Afghan Disaster a Nail in the Coffin for the Dollar

Hey There Income Hunters,


It took 4 presidents, trillions of dollars, over 175,000 lives and 20 years to replace the Taliban with … the Taliban.


I have always believed it’s hard to justify fighting never-ending wars on foreign land when we have been trending towards bankruptcy as a nation …


However, this disaster will have a more severe impact on our dominance in the world than any before


And we aren’t the first empire to suffer from a war in Afghanistan:



The truth is the Afghan war had everything to do with $3 trillion worth of untapped mineral deposits that the US had designs on, and very little to do with fighting terrorism.


A War for Control of Central Asia 


Afghanistan is strategically located in resource-rich of Central Asia and it became ground zero for natural resources long ago.


In fact, back in the 1980s and into the 1990s, the US. spent billions of dollars funding Afghan radicals and Islamic militants under a covert CIA program known as Operation Cyclone.


The Afghan funding was coordinated with financial assistance from Saudi Arabia, which became a close US ally through the terms of the petrodollar system launched in the 1970s.


The petrodollar was put in place to enforce use of US dollars in exchange for oil and other natural resources. Today, however,this critical system, which supported dollars for over 40-years, is hanging on by a thread.

Dollar Strength Dangling


The other massive news this week was Joe Biden’s desperate plea to Saudi Arabia and the rest of the OPEC+ cartel to raise oil production.


He was roundly rejected.


This may prove to be more damaging to the US dollar than the Taliban gaining control of Afghanistan, and here’s why …


The petrodollar system and the agreement between the US, the Saudis and OPEC to enforce the exclusive use of dollars in exchange for oil appears to be unraveling.


The Signpost for a Dollar Collapse 


I fully expected the dollar collapse to happen in the long term.


But Biden’s failure to secure a deal with the Saudi’s, combined with the Taliban takeover, have just elevated the risk to the dollar


The Saudis and OPEC+ are now the critical signpost for an imminent dollar collapse. If you hear the Saudis bashing the US, that will signal their default on the petrodollar dollar agreement …


Without the OPEC+ cartel’s support, US dollar’s dominance on global trade will be in jeopardy and massive selling from foreigners will ensue …


The Invesco DB USD Index Fund ETF (Ticker: UUP) is an excellent proxy for the Dollar’s value versus the major central bank currencies … 


UUP is in a short-term uptrend in a longer-trend bear market and the chart below illustrates the elevated levels above $25 dollars. I believe is an area to set up a bearish strategy to hold through the end of the year …



Bring It Home


I purchased a $25 put expiring Jan. 21 for $.48. The major support level for UUP is at 24.09.


If that breaks, the next level is at $23.09, and then $21.17.


I think a move down to $23.09 is realistic if the Saudis start dealing with China and signal a move away from dollars.


That would return almost a 3x multiple on your investment.


Big moves in the market are coming and we are starting to see geopolitical volatility that could translate into market volatility …


Granted,  we are in the liquidity-light month of August, so the real fireworks may be on hold until after Labor Day. However, they are coming so stay tuned to Power Income for the vital intel that will give you the edge.


Live and Trade With Passion My Friends,


Griff

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