Putting More Pressure On The Dollar
Over the weekend, the U.S. State Department posted about seizing Russia's sovereign assets in the U.S. and encouraging other G-7 members to do the same.
Congress has given us the power to seize Russian assets in the U.S., and we intend to use it. We are working with @G7 partners to see that Russia’s immobilized sovereign assets are used to remedy the damage Putin continues to cause in Ukraine. - @SecBlinken pic.twitter.com/QxJl1cwQYO
— Department of State (@StateDept) May 19, 2024
The downsides of the United States doing this when it has persistently large fiscal and trade deficits would seem obvious, but apparently they're not. Other countries that aren't allied/subservient to the U.S. will be less comfortable holding U.S. dollar assets, out of fear that their assets might be summarily seized as well at some point. In fact, that already seems to be happening, as China just sold a record amount of U.S. Treasury bonds.
China ditches $53 billion of US bonds in a record sell-off: - Unsustainable debt, sanctions and theft of foreign reserves have reduced the trust in the UShttps://t.co/Bcf5zOvl5U
— Glenn Diesen (@Glenn_Diesen) May 19, 2024
Vladimir Putin Envisions De-Dollarization
Near the end of President Putin's state visit to China, he fielded questions from Russian media in Harbin. In response to one question about an issue with the settlement of payments between Russia and China, Putin spoke about the extraordinary benefits America has gained from issuing the world's reserve currency, and how recent American policy had undermined confidence in the dollar. He concluded that the process of countries moving away from dollar settlements had begun and could not be stopped (text via the Kremlin, translated by Google):
All countries of the world trust the American economy, its power and its stability and take these pieces of paper. But this gives a huge, seemingly inexplicable advantage to the American economy and financial system. They can also be assessed directly, in certain numbers. According to our experts, this is over 10 trillion dollars, simply unearned money that fell from the sky due to the use of the dollar as a reserve world currency. In general, the obligations of the American monetary system to the rest of the world are approximately $53.4 trillion.
But as, for political reasons, the United States authorities undermine confidence in the dollar, they weaken their main, main, most important instrument of their power - the dollar itself. They cause irreparable damage ...Full story available on Benzinga.com
Benzinga
Agnico Eagle Mines Ltd.
Alamos Gold Inc. Class A Common Shares
B2Gold Corp.
Eldorado Gold Corporation
Kinross Gold Corporation
MAG Silver Corp.
Pan American Silver Corp.
Sandstorm Gold Ltd
Silvercorp Metals Inc. Common Shares
Wheaton Precious Metals Corp.