The World Is Dropping the Dollar

Your loaf of bread is about to get more expensive… [Morning Reckoning] April 06, 2023 [WEBSITE]( | [UNSUBSCRIBE]( The World Is Dropping the Dollar - The most traded foreign currency inside Russia is the Chinese yuan. - The BRICS are frantically building an alternative to SWIFT, the USD payments system. - Peace is breaking out in the Middle East, thanks to China. [[Trade Alert] This Explosive Sector Is Primed To Deliver Huge Gains… Fast!]( [Click here to learn more]( Have a few hundred dollars and the desire to make huge gains? If so, [this explosive stock market sector]( needs your attention right away. I’m talking about biotech. And as one headline from late July reads, “investors back [biotech]… as sector booms.” Point being, there’s a lot of money up for grabs right now. Best of all, we’ve identified what could be the No. 1 biotech stock pick in the world. It could deliver substantial gains over the coming weeks to those who act fast. And you can still buy shares for less than $3. [Just click here now for the urgent details.]( [LEARN MORE]( Asti, Northern Italy April 06, 2023 [Sean Ring] SEAN RING Good Morning Reader, Happy Thursday! I’ve had a hell of a time writing the Rude this week. The idiots in DC, NYC and elsewhere in the Lower 48 have lobbed grapefruits down Broadway to yours truly. Whether it’s the Democrats inadvertently re-electing Donald Trump, Alvin Bragg proving that graduating last in law school still makes you a lawyer or Chicago electing an even worse choice than Madame Fishface, America has not disappointed this week. Elsewhere in the world, while America is distracted turning itself into a dystopian amusement park, the Chinese government is stepping up to be the next Nobel Peace Prize winner. But before I tell you about peace-loving Pooh Bear, let’s get a bit of history in. [America’s #1 Gold Expert Issues Urgent Buy Alert]( [Click here to learn more]( For the first time in a decade, gold is once again red-hot. - Global demand for gold soared 18% in 2022 to its highest level in over a decade. - Central banks bought a record 1,136 tons of gold in 2022, worth around $70 billion. - And M&A has begun to pick up in the gold mining sector at a significant pace. But you must hurry. The price of gold has just climbed past $2,000 an ounce. And America’s #1 gold expert says this is only the beginning of a much larger move. [To see just how high gold could run in the coming years – and how you can prepare today, even if you’ve never bought any gold before – click here now](. [LEARN MORE]( “It’s Not Worth a Continental!” Unfortunately, my beloved library is still in Cebu, Philippines, where I had to leave it due to the insane transportation costs that followed the government-induced private sector shutdown of 2020-2021. My in-laws are dutifully minding my library, shelves and reading chair until later this year, when Pam flies back to her native country to retrieve them for us. That’s why I can’t pinpoint the exact page where the phrase “not worth a Continental” jumped out at me. Growing up in Joisey and believing that America was always the richest country in the world, Ihad no idea what that phrase could possibly mean. From [Clifford F. Thies, of AIER]( In 1775, practically at the outset of hostilities, the Continental Congress authorized an issue of $2 million in paper money. By the end of 1776, $25 million was in circulation, already at a 30 percent discount relative to silver. By the end of 1777, $38 million was in circulation, at a 70 percent discount relative to silver. By the end of 1779, $192 million was in circulation, and $1 in paper money was worth only 1 or 2¢ in silver. The states were issuing their own paper money, contributing to the inflation. With so much paper money, prices were skyrocketing, and specie was being hoarded. At one point, George Washington, commander of the Continental Army, remarked that a wagon load of money would not buy a wagon load of provisions. Innkeepers, merchants, and farmers were refusing to do business in terms of money. In October 1779, the Continental Congress requested not money from the states, but actual supplies – such as corn, wheat, hay, and oats – in order to support the armies in the field. What was that paper money that depreciated off a cliff? They were called the Continental Dollars. And since a wagonload of them were worthless, anything that was deemed worthless was “not worth a continental.” Sound familiar? - The Mississippi Bubble - Weimar Germany - Gideon Gono’s 100 trillion Zimbabwe Dollar Note Mark Twain was right: history doesn’t repeat, but it rhymes…. Especially financial history! But how much does it rhyme? Will the latest version of the United States Dollar follow its Continental Dollar ancestor into worthless oblivion? The World Is Dropping the Dollar Like a Bad Habit All week, you’ve probably heard news like this: - [Will a new BRICS currency replace the dollar?]