Hey There Income Hunter,
As the market settles down after three weeks of uncertainty and fear, it’s time to assess the damage and consider tradable ideas.
Russia should soon take over the last untouched Ukrainian seaport, Odessa, and that will completely cut off the under-fire country from global markets.
So, expect increased global supply chain disruptions and calls for further reductions in Russian oil and natural gas imports.
That means the EU will need more liquid natural gas imports … which will likely come from the US, causing American natural gas prices to rise.
This expansion is picking up speed and the west is quickly rapidly gaining market share in the global market. This is the most critical macro event impacting the dollar.
Today, I’ll run through short-term effects, tradable ideas and what to expect going forward.
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I’ve teamed with Andrew Giovinazzi and Frank Gregory to produce secure, flexible trades based on geopolitical turmoil and Federal Reserve miscues. And the wins have rolled in.
A Major Change in Outlook for US Dollars
The most important fiscal message that came out of the Russian invasion is this …
When you freeze $500 billion of foreign exchange reserves, sanction and remove banks from the US global payment system (SWIFT), and force western banks and commodity traders to self-police and not trade commodities from the single-largest commodity producer of the world (Russia) … really bad things can happen.
The US and Europe are insane if they think they can keep adding on sanctions that maximize pain for Russia while minimizing their own financial pain.
The pain will ultimately hit the West as our trading partners find alternatives to the dollar.
So far, this has manifested itself in the largest one week rally in commodities on record.
This is waking many people up to the fact that commodities may need to be used as collateral that backs global currency.
I have been pounding the table on gold and silver fulfilling that role and this also has been a hot topic since the invasion.
You know it is something China has been planning for. Just check out this timeline of activity.
2010: World Bank President Robert Zoellick suggests gold be the reference point of a new global monetary system which includes an “internationalized Chinese Yuan.”
2012: Iran begins accepting Yuan for Oil.
2013: PBOC declares it no longer needs to accumulate foreign exchange reserves (USTs).
2014: Shanghai gold exchange is launched to help “internationalize the Yuan.”
2015 – Russia Begins Trading Oil in Yuan
The ultra strategic China had their plan in motion while they were aligning with the US so they could sell us all their goods here …
So, China is making a similar move today … aligning with Russia to buy up all their resources – while working together to weaken the US.
Commodities & Precious Metals Will Power the World Forward
In a de-globalized world, trust between countries is waning. The new monetary system will have to be backed by hard assets.
The trend for the 2020s is this shift from financial assets to hard assets …
Bring It Home
Cherish every moment of this transition. It may be difficult for a while but the great American spirit will get through it and come out much better for it.
I always welcomed change and I think we all know we need it. The best thing we can do collectively is prepare others so they can protect themselves.
And the best way to do that is in Power Gains.
Have a great weekend and as always …
Live and Trade With Passion My Friend,
Griff