“The attack on the Petrodollar is underway.”
– John Karow, Precious Metals Advisor
As domestic market conditions suffer, the US economy is taking a massive hit from abroad as China inches closer to dethroning the Petrodollar.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek & Precious Metals Advisors John Karow explain China’s full-fledged attack on the US dollar and what it means for investors.
Brief History of the Petrodollar
A general understanding of the Petrodollar’s history is crucial for recognizing the global ramifications of this monumental shift. After President Nixon took the US off the gold standard in 1971, the hegemony of the US dollar was maintained by convincing OPEC nations to deal oil exclusively in USD. In exchange, the US offered military support and funding.
This agreement ensured every country would have to convert to US currency when purchasing oil, establishing the reign of the Petrodollar. This gave the greenback status as a reserve currency for decades and allowed it to remain a dominant force as the global economy transitioned into fiat currency.
The Petrodollar Beckons
For over a decade, China has been scheming to topple the USD as the leading currency by establishing the Petroyuan. If you’ve been with SBC Gold for a while, you know we’ve been warning of the rise of the Petroyuan for years. Earlier this week, China cemented its attack on USD influence by completing its first liquid natural gas trade in Yuan from the United Arab Emirates.
The Petroyuan poses an existential threat on the economic front, but China has been waging an effective geopolitical battle against the US too. As the US takes a back seat to global relations, China is stepping in to fill the void. Just a few weeks ago, Xi brokered a peace deal between long-time foes Saudi Arabia and Iran to further its influence in the oil-rich region.
While the Biden admin sits on its hands, China is positioning itself as a diplomatic powerhouse on the global stage. The US government is lacking initiative, imagination, and engagement which only plays into Xi’s plan to destroy American dominance. This is a foundational shift in the world order that could have devastating consequences for the United States.
Beginning of the End for USD?
Foreign leaders aren’t overtly stating their goal is to decouple from the US dollar completely, but their actions couldn’t be more explicit. China, Russia, and other adversarial countries have been eagerly searching for ways to circumvent the greenback’s position of dominance for years. Unfortunately, they’ve been fairly successful thus far.
Whether it’s their central banks stockpiling gold in record amounts or their leadership spearheading monumental trade agreements, our enemies are proving that it’s possible to thrive without the dollar. It’s only a matter of time before other countries around the globe realize the weakening dominance of the dollar and make moves to free themselves from US influence too.
United States Faces Financial Ruin
While China ramps up its attack on the US dollar, Americans are being squeezed underneath a $32 trillion debt. Even the interest is costing around $1 trillion annually. The only way to dig out of this financial pit is through inflating the currency which has its own set of ramifications.
Financial mismanagement at the federal level brought us to this point, and China is simply plunging the self-inflicted dagger just a little deeper. All fiat-backed assets are directly impacted as our currency teeters on the edge of a precipitous drop.
If you’re interested in learning more about the threat of the Petroyuan and how investors are impacted, request your FREE COPY of our in-depth and up-to-date Petrodollar report.