( - [China and Russia working on alternative to SWIFT (the USD payments system).]( - [Malaysia and India will bypass dollar.]( - [The most traded currency in Russia is now the Chinese yuan.]( - [Brazil and China will settle their trade in yuan, not dollars.]( Theoretically, there’s no reason for any of these countries to use the dollar. Except, their own currencies trade like they’re jumping on trampolines. So it’s difficult to maintain a solid rate. The USD was attractive because the US, in better days, had the strongest economy, military and institutions. But so mismanaged has been the dollar, whether by the Fed ratcheting up rates too quickly or the USG weaponizing the dollar by first sanctioning and then [confiscating Russia’s assets]( that the world is sacrificing stability for a leap in the dark. Because that’s what it is. To be fair, I have no idea what this new system would look like… and neither does anyone else. That’s why I think most of these moves have been made bilaterally. A bunch of things will be tried, and whatever works out the best will be codified into the BRICS “legal code.” But why is this such a disaster for Americans? Follow The Money This week, Saudi Arabia and Iran are meeting in Beijing to solidify a new relationship. I don’t know if Emperor Pooh Bear can pull off the miracle of making 1,500 years of hatred disappear. But he’s going to try his damnedest. Saudi Arabia has already agreed to trade its oil for China’s yuan. Let's write that again, for those who just blinked really quickly… Saudi Arabia has indeed agreed to trade oil for yuan. All sorts of questions pop up from just that one bit of news. Aren’t Saudis supposed to sell their oil for USD? Isn’t that what “petrodollar” means? If they’re not selling it for USD, is Sleepy Joe even aware of it? And perhaps most importantly… If the Saudis are taking in Chinese yuan, then where are they going to invest those yuan? That answer is obvious, isn’t it? They’ll invest those yuan back into China, just like they were doing with the USD and USA for nearly 50 years. That’s why these headlines make so much sense: [headline] Credit: [Bloomberg]( But this is just part of the problem. The second order effects are even worse. The Real Problem Let’s set the terms. Taxation is robbery. Inflation is theft. We’re dealing with the latter. The USG subsidizes the economy via inflation. The government literally steals from you by printing money. Here’s how: the Fed prints money and delivers that via the commercial banks to the USD users. That’s you… and all the foreigners who want USD. There are more dollars outside the United States than inside the United States. And normally, this doesn’t matter. Because you don’t benefit from “reserve currency” status. The government and the banks do, because they print $100 bills for $100 worth of goods from foreigners. The thing is, it only costs them 15 cents to print that $100 bill. That’s what we call seigniorage. And it’s the single greatest scam ever invented. You’re just the middleman through which the dollars flow. You get none of the $99.85 profit. And again, you don’t care. You don’t feel it. You go to the outlet stores, buy an SUV-load of “stuff” you think is marked down and off you go. But here’s where the problem comes in: when the foreigners decide they’ve had enough of the scam and then send all those dollars back. Those dollars build like a 100-foot wave and come crashing back into the domestic economy. Domestic prices skyrocket because there’s a tidal wave’s worth of dollars chasing far too few goods. Not only that, but do you really think your taxes pay for your military? Of course not. There’s simply not enough revenue to pay for all of it. That’s why the Fed needs to print, print, print. Those printed – one might say “counterfeit” – dollars spread the cost of the military around to everyone. Think of inflation as a tax that the central bank levies instead of a legislature. It’s a disaster for the lower classes because they get “taxed” out of existence. That’s why the Fed’s reaction to all this matters so much. They’ve got to make sure inflation doesn’t get out of control… but they still need some to pay for the “goodies” the government can’t tax you on. If you’re not prepared, your