This is part 2 of our “Global Dollar Dump” article series.
In part we noted how China has already begun moving away from the US as a major trading partner. This move has set in motion a series of events that will result in the US Dollar losing its status as reserve currency of the world.
Indeed, we are now seeing various other nations preparing for the end of the US Dollar as reserve currency. Consider that Saudi Arabia becoming so fed up with the US that it is sending trade representatives to China and Russia to strengthen trade ties.
Saudi Arabia is the single largest oil producing country in the world. Saudi Arabia IS oil in some regard. Whatever currency Saudi Arabia chooses to denominate its oil exports in will be the world’s reserve currency.
So Saudi Arabia’s decision to send trade representatives to China and Russia should be seen as Saudia Arabia seeing the writing on the wall, (death of the US Dollar) and starting the process of moving away from the greenback.
Saudi Arabia is not the only one. Singapore announced today that it will begin trading Yuan. The significance of this is enormous. Singapore is one of the four largest financial hubs in the world (the others are New York, London, and Tokyo). It’s also the second largest private banking center behind Switzerland. With its English-speaking population, first-world accounting standards, and close proximity to China, Singapore is literally a “gateway to the east” through which world capital flows into Asia.
In simple terms, the world is beginning to shift away from the US Dollar as a reserve currency. This is not idle conjecture. This is fact. The writing is clearly on the wall for those who can read between the lines of the media’s US-centric focus.
Indeed, officials from China, India, Brazil, Russia, and South Africa (the latest addition to the BRIC acronym, now to be called BRICS) recently met in southern China to discuss expanding the use of their own currencies in foreign trade (yet another move away from the US Dollar).
To recap:
- China and Russia have removed the US Dollar from their trade
- China is rushing its trade agreement with Brazil
- China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)
- Saudi Arabia is moving to formalize trade with China and Russia
- Singapore is moving to trade yuan
The trend here is obvious. The US Dollar’s reign as the world’s reserve currency is ending. The process will take time to unfold. But the Dollar will be finished as reserve currency within the next five years.
The process will not be linear in fashion: the Greenback will not simply collapse in one go. Moreover, it will not be obvious at first. Remember, the US Dollar is currently priced against a basket of currencies primarily comprised of garbage paper currencies backed by insolvent nations or broken unions (the Japanese Yen and the Euro).
However, ultimately the US Dollar will be losing some 50% of its value in the future. The US Dollar chart is already forecasting this.
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Good Investing!
Graham Summers
