If you’ve been following the media lately, you’ve seen news headlines like:
“Is the U.S. Dollar’s Dominance Under Threat?” – Morgan Stanley
“Threats Mount to Dollar’s Role as World’s Reserve Currency” – Barron’s
“The dollar could be facing an existential threat” – Investors Chronicle
These are just a few examples of the sentiment surrounding the U.S. dollar right now.
And you might be having a hard time separating fact from fiction…
But the truth is, the U.S. dollar is under threat.
All over the world, trust in the dollar as the currency for payments and reserves is slowly eroding.
From Brazil to China, foreign nations are beginning to turn away from dollar-denominated assets.
This trend isn’t new. In fact, it’s been in motion for the past few years.
That doesn’t mean the dollar is going away as the world’s dominant currency. But it does put your money on shaky grounds.
And it means you should pay attention to the wars being waged against the dollar.
Even so, there’s a silver lining for investors who position themselves early for the uncertainty that’s coming…
Trust Is Eroding
In March of last year, the Fed began its series of quick interest rate hikes.
These hurt the value of Treasury bonds that U.S. banks held for liquidity purposes. That created massive paper losses.
But when a large number of depositors take their money out at the same time, these paper losses turn into real ones.
We saw that first with the collapses of Silicon Valley, Signature, and Silvergate Banks. Then the major European bank Credit Suisse failed shortly afterward.
First Republic Bank was the next one to go belly up. And PacWest looks like it’s on the verge of collapse.
When depositors get really worried about the safety of their money, that can cause a domino effect in the banking sector.
Yet rising interest rates didn’t just trigger volatility in the banking sector. They contributed to an eroding of trust in the dollar as a payment system globally.
Higher interest rates made borrowing U.S. dollars too expensive. That’s especially true for emerging-market countries. It makes paying back their debts even more challenging.
As a result, collectives like Brazil, Russia, India, China, and South Africa (the BRICS) and other countries are increasingly trading with each other using non-dollar currencies.
President Lula of Brazil, the world’s 10th-largest economy, announced his intent to reduce Brazil’s reliance on the dollar in foreign trade during his recent visit to China.
India developed a rupee payment system that enables trade settlements away from the dollar. Plus, Indian oil refiners are now using the United Arab Emirates’ dirham to buy Russian oil instead of using the U.S. dollar due to sanctions against Russian oil.
Argentina, on the other hand, just announced that it will start paying for Chinese imports in yuan rather than dollars.
You see, Argentina is struggling with inflation. In April of this year, it soared 108.8% year-on-year.
This is the highest level since 1991 and after rising 104.3% in March. And it’s losing dollar reserves at a fast pace.
At a mere $35 billion, Argentina’s central bank reserves dropped to their lowest level since 2016. In fact, net reserves are almost completely depleted if gold is not taken into account.
The South American country hopes that the currency deal will ease its diminishing dollar reserves. It also hopes this will lessen its dependence on the U.S. dollar.
All of these examples point to how countries are speeding up their efforts to turn away from the dollar. But there’s more to the story…
Foreign Governments Are Dumping U.S. Treasury Bonds
U.S. banks are failing… Borrowing costs are rising…
For policy leaders around the world, that’s a problem. They’re afraid of further losses. And they’re looking for a backup plan that doesn’t put them at the mercy of the U.S. dollar.
That’s why we’re seeing a collapse in foreign holdings of U.S. Treasury bonds.
In fact, foreign treasuries and governments were dumping U.S. Treasuries throughout 2022. At the same time, the Fed was raising rates aggressively.
That is not coincidence. It’s not a conspiracy theory, either. You can follow the money.
Just look at China, for example. It’s the world’s second-largest economy. And it holds billions of dollars’ worth of U.S. Treasuries, second only to Japan.
After the Fed started hiking rates last year, China cut its holding of Treasuries to its lowest levels in more than a decade. You can see that in the chart below…
China sold nearly $154 billion in U.S. Treasuries between March 2022 and January 2023 alone.
And it’s not just China. Japan, which hold the most Treasuries, sold $125 billion during that period.
How to Protect Your Money
Here’s the good news…
There are ways to diversify your portfolio, your money, and your investment outlook as this trend unfolds.
Remember, one of the main reasons for less confidence in the dollar is the instability of the U.S. banking system.
So you should avoid investing or depositing your money in banks that are at risk of failure.
To help you protect your wealth, my team and I dedicated hours of research to find out which banks could be the next to collapse.
We prepared a new special report with our findings, called The 722 Bank Bombshell: Is YOUR Bank Next to Fail? It reveals seven banks that are on the brink of failure.
This level of research is normally reserved for our paid subscribers. But this situation is too dire for me to keep this report behind a paywall.
See, in the days ahead, we could see a run on dozens of banks… and a scramble to move wealth like you wouldn’t believe.
And as I’ll explain in my Countdown to Chaos emergency briefing on Wednesday, June 21, at 8 p.m. ET, it’s all set to unfold starting at the end of July.
The crisis that’s coming could mean huge losses for every American.
If you don’t prepare today, your nest egg could be at risk. I don’t want you to be blindsided.
So please, take a moment today to upgrade to VIP. When you do, my team will send you my new special report, The 722 Bank Bombshell, right away.
Regards,
Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. As countries around the world begin to turn away from the dollar, I’ve found evidence that the Fed is set to enact the greatest monetary transformation in the history of America.
Between now and the end of July, the Fed will unleash a technology that gives the elites new powers – for the first time ever – to track every dollar you spend…
What could our government do with the ability to track every dollar? To identify:
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Who’s spending it…
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What they’re buying…
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Who they’re buying from…
It’ll be the end of the dollar as we know it.
But folks who know what’s coming between now and July 31 could have the opportunity to turn as little as $100 into $5,000 or more.
That’s why at my emergency briefing on Wednesday, June 21, at 8 p.m. ET I’m going to show you exactly what’s about to happen.
I’ll also reveal one way you could profit from the chaos – with one virtually unknown investment that has a history of gains as high as 50x.
So if you haven’t yet, be sure to upgrade to VIP today. It’s the best way to ensure you get the most out of my briefing on June 21. Click here to upgrade.