loaf of bread will require a wheelbarrow worth of paper to pay for it. But we’ll get you prepared in a second, because I think it may get even worse… The Peace Deal According to the Global Times, Emperor Pooh Bear invited the Saudi Arabian and Iranian delegations to Beijing today to discuss detailed arrangements to resume ties. [Liu Zhongmin]( a professor at the Middle East Studies Institute of Shanghai International Studies University, practically snorted: It is obviously difficult for the West to understand the fundamental reason why China can successfully promote the reconciliation between Saudi Arabia and Iran, because China follows a diplomatic concept and policy that is completely different from the West's Middle East strategy and policy, and is different from the West's behaviors that divide the region, incite camp confrontation, and promote so-called democratic transformation as well as harmful practices such as proxy warfare. Here's my question, and I’m just thinking aloud here. Feel free to call me crazy. Do the Chinese want to build an oil pipeline from Saudi through Iran to China? One already runs from Saudi through Kuwait to Iraq. The Chinese would just need to extend it. This would lower costs and avoid hostile navies like the US and UK. Saudi would get the yuan, Iran would get an enormous transit and insurance fee and China would get its oil. This would also bring China’s Belt and Road Initiative closer to fruition. That would obviate Alfred Thayer Mahan’s sea-based world and usher us into the age of Halford Mackinder’s land-based World Island. I’m not sure, but forgive me for thinking there’s an ulterior motive. Wrap Up My erstwhile colleague Jim Rickards has been talking about gold forever. And now it’s time to act. In fact, he predicts gold could soar as high as $15,000 thanks to an announcement coming from the Fed on May 3. It’s not too late to protect your purchasing power and get in on gold’s huge run. [Click Here for More Details.]( Silver also looks like a great bet right now. We can see the upside all the way to $50 or higher. And, if you’ve got room left, a bit of Bitcoin can also help you avoid inflation. For Bitcoin, you’re not swinging for the fences. Just a bit of protection. And remember, it’s Bitcoin. No shitcoins! You’ve got time, but the sooner you act the better. This is a lot to take in, but I want to make it clear: something big is brewing here and it doesn’t look good for the everyday American. So let me know how you feel about all this (or any other topics you want covered) by emailing me [here](mailto:feedback@dailyreckoning.com). And have a wonderful Easter weekend! All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com [Urgent: Currency Wars Alert]( “Worst case scenario is almost inevitable” -Former Pentagon Insider Jim Rickards [Click here to learn more]( In my 2011 book, I warned that the U.S. was engaged in a currency war. And that these wars: “Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. ” Now with Putin invading Ukraine…Rising tensions with China… Inflation, recession, and supply chain issues all hitting the U.S. economy at the same time. It seems as if some of my worst fears have finally come true. [That’s why I’ve recorded an urgent video message.]( To update you on exactly what you need to be doing to protect yourself. Because if history is any indicator, this will not end well. [Click here to view my urgent video message.]( [LEARN MORE]( In Case You Missed It… Greg Guenthner, Editor Did Oil Just Fool Everyone? [Greg Guenthner] GREG GUENTHNER Good Morning Reader, A handful of key assets are on the verge of major moves this week. Gold is on the cusp of a significant breakout above $2,000 as the US Dollar index drops. Any significant extension above the mythical $2K mark should attract a ton of attention from the mainstream financial media, lighting the fuse for an even bigger momentum move in the metal and the miners. Bitcoin is also working on its own potential extension above $28K. It’s marked time for more than two weeks after a breakout move off the March lows. Bitcoin is now tightly coiled and could easily top $30K once its next run is underway. The artificial intelligence bubble is also getting frothy once again. Tech stocks are back as market leaders following a brief hiatus – and the sector’s AI darlings are ripping higher out of choppy consolidation patterns that have trapped these speculative names since February. No, it’s probably not time to run around screaming about a new bull market. But we’re seeing some structural improvement in the market. The strong