as this comes to pass.
  2. Market Decline. As the US gets boxed out of international trade by China, Russia, and Saudi Arabia, it will put a significant strain on its national economy. And there’s a good chance that strain will lead to a recession, or a depression. Means people and institutions with investments in the stock market may suffer the pain of big losses.

All of us who recognize this know and understand that there is one asset class that can hedge against both of the above risks, they are precious metals.

Gold and Silver appreciate in value whenever the USD falls. And their value grows significantly during  stock market correction, crashes, and recessions.

Precious metals offer investors the most protection against many adverse events if you own them befor the pain take place, because the reactive buyers will be buying precious metals fast, which drive up prices.

HeffX-LTN Analysis for OIL: Overall Short Intermediate Long
Bullish (0.26) Neutral (0.08) Bullish (0.40) Bullish (0.31)
HeffX-LTN Analysis for GLD: Overall Short Intermediate Long
Neutral (0.17) Neutral (0.07) Neutral (0.04) Bullish (0.39)
HeffX-LTN Analysis for SLV: Overall Short Intermediate Long
Neutral (0.11) Neutral (0.17) Neutral (0.08) Neutral (0.08)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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