Hi,
Throughout the past year, we have been covering the progressive de-dollarization that has been taking place around the world. Initially sparked by the weaponization of the dollar by the United States via sanctions after Russia invaded Ukraine, countries have quickly realized that to be at the mercy of the USD, is equivalent to financial slavery. At first, information came out in a slow drip, but this past week that flow of information turned into a flood as story after story came out eluding to the USD’s ultimate demise. While that may sound like a stretch at face value, take a look at the announcements that came out this past week throughout this newsletter and how they have the potential to change the global financial system as we know it today.
First off, it is important to remember how the USD currently is allowed to hold such power within the financial system both domestic and abroad, and that being through petrodollar status. After the world was taken off the gold standard in 1971, the United States and OPEC+ nations agreed that their oil would ONLY be sold in USD, forcing the world to hold USDs if they wanted oil out of the Middle East. In many cases, countries did not have a choice as they do not have enough oil to be energy independent themselves. Prior to 2020, this was a big win for the United States because they themselves were energy independent. Meaning, not only did they not have to import oil, all other countries that did, still needed to buy USDs first in order to then buy oil that was coming from outside the United States. Due to this need for USDs, the United States was able to weaponize the dollar against other countries. However, since 2020, the Biden Administration started pursuing the Green New Deal and has added regulations forcing the United States out of energy independence, making them heavily reliant on OPEC+ energy production; turning the tables of power. It is also important to note that prior to 2020, the Strategic Petroleum Reserve in the United States was nearly full, and in just 2 short years, it has been drained down to levels not seen since the 1980s.
To add to the shift in power going from West to East, OPEC+ nations have announced that they will cut production of oil over one million barrels a day, which sent oil prices rocketing up 5%, highlighting the importance of owning the physical asset itself. This was in complete opposition to the United States that asked for a production increase multiple times to help slow down inflation by lowering gas prices domestically. The same way silver and gold are continuously heading East, the same can be said for energy as OPEC+ continues to fight back against the United States control over their production numbers.
Another note on this topic that highlights the monumental shift in the global financial system is what happened between France and China. Previously, Europe backed the United States by placing heavy sanctions on Russia and their supporters, China included. Last week, history was made due to Europe becoming desperate for energy, as France and China settled the FIRST EVER liquefied natural gas (LNG) purchase in the Chinese Yuan, setting precedent for other countries to shift away from the USD; using other currencies for trade settlement. If this were to happen on mass, USDs would rush home, bringing back the inflation that was shipped overseas with it, sparking a hyperinflation in the USD propelling silver and gold to new highs.
Brazil also hopped on the Yuan bandwagon, strengthening ties within BRICS as Brazil and China announced a trade deal between the two nations that would ditch the United States Dollar in favour of the Yuan and Real. In addition to this, ASEAN nations which is a group of countries that includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam have also announced that they are in talks to drop the USD, Euro, Yen, and Pound for financial transactions, with a handful already announcing new trade deals in the Indian Rupee. It should be stated that while one or two countries deciding to drop the USD would have negligible impact, if any, when you begin to see not only small economy countries, but countries like France, Brazil and OPEC+ nations begin to move out of the USD, it is signs of a much larger shift taking place.
We would also be remiss if we did not mention where precious metals tie into these announcements as they heavily contribute to the shift we are seeing, and may be one of the main reasons countries are shifting toward BRICS nation currencies for trade. On March 30th, 2023, State Duma Deputy Chairman Alexander Babakov said that ideas for a mutual BRICS currency would be presented at their upcoming summit in South Africa hosted in August of this year. Further to that point, he went on to say that this currency would not only be secured by gold, but by other groups of tangible assets, including rare earth elements. It should come as no surprise to find out that China announced its first gold purchase since 2019 just last year, Russia continues to stock gold, India is buying record amounts of silver, and Brazil has increased their gold reserve by nearly 100% since 2021. There is a clear shift happening with countries moving toward assets that hold real value.
Due to the financial chaos that has been upon us largely because of mass currency printing followed by record interest rate hikes, there have been 14 sovereign debt defaults scattered across nine countries since 2020. When considering that between 2000-2019 there were 19 such events across 13 countries, it is clear the pace at which debt is going bad is picking up at an unprecedented pace. Similar to countries, individuals are beginning to realize that holding currencies that can be printed at will is a sure fire way to ensure you continue to lose purchasing power dramatically over time. If you wish to secure your wealth to ensure you prosper through the global financial shift, look no further than the beautiful 2oz Silver Sabre-Tooth Coin out of the Royal Canadian Mint or the stunning 2.5g Gold PAMP Bar. Both have proven to hold value well into the future, storing your purchasing power every step of the way.