stocks are trending. And most breakouts are following through – instead of abruptly reversing like we experienced last year. These are all exciting developments for stock market bulls. The first quarter ended with a bang, giving market participants a break from the relentless selling that dogged the market in 2022. Despite overwhelmingly bearish sentiment, ongoing inflation and rate hike fears, and a full-blown bank crisis, this year’s strongest names continue to defy the odds. But the most important market event kicking off the second quarter isn’t happening in the tech sector. It has nothing to do with Bitcoin or crypto. It’s not even about gold’s historic march toward all-time highs. The most impactful market move right now is actually happening in the oil patch. And it could have huge implications for energy stocks as we kick off the second quarter. [Crypto Legend Reveals: “The Next Bitcoin”]( He called Bitcoin at $61. Now he says this next crypto will be even bigger. In fact, he’s targeting 25X gains over the next year alone. [>>Click here now for the details]( [LEARN MORE]( Crude’s Crazy Year If you made money trading stocks last year, chances are you booked some of those gains in the energy sector. The Energy Select Sector SPDR (XLE) posted a dominant performance during the first half of 2022 as bear market conditions took hold. While growth stocks swooned, XLE gained nearly 70% before topping out in early June when crude spiked to $120 during the early months of the Russia-Ukraine war. With nowhere else to turn for gains, XLE became one of the most crowded trades on the market. XLE endured a hard reset, dropping 25% from its June highs before bouncing and recovering into the third quarter. But crude prices couldn’t catch a bid. After topping out in the summer, light crude dropped more than 40% on a steady decline that saw it approach $70 by the end of the year. While the energy sector still managed to finish at the top of the heap in 2022, it was coming under increasing pressure in March. Crude was losing crucial support levels, falling below $70 for the first time since late 2021. And this time, it was taking energy stocks down with it. As tech snapback trades gained traction in Q1, oil patch plays were flirting with lower prices. Crude was approaching $65. XLE has dropped nearly 20% in just six weeks and was well below its 200-day moving average. By mid-March, a bigger breakdown was looking inevitable. But the cartel had something to say about that… [Over 62 And Collect Social Security? Take Action Immediately!]( [Click here to learn more]( [If you’re over the age of 62 and currently collect Social Security, you need to prepare now](. Because Biden has given our country the worst inflation in decades – and many warn things will only get worse from here. Worse yet, the Social Security check you receive now may not keep pace with inflation… [Which is why, if you don’t act now, you could fall behind in the months ahead](. Is your retirement at immediate risk? [Click here now to get the simple, step-by-step actions to survive inflation](. [LEARN MORE]( All of a Sudden, Oil Explodes In case you missed it, OPEC jolted the oil market over the weekend when it announced a surprise million-barrel cut. Saudi Arabia alone is cutting 500,000. I guess they weren’t too happy with prices steadily decreasing over the past ten months… Geopolitical implications aside, this news was the jolt oil needed to stave off a major breakdown. When the futures market opened Sunday evening, crude immediately jumped more than 6% to retake $80. Light crude is now up an incredible 25% from its March lows. More importantly, the breakdown is broken. [chart] XLE is now back above its 200-day moving average and the key $82 pivot. The stage is now set for a quick move back to $90 and a challenge of those 2022 highs. Despite its leadership role last year, XLE’s chart has been a mess for months. Last month’s breakdown looked like the real deal – and I suspect many pro and amateurs alike were leaning bearish on oil and energy stocks. That’s a recipe for a big move higher. Oil fooled everyone into thinking it was about to fall off a cliff. Now, the energy sector is poised to attack its highs. I think it’s safe to say that more than a few traders will be caught with their pants down if this move extends higher in the weeks ahead. Let me know your thoughts on this topic (or any other topics you want covered) by emailing me [here](mailto:feedback@dailyreckoning.com). Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. 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