• Development of Central Bank Digital Currencies, aka, a Digital Dollar, is accelerating around the globe
• The U.S. is motivated to develop a digital dollar to avoid losing economic dominance to China in the cyber age
• Deemed inevitable, a digital dollar can be defended against by moving assets into physical precious metals
  China Claims World’s Largest Gold Vein

Rise of the Digital Dollar

The push toward Central Bank Digital Currencies (CBDCs), aka, a Digital Dollar, is reshaping the global financial landscape at lightning speed. With 134 countries exploring CBDCs—including major powers like China piloting massive programs—this shift is more than a trend; it’s a race. But as the U.S. navigates its role in this new digital economy, critical questions arise: What does a “digital dollar” mean for your financial freedom? And more importantly, how can you protect yourself against the risks?

Where the Digital Dollar is Now

– 134 countries, representing 98% of global GDP are exploring a CBDC. That number was only 35 in 2020.
– 19 G20 countries are in the advanced stages of launching a CBDC
– All original members of the BRICS Alliance (Brazil, Russia, India, China, South Africa) are in pilot phase
– Since Russia invaded Ukraine, the number of cross-border wholesale CBDC projects has doubled
– Project mBridge connects banks in China, Thailand, Saudi Arabia, and others using CBDC
– The Digital yuan(e-CNY) is the largest CBDC pilot in the world. In June 2024, the e-CNY did over $986 billion in transactions, four times the amount done in June 2023
– The digital euro is in pilot for domestic use in Europe and internationally¹

²

How About the U.S.

The U.S. Federal Reserve is participating in a cross-border CBDC project. It’s called Project Agora. It connects the Fed with 6 other major central banks. Along with a large group of private financial firms. Fed Chair Powell told the Bank for International Settlements (BIS) Innovation Summit 2021 that ‘way more than half’ of the Fed’s 12 regional banks had ‘active work’ on CBDC.³

What Exactly is a Digital Dollar

A digital dollar is issued by a central bank and controlled by a government. They are different than cryptocurrencies like bitcoin. Cryptocurrencies are decentralized. Their transactions aren’t monitored by one authority. Instead, blockchain technology is used as an independent ledger.

Why Governments Want a Digital Dollar

There are several reasons for countries to adopt a digital dollar. They are promoted as making money more accessible to those outside of the banking system. CBDC are supposed to increase efficiency in domestic and international trade transactions. Making them cheaper and faster. CBDC could allow governments to implement monetary policy faster and more effectively.

Why the U.S. Wants a Digital Dollar

The U.S. wants a CBDC for all the above reasons. But they have another motivation. The U.S. needs to retain its role as the world’s dominant currency. They want to keep all the financial advantages that gives. Policy makers fear that if the U.S. doesn’t take the lead, it will itself locked out of a new electronic financial system. Its leading role would be replaced by China, who is leading the development of CBDCs. China’s first-mover advantages would allow it to determine the shape of this new economic world order. With itself at top and its CBDC as the new primary means of exchange.

Problems of the Digital Dollar

The digital dollar brings problems along with its solutions. The U.S. could lose the ability to track criminal money flows or enforce sanctions.

A federally issued and controlled dollar could make the private banking system obsolete. Major economic disruptions could result.

The digital dollar also creates greater fears about loss of freedom. Both economic and personal. The Federal Reserve could manipulate their digital dollar to control financial behavior. For example, say they want to stimulate consumer spending to avoid recession. They can put an expiration date on dollars. If they aren’t spent by a certain time, they disappear from your account. Or the Fed can implement negative interest rates to force retirement savers to spend their funds. Cyber money also becomes vulnerable to cyber criminals. Billions could be stolen from the safety behind their screens.

Freedom advocates also fear the control a digital dollar would give. Every transaction would be recorded. There would be no more privacy. And there could be consequences for buying something or supporting a cause the government doesn’t approve of. It would be in their power to block the transaction, fine you, or simply erase your funds from the digital ledger without recourse.

Resistance to the Digital Dollar

President-elect Trump is taking the lead to stopping an American digital dollar. He stated, “As your president, I will never allow the creation of a central bank digital currency.” He continued, ” Such a currency would give the federal government – our federal government – the absolute control over your money. They could take your money, you wouldn’t even know it was gone. This would be a dangerous threat to freedom – and I will stop it from coming to America.”⁴

Legal analysts have stated that the Federal Reserve does not appear to have legal authority to issue a CBDC without congressional authorization. And Fed Chair Powell said he would not issue a digital dollar without Congressional approval.

