The Threat to Dollar Dominance Just Got Bigger

Andrew’s Note: Today, we’re featuring an essay from hedge fund market wizard, Larry Benedict.

Throughout 20 years on Wall Street, Larry never had a single losing year. At his former hedge fund, he once managed over $500 billion in foreign currency.

Over the past two decades, Larry’s kept a close eye on global events that could harm the U.S. economy. And now, he sees an event on the horizon that could threaten the dollar’s dominance… particularly from Russia and China.

To find out how this could affect your wealth, sign up for his special briefing this Saturday at 11 a.m. ET. Fortunately, his proprietary trading strategy does especially well when the dollar loses value… So, tune in right here to learn how to profit.

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In 2001, Goldman Sachs analyst Jim O’Neill tipped the first domino to end the U.S. dollar’s dominance.

He didn’t intend to. All he saw was an economic opportunity posed by several world economies – notably, Brazil, Russia, India, and China. Later, South Africa rounded out the group.

These countries became known by the acronym BRICS.

O’Neill claimed that these economies would lead the world by 2050. Due to cheap labor, rich natural resources, and promising demographics, the BRICS countries had a strong outlook.

But by 2015, it seemed like his prediction had fizzled out.

Goldman Sachs even folded its BRICS-specific investment fund into a broader emerging markets fund, saying it no longer anticipated “significant asset growth in the foreseeable future.”

Yet in recent years, BRICS has become more than just an economic theory.

The countries involved have formed a geopolitical bloc and become the chief rival of the G-7.

And now they are preparing to take aim at the dollar.

Rising Powers

The BRICS – and other countries around the world – dislike the dollar’s reserve currency status.

Nearly all trade requires the U.S. dollar, and global financial systems operate using dollars. Most sovereign debt is priced in USD as well, which can make it expensive to service that debt.

And Western countries have weaponized the dollar’s importance.

Russia, for one, faces heavy economic sanctions due to its invasion of Ukraine, including its exclusion from the SWIFT banking network.

This unprecedented move punished Russia for failing to toe the line… And other countries noted the pressure tactic with alarm.

Now the BRICS countries are getting ready to retaliate… And the threat they pose has teeth.

Together, they make up 31.5% of the global gross domestic product (GDP). In comparison, the G-7 has sunk to 30%. Plus, at least 41 other countries have petitioned to join the BRICS bloc.

And they’ve been testing out their strength lately.

As just one example, Brazil and China are settling trades in the yuan, circumventing the USD system.

Additionally, China also came up with the petroyuan, enabling oil producers to sell their oil in yuan instead of USD.

And in 2022, central banks around the world bought gold at record levels.

That continued this year. In the first two months of 2023, three BRICS countries were among the top five gold buyers. China bought nearly 40 tonnes, and Russia bought over 31 tonnes. India bought 2.8 tonnes.

These gold reserves grant them more autonomy outside the dollar-denominated system.

And that’s not where this story ends…

Project R5

The BRICS are gathering on August 22 – a little less than a month away.

There, they’ll discuss how to challenge the dollar’s global dominance.

That could accelerate Project R5… a plan to create a BRICS currency to challenge the dollar’s status. If they succeed – even partially – it will rock the financial world as we know it.

The last time something of that magnitude took place – the creation of the euro – the dollar lost as much as 45% of its value.

Commodities like oil and gold could see big movements too as a result of this shift.

And pretty much no one is prepared for such a scenario.

After all, U.S. debt has risen to more than $32 trillion.

Without the dollar’s reserve currency status, the pain of that debt would hit hard.

Interest rates would have to rise heavily to make our Treasurys attractive to foreign investors so we could keep servicing our debt.

A weaker currency would also mean more expensive imports. That would lead to soaring inflation. Most of us have seen firsthand how destructive that can be in the last couple of years.

And the consequences would ripple out from there.

For example, the U.S. would struggle to fund its military complex in this scenario – and I’m sure you can imagine the kind of blowback that would have.

So this BRICS summit should be on everyone’s radar. The potential consequences make this too big to ignore.

And if you want to be among the few who have a plan in place, then please attend my Dollar End-Date Summit on Saturday, July 29.

There, I’ll explain more about the threat to the dollar we’re seeing… and the best strategy I know of to weather the volatility that’s about to erupt.

In fact, based on our backtest, this strategy could help you add as much as $192,000 to your wealth in a year…

That’s not something you want to ignore with the BRICS’ August meeting just around the corner.

To RSVP, simply go right here to add your name to the list.

I look forward to seeing you there.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict