Is China trying to displace the U.S. as the world’s leading superpower?
The answer is clearly yes.
So a better question to ask today is: could they succeed? Soon?
Our nation’s most powerful intelligence agencies and market makers seem to think it is possible, sending shock waves through the stock market.
Traders reacted globally last week when President Trump accused China of manipulating its currency and interest rates lower to gain advantage over the U.S.
The Chinese yuan fell to its lowest level in a year, and China’s central bank seems perfectly content to let their currency slide further.
Trump’s recent rhetoric “is certainly shifting this from a trade war to a currency war,” says Jen Nordvig, a top Wall Street currency strategist.
“There is no question that the weakening of [China’s] currency creates an unfair advantage for them,” U.S. Treasury Secretary Steven Mnuchin said last week. “We’re going to very carefully review whether they have manipulated the currency.”
The last time China devalued its currency this fast, in 2015, oil prices tumbled and currencies like the ruble, peso and ringgit were hit hard.
This time the U.S. dollar could be hardest hit, says Shahab Jalinoos, head of FX trading strategy for Credit Suisse Group AG.
“It has now been virtually defined as a currency war by the U.S. president, given that he explicitly suggested foreign countries are manipulating exchange rates for competitive purposes,” Jalinoos said. “The barrage of commentary will likely force the market to scale back long dollar positions.”
Any retirement investments in your portfolio, or cash in your bank account, could be affected fast if the dollar starts to crumble.
Here’s what market analysis tells us about gold:
1.In most cases, gold prices rise during periods where the stock market is crashing, the dollar is under threat or inflation runs rampant
2. Gold and stocks tend to be negatively correlated, with stocks leading the way in times of optimism and gold benefiting when fear and uncertainty take hold
3. Diversifying with safe haven assets tends to lower overall portfolio volatility
Gold and silver clearly deserve your careful consideration at a time like this, when uncertainty seems to be the order of the day.
CIA & FBI AGREE: CHINA IS AT WAR WITH US, BUT QUIETLY
Michael Collins, deputy assistant of the CIA’s East Asia Mission Center, believes China is well on its way to world dominance in economic and military terms and is speaking out now.
This transformation isn’t happening through fair competition – under the veil of fair dealing, the Chinese state is working actively to undermine our success, steal our secrets and manipulate our markets.
According to Collins, this aggressive incursion from China is “the most serious currently faced by the U.S.” The CIA believes they are engaged in an ongoing “cold war” against our country and its markets.
How serious is this new cold war? If you’ve been startled by the possible depth of Russian meddling in our economic and political systems, this could be much worse. “It sets up a competition with us and what we stand behind far more significantly by any extreme than what the Russians could put forward,” says Collins.
As you know, the CIA is our nation’s premier agency that supplies us with global intelligence in the realms of politics, society, the economy, technology and the military.
And this isn’t the only branch of our nation’s intelligence operations that is deeply concerned about China.
Just last week, Christopher Wray, director of the FBI, also confirmed that his agency sees China as our country’s most significant threat.
Speaking on CNBC News, Wray said that the scale of this risk is real, and large.
“It is a whole state effort,” says Wray. “It is economic espionage as well as traditional espionage; it is nontraditional collectors as well as traditional intelligence operatives; it’s human sources as well as cyber means.”
This isn’t an abstract observation… this is happening right now all around us. The FBI director revealed that they are carrying out economic espionage investigations against China in all 50 states!
“The volume of it. The pervasiveness of it. The significance of it is something that I think this country cannot underestimate,” warns Wray.
Why isn’t this information more widely known in the U.S.? Because China prefers to keep this as quiet as possible.
“The Chinese do not want [open] conflict,” says the CIA’s Collins. “At the end of the day, they want every country around the world to side first and foremost with China and not the United States.”
Dan Coats, the U.S.’s Director of National Intelligence, also points to China as our most significant danger today.
Coats has been a vocal critic of China’s efforts to steal America’s academic and economic secrets. He believes that the country has stepped over a line that separates our good and bad economic partners: those that compete fairly and honestly with us vs. those who use their economic engagement with us to damage our economic future.
MILITARY MIGHT TO MATCH ECONOMIC MIGHT
U.S. intelligence has revealed that China’s military strength has expanded more rapidly than anyone could have expected.
“It’s a country with a second largest defense budget, the largest standing army of ground forces and the third largest air force in the world,” says Marcel Lettre, former U.S. undersecretary of defense for intelligence.
In April, China’s President Xi Jinping announced that China will build a “world class” navy. China already has a navy of 300 ships and just launched its first 50,000 ton aircraft carrier.
There are growing military-oriented conflicts brewing in the background.
The U.S. has been a vocal critic of China’s efforts to control disputed territory in the South China Sea and build numerous artificial islands that hold top-secret military installations.
IS YOUR RETIREMENT PLAN READY FOR WHAT IS NEXT?
Just last Friday, President Trump threatened to escalate the ongoing trade tariff dispute with China to a whole new level.
There are over $500 billion in Chinese imports hanging in the balance: virtually everything we import from the country. Like it or not, our country’s economic futures are closely tied together.
The question is: who will be the dominant superpower in that equation?
The U.S.A. has been top of the heap for a very long time, due to our strong work ethic, fair dealings and undisputed might in business, politics and economics.
Even if China fails to knock us off this perch, they can still do a lot of damage. And that damage has already begun to erode confidence in America’s retirement future, especially when so much of that wealth is in dollars and sky-high real estate and stocks.
We’re not market timers here at the Hartford Gold Group, but we are market enthusiasts. And any student of the market learns this rule first: what comes up, must come down.
We love to invest, but we believe in doing it the common sense way. Balancing stocks and bonds with safe haven assets is something everyone should consider… right now.