The BRICS Rebellion: Charting Dollar Dominance and the End of U.S. Economic Power | Private Equity Weekly

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this Discussions within the BRICS group The creation of alternative payment systems marks a major shift in geopolitics and has far-reaching economic implications.The Russia-led move highlights emerging economies’ growing desire to reduce dependence About the United States and dollar-dominated financial infrastructure.

The BRICS grouping has now expanded to include other countries including Saudi Arabia, Egypt, the United Arab Emirates, Iran and Ethiopia, and represents a powerful economic force. With a combined population of more than 3.5 billion and an economic value of more than $28.5 trillion, these countries have considerable influence in global trade and finance. Furthermore, their large share of global crude oil production further solidifies their importance in the international economic landscape.

At the heart of this measure is the desire to reduce reliance on systems such as global social associations. Interbank Financial Telecommunications (SWIFT) has traditionally been controlled by the United States. SWIFT’s dominance allows the United States to use its control of the U.S. dollar as the world’s reserve currency to exert significant influence over global financial transactions. This control is evident in the United States’ use of SWIFT as a tool to impose sanctions on countries deemed not to comply with its foreign policy objectives, such as Russia following the Ukraine conflict.

Russia developed its own payment system, the Financial Flow System (SPFS), becoming a model for potential alternatives within the BRICS countries. Other member states, such as China with its Cross-Border Interbank Payments System (CIPS), have similar infrastructure. The integration of these systems among BRICS countries could provide a viable alternative to SWIFT, thereby reducing the impact of U.S. sanctions and increasing autonomy in international financial transactions.

Furthermore, discussions around the establishment of alternative payment systems highlight gold’s potential role in the international monetary system. Since the BRICS countries collectively hold large gold reserves, the integration of gold-backed mechanisms can provide stability and confidence in the face of currency fluctuations.

However, the pursuit of alternative payment systems poses a direct challenge to the dominance of the US dollar. Given the U.S. dollar’s key role in global finance, any major shift against the U.S. dollar could have far-reaching consequences for the U.S. economy. This includes potential depreciation of the dollar, rising borrowing costs and inflationary pressures, all of which could affect the stability of the U.S. economy.

Despite these challenges, momentum toward dedollarization appears to be accelerating, driven by emerging economies’ desire to increase financial sovereignty. As a result, diversification into alternative assets such as gold may become increasingly attractive for countries seeking to mitigate the risks associated with overreliance on a U.S. dollar-dominated financial system.

De-dollarization, the gradual reduction of reliance on the U.S. dollar in international trade and finance, has created manifold challenges for the U.S. economy that could have far-reaching consequences. For decades, the dollar’s dominance as the world’s main reserve currency has provided the United States with significant economic and geopolitical advantages. However, the impact on the U.S. economy is profound and complex as countries seek to diversify their currency holdings and reduce exposure to the U.S. economy.

One of the most immediate impacts of de-dollarization is the potential depreciation of the dollar itself. As countries no longer use the U.S. dollar for international transactions, demand for the currency decreases. Reduced demand could cause the dollar to weaken relative to other currencies, making imported goods more expensive for U.S. consumers and exacerbating domestic inflationary pressures. Additionally, a weaker dollar could undermine the purchasing power of U.S. households and erode confidence in the stability of the currency.

Additionally, de-dollarization could lead to higher borrowing costs for the U.S. government. Historically, the widespread use of the U.S. dollar has allowed the United States to borrow money at relatively low interest rates. However, if countries begin to favor alternative currencies or assets for their reserves, the U.S. government may find it more costly to finance its budget deficits through the issuance of Treasury bonds and other securities. That could lead to higher interest on the national debt, exacerbating fiscal challenges and potentially crowding out other government spending priorities.

Additionally, the dollar’s ​​diminished role as the world’s primary reserve currency could undermine U.S. economic influence on the global stage. The United States has used the dollar’s dominance to exert considerable diplomatic influence by imposing economic sanctions on countries deemed not to comply with its policies. However, as countries reduce their reliance on the U.S. dollar, the effectiveness of such sanctions may diminish, limiting the United States’ ability to influence international events and advance its foreign policy goals.

In addition, de-dollarization has the potential to disrupt global trade patterns and financial markets. The dollar’s removal as the preferred medium of exchange could create uncertainty and transaction costs for international commerce, affecting U.S. exporters and companies with global supply chains. Increased currency volatility and volatility in interest rates and asset prices could also disrupt financial markets, create challenges for investors and potentially affect economic growth and stability.

In summary, while the full impact of de-dollarization on the U.S. economy remains uncertain, it is clear that this shift will create significant challenges and adjustments for policymakers, businesses, and consumers. Adapting to a world with diminished dominance of the U.S. dollar requires careful navigation and strategic planning to mitigate risks and take advantage of new opportunities in the changing global economic landscape.

Let’s take a look at next week’s Standard Deviation report to see what short-term trading opportunities we can spot

Gold: Weekly Standard Deviation Report

April July 5, 2024 5:34 pm ET

generalize

• A close above the 9-day moving average indicates a bullish trend, attracting more buyers and potentially fueling upward momentum.
• The VC Weekly Price Momentum Indicator confirms bullish price momentum, increasing confidence in the bullish trend.
• Providing specific price levels to manage positions allows traders to ride market fluctuations while staying consistent with the broader trend direction.

Weekly Trend Momentum Analysis: Using the 9-day simple moving average (SMA) as a trend indicator is a common practice in technical analysis. The closing price was above the 9-day moving average at 2160, indicating a recent upward trend in average prices and indicating bullish sentiment among traders. This bullish confirmation is likely to attract more buyers to the market, which could fuel further upward momentum. Conversely, a close below the 9 moving average could signal a weakening bullish trend, potentially triggering profit-taking or short-selling strategies.

Weekly Price Momentum Analysis: The VC weekly price momentum indicator at 2315 provides additional insight into the strength of price momentum. A close above this indicator confirms bullish price momentum and confirms the bullish signal from the moving averages. This confirmation increases confidence in the bullish trend and may encourage traders to enter or maintain long positions. A break below the VC PMI would signal a loss of upward momentum and could lead to a re-evaluation of the bullish bias.

Weekly price indicator analysis: This strategy provides specific price levels for managing positions, providing clear entry and exit points. Taking profits during corrections in the designated price range (2279-2214) for short positions acknowledges the possibility of a market pullback in the context of the overall bullish trend. Using the 2214 level as a stop-loss order for long positions helps protect profits and manage risk in the event of adverse price movements. By incorporating these price levels into strategies, traders can ride market volatility while staying consistent with the direction of the broader trend.

cycle analysis: Determining cycle expiration dates (such as the dates mentioned in 4.15.24) adds a new time dimension to the analysis. Traders may interpret cycle dates as potential turning points in the market, where trends may reverse or accelerate. This awareness of cyclical patterns enables traders to predict market behavior and adjust strategies accordingly, enhancing their ability to take advantage of emerging opportunities or mitigate risk.

Strategic Analysis: This strategy emphasizes profit taking on long positions at specific price levels (2380-2415), reflecting a disciplined approach to managing trades. Taking profits within this range is consistent with expectations of price movement based on technical analysis or other market factors. By adhering to predetermined profit-taking levels, traders can realize gains while minimizing the impact of market volatility or unexpected reversals.

Overall, the analysis highlights the systematic approach taken in the trading strategy and the use of technical indicators, price levels, and cyclical patterns to make informed trading decisions. Continuously monitoring and adjusting your strategy in response to changing market conditions is critical to its effectiveness and long-term success.