China’s rare earth move signals the end of dollar dominance

A macro/thematic analyst, Luke Gromen, pointed out that China’s recent decision to limit the export of rare earth minerals illustrates the end of the US dollar’s dominance. Notably, these minerals are crucial in producing electronics and military defense products.

Gromen’s remarks follow China’s new regulations recently put in place to prevent the sale of these essential minerals to the US military industry. 

The relationship between this industry and the US dollar is that the military industry offers support to the dollar’s value via military power, he explained to Marty Bent, founder of Truth For the Commoner (TFTC), on Sunday, October 19. Therefore, when the industry is affected, it impacts the dollar’s value.

China’s export decision on rare earth raises controversy among individuals 

China’s move triggered US President Donald Trump’s announcement of an additional 100% tariffs on China. Additionally, Gromen argued that this demonstrated the country’s greater influence than several Western commentators understand.

The analyst further illustrated that the US normally sends the military and retaliates if it interferes with the financial aspect of the rules-based global order. With this discovery, Gromen highlighted that this was the primary reason for invading Saddam and what was happening with Gaddafi. 

In the meantime, a reliable source pointed out that China currently accounts for more than 90% of the world’s rare earth minerals and rare earth magnets, which are useful in producing electronics. 

Regarding new restrictions on these materials, Gromen cautioned that this action will alter supply chains and the global financial system. To address this current challenge in the US, the analyst suggested that a hard money standard is the only effective solution. He stated Bitcoin as an example of a hard money asset that can assist in enhancing the country’s struggling economy.

Hence, as inflation impacts currency values, both the prices of BTC and gold will likely continue to escalate because individuals and businesses are turning to the cryptocurrency to safeguard their purchasing power.

As debate concerning China’s limitation on rare earth exports heats up, Gromen has expressed skepticism about the US government’s intention to use stablecoins to maintain the dominance of the US dollar. 

This is because he views stablecoins as just a short-term solution and therefore cannot address the main issue, which, according to the situation, is currency devaluation. 

The weakening of the US dollar causes tension among investors 

Investment analysts at The Kobeissi Letter pointed out that the US dollar is on track to record its worst year since 1973 as Bitcoin and gold reach an all-time high. This has sparked tension among investors in the market.

“The US dollar is set to have its worst year since 1973, reflecting a decline of more than 10%. Since 2000, the USD has lost 40% of its purchasing power,” reported The Kobeissi Letter. 

This continuous decline of the currency value illustrates that asset prices will continue to increase as investors look for ways to safeguard their purchasing power, added The Kobeissi Letter.

On the other hand, sources have revealed that China’s economic growth likely weakened to its slowest pace in a year during the third quarter. This drop results from a long-lasting slump in the property market and the impact of trade-related demand. Consequently, there is pressure on government officials to bring in more support action to enhance confidence and growth.

Respondingly, Beijing has taken minor support measures this year to keep its options open for future challenges, benefiting from strong exports and healthy stock markets. 

However, the new trade tension resulting from the US-China conflict presents potential threats. While there is a likelihood of more support measures, experts disagree over whether the government will act this year.  

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