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Last week, China demonstrated its military power and formed an alliance with U.S. rivals, including Russia, North Korea And, at least so far, India. However, this force is not the only threat to the axis of evil today.
It is also shocking that China and its allies are Dollaralarms spread across the global financial markets. China and other central banks have been storing gold, diversifying their reserves from U.S. government bonds, driving gold prices up, and the Treasury generated gains. Their allies followed suit.
Is it important to most Americans? Yes. A weaker dollar means that traveling abroad and importing goods are more expensive even without tariffs. Higher interest rates inflate lending costs.
Gold may shine, but it is still money. Taxes should be treated this way
Morgan Stanley reported: “The value of the dollar to other currencies fell about 11% in the first half of the year, the biggest drop in more than 50 years, ending a 15-year bull cycle.” The investment bank wrote last month, also noting that “the dollar ended the first half of 2025 with its biggest loss since 1973” and predicted it would worsen in the next 12 months.
Although the dollar fell, gold prices rose. The price of COMEX delivered in September has recently exceeded $3,600 per ounce, the highest ever. Prices have risen 45% over the past year.
In June, JP Morgan analysts predicted that gold prices will rise to a large extent as central banks continue to buy. They wrote: “According to the International Monetary Fund (IMF), central banks’ gold holdings reached nearly 36,200 tons by the end of 2023, accounting for nearly 20% of official reserves, up to about 15%.
China’s central bank calls on state banks to reduce dollar purchases
“Divers away from dollar reserves, while still modest, has been accelerating in recent years… U.S. stocks ended at a rate of 57.8%, marking a 0.62 percentage point decline.”
Not all central banks have participated in the recent gold purchase craze. JP Morgan has China, Poland, Türkiye, India, Azerbaijan, CESSA and Iraq as the main players, and this is not exactly our allies.
Investors have also bought gold, especially in China. “The ETF inflow momentum has risen sharply, with total inflows at 310 tons at the beginning of the year – about 10% global holdings. This has greatly contributed to 9.5% of U.S. holdings and 70% increase in Chinese ETF holdings.”
Why China Abandon US dollars and buy gold? Destroy the U.S. currency and the U.S. itself. Beijing is in desperate need to overturn the dollar and promote widespread adoption of the yuan as the world’s reserve currency.
This won’t happen anytime soon, given Beijing’s currency manipulation, a lack of reliable economic data and a faltering economy. However, raising doubts about the strength of the dollar can be in line with China’s purpose, thus reducing investors’ demand for the dollar-denominated treasury. This forces the U.S. government to pay higher interest rates to attract buyers – a situation that has aired.
Can the US dollar lose its reserve currency status to China?
The anti-Trump media’s continued shock to President Trump’s economic policies, especially his tariff plans, helps China’s cause helps China’s cause. Not surprisingly, the exaggeration of stories about tariffs, immigration enforcement, cutting government agencies and the high federal deficits are stressed over the public’s optimism.
Optimism is important. People won’t buy a home, expand a business, or leave a job for better opportunities unless they feel positive about the future.
People won’t buy a home, expand a business, or leave a job for better opportunities unless they feel positive about the future. (Joe Raedle/Getty Images)
Frustrating consumers can easily disappoint our growth. Ironically, Bloomberg recently asked: “The U.S. economy is still pretty good. Unemployment is low, with GDP in the second quarter at 3.3%. But Americans don’t see it exactly, and the question of this question is… Why? Why? Five years? Five years, the epic economy and stock market boom, everyone is so negative, why so negative?”
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Perhaps Bloomberg should check its own headlines: “As higher tariffs pass higher tariffs, U.S. inflation has risen” and “the golden age of Trump’s trade war signal ends.”
Readers may be surprised to see a work published by the Financial Times titled “Bond Investors Controlling U.S. Debt”, suggesting that tariff revenue will “turn sharply from a sharp shift earlier this year from earlier this year to strengthen U.S. public finance” when investors were evenly viewed negatively. Last week, when a lower court ruled that Trump’s tariffs were illegal, even critics acknowledged that tariff revenues were considerable, valuable, and would help reverse some of the losses of Joe Biden’s spending frenzy.
Neither China nor the free media will undermine the dollar or the economy. In order to make the US dollar lose its reserves, another currency will have to appear – this won’t happen. Europe remains politically and economically stagnant, and Japan is in a state of turmoil.
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Meanwhile, investment incentives in the A Big Beauty Act, coupled with the new White House trade deal, are already promoting U.S. investment. Jobs and tax revenue will follow.
Finance Minister Scott Bessent We will see a “substantial acceleration” in the economy by the end of the year, told NBC’s Kristen Welker over the weekend. If he is right, then at least at present, at least the rebound of the dollar will be at the same time, and China’s ambitions will be thwarted.
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