China Offloads Record $53.3 Billion in US Treasuries, Ushering in a New Era of De-Dollarization

The world’s second-largest economy is steadily offloading billions of dollars in US Treasuries. This is a frightening symptom of the larger trend of de-dollarization as countries—both allies and adversaries—begin to worry about the dollar’s decline.In this week’s The Gold Spot, Scottsdale Bullion & Coin Founder Eric Sepanek and Precious Metals Advisor Kathem Martin discuss China’s alarming rate of selling US treasuries, what other countries are following suit, and how this threatens the financial security of all American citizens.China’s Dollar Dump EscalatesOver the past few years, China has been the ringleader of de-dollarization as it seeks to sever economic ties with the US and usher in an era of Yuan hegemony. According to the US Treasury Department, the People’s Bank of China (PBOC) shed $48.9 billion of Treasuries in Q1 of 2024, slashing its holdings from $816.3 billion in December last year to $767.4 billion in March.That single-quarter drop reaches $53.3 billion when factoring in agency bonds. Year-to-date sales of US treasuries amount to $74 billion, and China’s USD holdings stand at the lowest point since 2009.BRICS Follow the LeaderAs the second largest holder of US Treasuries, China’s economic trajectory has an outsized impact on the US. However, it’s not the only nation moving away from USD. The BRICS nations – a group of emerging economies – are driving a wedge into the dollar’s foundation, threatening to topple the world reserve currency.What started as a loose band of five countries is rapidly expanding into one of the most powerful forces on the global economic stage. These nations are actively pursuing the development of a gold-backed BRICS currency to directly rival the dollar. Russian Foreign Minister Sergey Lavrov claims that 90% of trade between Moscow and Beijing is already settled in Yuan or Rubles.Experts Raise Economic AlarmsMany domestic and foreign economic experts warn about this development and its potential ramifications.Bloomberg Intelligence’s chief Asia foreign-exchange and rates strategist Stephen Chiu points to a clear trend away from the dollar:“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings…China’s selling of US securities could speed up as US-China trade war resumes.”Former International Monetary Fund (IMF) Deputy Director Desmond Lachman agrees regarding the inevitably of a costly trade war between the world’s largest economies:“Anyone who doubts that we are headed for a U.S.-China trade war has not been paying attention.”De-Dollarization: Ditching the Dollar, Going for GoldThe interim strategy of the BRICS countries and other dollar-skeptic nations is to bolster domestic currencies by shunning the dollar. However, their long-term strategy revolves around physical gold bullion. Central banks have been buying gold bullion at record rates in 2022 and 2023, with experts expecting the binge to continue through 2024.Unsurprisingly, the usual suspects—China and Russia—are at the top of the pile, massively expanding their gold reserves. The PBOC’s gold holdings have gone from less than 2% of reserves to nearly 5% within less than a decade.With central banks ditching USD for gold, savvy investors are following suit. If the world’s wealthiest, smartest, and most experienced financial managers think gold is a safer option than dollars, it’s time to take notes.How the Dollar Dump Hurts AmericansThe global shift away from the US dollar could be catastrophic to our financial stability at home.The savings accounts, retirement plans, and livelihoods of everyday Americans depend wholly on bonds, stocks, savings accounts, and other dollar-related assets.As foreign governments pump trillions into the economy, the dollar’s value inevitably decreases. Our government’s addiction to spending and printing only compounds those negative effects. This currency devaluation hurts all dollar-linked assets and destroys investor confidence.Free Report: De-Dollarization TimelineThe days of believing the US government will secure the dollar’s future are long gone. Smart money investors are taking their financial security into their own hands. To empower clients to make the best decisions possible, we put together a comprehensive De-Dollarization Timeline.This easy-to-read report breaks down the historical events that have led us to this point. It’s also routinely updated with relevant events so that you can stay updated. 

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