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Chinese yuan note and U.S. $100 note below chess pieces

Market Insider: April 25, 2023

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U.S. Money Reserve

Apr 25, 2023

On April 18, 2023, Jared Bernstein, the presidential nominee for chair of the Council of Economic Advisers, said that China likely wants to erode the dollar’s position as the world’s reserve currency. As the dollar faces pressure, some analysts say precious metals like silver may be safe havens for consumers.

The dollar is facing increased international competition.

The Chinese yuan has become increasingly competitive against the dollar in international markets. In March 2023, Saudi Arabia began talks with China about accepting yuan instead of dollars, challenging the long-held standard of trading oil in U.S. currency. Other countries, such as Russia and Brazil, have also begun using more yuan as part of their currency reserves.

French president Emmanuel Macron expressed support for Europe becoming less reliant on the dollar. In an interview with Politico on April 9, 2023, Macron urged European countries to avoid being “America’s followers.”

Overlapping international paper currencies

The dollar’s position may be in jeopardy.

Eurizon SLJ Asset Management analysts say the dollar’s role in international trade eroded at 10 times its usual pace in 2022. In a research note published on April 17, 2023, researchers stated, “We believe the erosion of the dollar’s reserve currency status has accelerated in recent years at an alarming pace.”

Billionaire Ray Dalio says the dollar’s dominance is on the decline. In an interview on The Julia La Roche Show, Dalio argued that both the growing presence of the yuan in international trade and U.S. sanctions would lead countries to lessen their exposure to the dollar.

U.S. paper currency over chart showing volatility

Financial analysts predict that precious metals could be safe havens for consumer portfolios as the dollar declines in strength.

A team of analysts at Citigroup says that silver prices are poised to rally on the back of the dollar’s decline. In a note to clients, the analysts recommend buying precious metals, silver in particular, saying, “Precious metals and especially silver has near perfect conditions for the ongoing bull market.”

Speaking to reporters for Forbes, Nigel Green, CEO of wealth advisory firm deVere Group, predicted that silver demand would grow because of dollar weakness in the international market.

If recent analyses are correct, silver may serve as a potential safe haven for consumer portfolios as the dollar faces increased pressure internationally.

Read U.S. Money Reserve’s “Market Insider” each week for more economic insights. Nothing herein should be considered as portfolio or retirement advice as U.S. Money Reserve (“USMR”) cannot and does not offer financial advice. Clients should consult a financial advisor for specific advice. This commentary is provided by USMR for informational purposes only and is provided on an “as is” basis without any warranty of any kind, whether express or implied. Your use of the information provided in this commentary is entirely at your own risk. In no event will USMR be held liable for any indirect, special, incidental, or consequential damages arising from the use of information contained in this commentary.

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