The Petrodollar’s Demise and You

Frank Holmes, John Rubino and Chen Lin are this week’s guests. A few years before August 15, 1971, massive amounts of gold were leaving the United States Treasury for Europe because European nations executed their right under the 1944 Bretton Woods agreement to demand an ounce of gold for every $35 U.S. dollars held. As America began to borrow money to pay for the expansion of its empire in Vietnam and around the world, foreigners believed the dollar would lose its value so increasingly they demanded gold from the United States in exchange for paper dollars. As the vast horde of gold left the U.S., President Nixon understood that without gold backing the dollar would become worthless so he simply refused to honor America’s obligation to back the dollar internationally with gold. To ensure the dollar would become the world’s reserve currency without a gold backing, the Nixon Administration arranged with the Saudi royal family to demand payment for its sale of oil in U.S. dollars. In exchange the U.S. ensured the royal family that it would use its military might to guarantee the royal family would retain dictatorial control of Saudi Arabia. From that time on, the dollar became known internationally as the “petrodollar.” It has remained the world’s reserve currency but now for reasons that will be discussed, the U.S. is losing that privilege to China, which along with Russia, Brazil, India, South America and Saudi Arabia, is forming the “petroyuan.” What the U.S. is losing with this powerful privilege and what it will mean for the wealth of America and its citizens will be the focus of our discussion as well as ideas from all three guests as to how they plan to adjust their investment strategy accordingly.

Frank Holmes bought a controlling interest in U.S. Global Investors in 1989 and has led the company, as CEO and CIO, to become a go-to destination for investors seeking exposure to gold, natural resources, emerging markets and more.

His award-winning CEO blog, Frank Talk, is one of the very first to appear in the world of finance. More than 40,000 investors subscribe to his weekly commentary in the Investor Alert newsletter. Frank is a regular commentator on top financial outlets like Bloomberg and Fox.

His frequent travels helped inspire him to launch the U.S. Global Jets ETF (JETS) in 2015, still the only ETF on the market that focuses on the global airline sector. He followed this up, in 2017, with the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU), which provides investors exposure to precious metals miners.

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John Rubino is the founder of the popular financial website DollarCollapse.com. He is co-author, with GoldMoney’s James Turk, of The Money Bubble: What To Do Before It Pops, and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), The Collapse of the Dollar (also with James Turk), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. Currently John has a growing following as a regular columnist on Substack.

Chen Lin had been a doctoral candidate in aeronautical engineering at Princeton. However, Chen found his investment strategies were so profitable that he put his Ph.D. on the back burner to devote full time to private investing and writing a newsletter titled “What is Chen Buying? What is Chen Selling?” Chen's track record has been phenomenal! In one account we tracked, in which he used no leverage, he was able to grow $5,411 starting in 2002 to over $2.2 million by the end of 2012. You can visit his website at http://chenpicks.com