June 26, 2018
Donald Trump’s hardball stance against China, Iran and Russia underscore the American President will not tolerate unfair trading practices or threats against US security.
On paper, Trump can justify his foreign policies. An eight-year bull run has restrengthened the US economy whilst tax reforms has awarded corporate America and the mega-rich financial windfalls. Trump is doing a great job for Americas wealthy.
However, for the average American, the President’s foreign policies threaten to increase the cost of living. The appetite for US equities from overseas is waning, trade wars are threatening inflation and a thaw in relations with allies could dump US markets in the doldrums.
Economic experts are warning US investors to seek insurance measures in assets that protect your future earnings. With securities in a bubble that is about to burst, now is the time to buy gold.
US equities may be performing well today, but if China follows Russias lead and dumps US Treasuries, it will destroy the US dollar and the quite markets in one foul swoop.
As things stand, owning gold and silver are the obvious solutions. With gold prices falling to around $1270 in recent weeks, it is highly unlikely the yellow metal will be this cheap again. Once the next financial crisis hits, the price of gold will sky-rocket.
China Can Destroy The Dollar
While Trump should be applauded for challenging China over unfair trading, the theft of intellectual property and forced technology transfers for US companies based in China, the President has also posed Washington with a dilemma.
Chief economic adviser for the Whitehouse, Larry Ludlow has admitted that trade tariffs imposed in China could undermine the stability of the US economy and threaten jobs across all 50 States.
In an interview with Fox News Sunday, Ludlow did not disguise the fact that taxes on imports of steel, aluminum and a growing list of goods and services stemming from China could jeopardize the progress of the US labor market.
A trade deficit in the United States would mean Americas middle-class would miss out on the consumption of less expensive goods manufactured in China. However, the bigger loss is for China that would lose a market of an estimated $478.8bn.
For a country that is intent on flexing its economic power, China has plenty of options to recuperate their deficit elsewhere – and in doing so will destroy the US dollar as the world’s default currency. The warning signs are already in place.
Russia Building Gold Reserves
In April, Russia sold $47.4bn of US Treasuries as response to sanctions imposed by Washington. It is thought the Russians offloaded US debt to support the Ruble. It also
emerged recently that the country’s central bank is hoarding international bullion shares which has sparked fears that Russia’s allies could also dump dollar-backed securities.
American consumers should be worried that both China and Russia are stockpiling gold amidst signs there could be a devastating shift in global currency. US sanctions on Russia is largely political, and if the US were to ease the pressure on Putin at this point, China and Iran could pursue their policies to expand in Europe. However, the US Treasury Department is concerned that a Russian retaliation could put a strain on the US economy.
News from Moscow revealed the Kremlin has concerns that US sanctions will put a strain on Russia’s banking sector and destabilize financial markets. The ripple effect would also be felt across Europe which would not please Trump’s allies – relationships that are already showing signs of thawing.
EU leaders are dissatisfied with Trump’s decision to pull out of the Iran deal. Questions are being asked about the President’s foreign policy and Trump has been warned that abandoning the Iran nuclear deal could be potentially disastrous for the global economy.
Russian officials have stated that Europe can renegotiate a deal without Washington. If EU-leaders decide to leave the Trump administration to their own prerogative, it will sideline the influence of the United States in the Middle-East. Subsequently, rising gas prices will be felt most heavily in the pockets of American consumers.
Chinas Oil Deal With Saudi Arabia
There’s even worse news for Washington. China is reportedly renegotiating a fresh deal with Saudi Arabia to supply their oil and make payments in yuan rather than dollars. A revised deal with the Saudis will mean they are one of China’s top three suppliers of oil along with Russia and Angola. China also gets its oil from Iran and Iraq.
The Saudis have yet to agree to China demands to pay in yuan, but the Chinese are forcing their hand. In May, Sinopec cut its Saudi imports by 40 per cent. Due to Chinas
influence in Asia, the Saudis could be in danger of losing the Asian market altogether.
If the Saudis decide to kowtow to the Chinese accept payment in yuan, they will have to move away from US dollars which will effectively kill the greenback as a world currency. US markets will collapse overnight and millions will lose their jobs – and their pensions!
A collapse of the dollar will also add to Americas worsening debt crisis. The country, and the senate, already know the $21 trillion debt ceiling is not sustainable and the FED worsened the crisis with the unstoppable quantitive easing policy in a vein attempt to stoke the economy.
The bull market may be enjoying an eight-year roll, but the impending economic problems are not going away. Once the dollar falls, a domino effect will take place and Trump’s prediction that the US is not a rich country will be a self-fulfilling prophecy. The wealthy will survive, but will the average US worker?
Protect your future now because financial ruin for Americans is right around the corner.