The Demise of the Petrodollar
Think the death of the petrodollar is not a reality? Think again…Numerous factors that will lead to the eventual death of the petrodollar have already been set in motion, and this chain of events could lead to some of the most significant economic upheavals in history. . Numerous countries have already begun to move away from the dollar, and this trend is likely to continue.
The world is about to change. Are you ready?
Russia has been in the news a great deal over the past year, as the Russian/Ukrainian conflict continues. While U.S. and other government sanctions over the last year have certainly hurt the Russian economy and its currency, Russia has been taking steps to move away from the petrodollar.
Steps that could change global trade as we know it today…
The Russian company Gazprom is the world’s largest extractor of natural gas, and one of the globe’s largest companies.
Quietly behind the scenes, Gazprom has made agreements with some of its biggest customers to switch payments from U.S. dollars to Euros and the Chinese Yuan. Because the Russian Government has a majority stake in the natural gas producer, this move clearly comes with the full blessing and backing of the Russian Government. You may have heard about the $400 billion deal that Gazprom signed last year with the China National Petroleum Corporation… What you may not have been aware of is this deal is structured in each country’s domestic currency and completely bypasses the dollar.
To understand the magnitude of such a move away from dollars, consider this:
Gazprom holds almost one-fifth of the natural gas reserves on earth.
Gazprom revenues make up a significant portion of Russian GDP.
Gazprom’s production amounts to around 17% of GLOBAL supply and the company holds about 18% of the world’s reserves.
Gazprom is just another international behemoth moving away from the dollar, but it is certainly not the only one… Other large Russian companies have also been following suit and making similar moves.
While the effects of such a move are already being felt, the real danger lies in additional nations doing the same…
Guess what? Other nations have already begun similar policies to move away from the greenback…
If one of the planet’s largest companies, a company that is responsible for a huge portion of the globe’s natural gas supply, has already begun to move away from the dollar, it stands to reason that more will follow. Some already have…
Germany and China have already made arrangements to conduct their trade in yuan and euros. China and Brazil have a similar arrangement as do Australia, Japan, Turkey, and Kazakhstan. Iran has employed similar accords. As a matter of fact the entire BRICS (Brazil, Russia, India, China, South Africa) bloc has signed agreements with each other to conduct trade in their own local currencies.
Why is this critical?
As more and more of these nations and companies move away from dollars, pressure will increase on Saudi Arabia to do the same.
The U.S. and the Saudis have enjoyed a profitable relationship for decades, a relationship that has recently become strained and fragile.
As companies like Gazprom and other nations move away from the dollar, pressure may mount on Saudi Arabia to do the same.
One could argue that Saudi Arabia is the only thing keeping the petrodollar alive as we know it.
A move away from the dollar by Saudi Arabia would cause any remaining supporters of the petrodollar system to waiver, and the petrodollar system as we know it could fall like dominoes….
What might this mean for the U.S. economy?
Well, it’s not pretty…
The dollar has been supported by its petrodollar status and as the reserve currency of the world. Once this status is lost, things change dramatically…
As the dollar is abandoned, significant economic hardships will set in…
Consider this: It is the very petrodollar that finances the U.S. economy…
When oil or natural gas is transacted in dollars, those dollars are then used to buy U.S. treasuries. Without dollars being used for these transactions, there will be no need for these nations to buy U.S. treasuries.
Here are just a few potential fallouts: :
- Interest rates will skyrocket as U.S. treasuries are dumped en masse on the open market
- Mortgage, credit card and other personal debt instruments will see massive defaults
- Business will fail as credit becomes more expensive
- The dollar will slump in value causing significantly higher prices
- Wages will not keep up and people will not be able to afford everyday necessities
- The cost of imports will go through the roof
When this occurs, the government will have only one option…
Print more money ensuring the continuation of the cycle…
Now is the time to be thinking about your future, and how to protect it. The move away from the dollar has already begun.
There will be no going back…
As the petrodollar is forced out of existence, the hardships described above will become reality.
Now is the time to look at non-dollar backed assets-assets that can preserve purchasing power and wealth.
Now is the time to consider precious metals.
Should this come to pass; gold, silver and other precious metals can help protect what you have worked so hard for. They have been considered a reliable store of value throughout history-and with good reason…
Fortunately, it has never been easier to incorporate physical gold or silver within your portfolio. Don’t wait until it’s too late.
One of the simplest ways to gain exposure to these critical precious metals is through a precious metals IRA. Getting started with a gold IRA is easy. Our experienced executives are here to guide you, step-by-step, through the entire process. Call us today at 1-800-341-8584.Tags: death of petrodollar, demise of petro, demise of petrodollar, gold, petrodollar, petrodollar trouble, petroleum