China is refusing to buy iron ore from Australia largest mining company, **in US Dollars**. As we saw at the Shanghai Cooperation Organization at the start of September, China wants a greater global role for the China National Yuan (CNY) currency, and less for the USD.
About 9 days ago, China told its steelmakers to pause buying iron ore from BHP, a massive Australian mining company. Iron ore is Australia’s most valuable export, and without it, both countries lose money.
The order came from the Chinese government because they no longer wish to utilize US Dollars for Iron Ore purchases. They want the US Dollar out of commerce transactions, because using the US Dollar makes China susceptible to US-imposed economic sanctions, and blocking of payments through the US-dominated SWIFT banking system.
BHP did not want to halt using the US Dollar, so China halted import of Iron Ore through BHP.
China buys 85% of Australia’s iron ore so this is very concerning for Australia.
Most international commerce utilizes US Dollars between sellers and buyers because the US Dollar has been the de-facto reserve currency for the whole world, since World War 2.
As more and more countries halt using the US Dollar, to make it impossible for the US to impose economic sanctions, those Dollars will begin flooding back into the US from countries around the world who don't use them anymore.
That influx of dollars will cause the value - the purchasing power - of the Dollar to plummet relative to many foreign currencies. As the Dollar plummets in value, imported goods will being costing more and more US Dollars - if foreign countries sell to us at all!
Inflation inside the US will skyrocket.
This is one of the quiet reasons the price of Gold is rising. Countries are realizing they need to get OUT of the US Dollar and buy into something that everyone will accept as payment for international trade.
Goldman Sachs is now telling its investment and banking clients they expect Gold to hit $4300-$4900 per OUNCE, by this December.
