China-Russia “Dedollarization” Leads to Dollar Drop

China and Russia have continued to dump the U.S. dollar in favor of gold bullion, yuan and rubles, in essence approaching a financial alliance. This leaves many questioning the U.S. dollar’s future as the world’s foremost reserve currency and, subsequently, the safety of their portfolios and pocketbooks.

Both countries have sought to use the dollar less in their trade settlements for several years now but have redoubled their efforts since the Trump Administration tightened sanctions. In 2015, more than 90% of bilateral trade between the two nations was conducted in dollars. So far in 2020 that number has been slashed to 46%.

In an attempt to shoulder the strain on the dollar that this and its many other issues would naturally cause, the Federal Reserve has been aggressively buying. Of course, this has created market bubbles so sizable that they would devastate many Americans unless they were corrected in a careful, measured manner.

Then COVID-19 hit our country, bringing with it joblessness, homelessness and massive national and private debt. The pressure it has placed on the economy has removed virtually any “wiggle room” our government could have had to administer a careful, measured approach to correcting the markets and preserving the dollar.

Historically, every world reserve currency has been unseated at some point, so the dollar’s days have been numbered since the beginning (as illustrated in the graph below created by ZeroHedge.com).

If the U.S. dollar is bound to fall sooner or later – perhaps closer to “sooner” given COVID-19 and the Russia-China financial alliance – what will that mean for your clients’ wealth and financial wellbeing?

The best course of action here is to follow the cue of the global superpowers above. And no, we’re not talking about the U.S. Both Russia and China have made the move to build their gold reserves to levels not seen in years. Russia’s and China’s central banks understand the critical role physical gold plays in times of local economic turmoil and major global economic shifts. It is a store of value proven over centuries, standing true through the rise and fall of every nation and empire to date.

What Russia and China are counting on physical gold to do for their economy, your clients can count on it to do for their portfolio. A proper position in gold and silver provides wealth insurance that will protect your clients’ financial wellbeing and guarantee purchasing power, regardless of the worth – or lack thereof – of the bills in their wallet. Call us today to discuss how physical gold and silver can provide this level of assurance to your clients.