The House of Representatives already voted to stop the Fed from issuing a digital dollar. House Democrats fought hard to stop the bill. But the bill has not yet been addressed in the Senate. Right now, the Republicans hold a slim majority. A majority that may disappear in two years. Afterwards, Congress would have a free hand to push their digital dollar agenda.
Fearful of the federal government, states are fighting back against a digital dollar. Florida, Missouri, and Tennessee have introduced bills to ban or limit the use of CBDCs.

Conclusion

The global financial system is going digital. The U.S. may ultimately be forced to join the Digital Dollar movement to avoid being shut out of the new economy. Currently, President-elect Trump, Republicans and some states are resisting being dragged into the digital dollar world. But the change may be inevitable. That’s why it is important to do something now to protect your assets. Owning physical precious metals gives you a safe haven asset that is immune from the hazards of the digital dollar. A Gold IRA gives you the means to protect your funds for the long term. To learn more, call us today at 800-462-0071.

Notes:
1. https://www.atlanticcouncil.org/cbdctracker/
2. https://www.atlanticcouncil.org/cbdctracker/
3. https://www.bis.org/press/p240403.htm
4. https://www.globalgovernmentfintech.com/trump-pledges-to-block-potential-us-central-bank-digital-currency/

• Experts fear China’s gold buying binge is a prelude to an attack on Taiwan
• A Chinese attack on Taiwan is predicted to send the price of gold skyrocketing, hitting up to $5,000 an ounce
• Central banks and individuals are flocking to physical gold to secure their wealth during this time of political chaos

China Gold Buying: Prelude to Taiwan Attack?

Having learned a lesson from Russia, China has been sanction-proofing their economy for two years. Now, China’s leader Xi may be ready to achieve the long-sought goal of annexing Taiwan. A Chinese attack on Taiwan would shake the global economy and send gold prices soaring.

Experts say China has been preparing for a major action. They have been building trade relationships in the ‘Global South’, stocking up on oil and gas, and most notably, buying gold on a colossal scale.

In the last 17 months, Chinese gold reserves, that we know about, soared 17%. They now have 73 million ounces of gold currently worth $170 billion. They have also raised their foreign exchange reserves to their highest level since 2015. This is looking to some analysts as a war chest meant to defend against sanctions brought on in response to an attack on Taiwan.¹

²

Once thought impossible, a Chinese attack on Taiwan is looking more probable. Xi himself ordered his armed forces to be “ready to invade Taiwan by 2027.”³

Xi is thought to be encouraged by a few factors. He may have perceived Western weakness and disarray on Ukraine. China can capitalize on Iran increasing global instability. Thanks to Western sanctions, China has access abundant cheap energy from Russia. They have also secured supply chains and built-up strategic reserves of vital resources.

“Xi seems to have studied the sanctions playbook the West used against Russia over Ukraine and subsequently initiated long-lead protective measures to batten down the hatches of China’s economy to resist similar pressure,” Michael Studeman, former head of the Office of Naval Intelligence. Studeman continued, “”Xi likely knows attempting to assimilate Taiwan would lead to much fiercer global resistance and harsher whole-of-society repercussions that would likely last years. And he intends to ready China to endure them.”⁴

The move on Taiwan is looked at as potentially more than a territorial dispute. For the Chinese, it could be the dawn of a new world order with China at the top. Militarily, China is building up its nuclear arsenal, missile capabilities, and space-based weapons. The military expansion is backed by its massive espionage and cyber campaigns. Overall, China is positioning itself to usurp the role of global superpower.

Economic Attack

China’s attack may not be limited to Taiwan. Economists are interpreting China’s actions as a prelude to a global economic assault.

“China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?” said Andreas Steno Larsen, CEO of Steno Research.⁵

Devaluing their currency is widely described as a “nuclear option” by economists. It could trigger worldwide consequences. The action would make their goods drastically cheaper, escalating a trade war with the US. The US is already accusing China of flooding markets with cheap goods. By hoarding gold and oil, China can hedge against the negative effects of a large devaluation.

Effect on Gold

Gold may skyrocket if China invades Taiwan. China’s gold demand may continue increasing if they are planning a Taiwan attack. They’d do this to support their economy and defend against sanctions. China holds a massive $3.25 trillion in foreign currency that could quickly be converted into gold. They could effectively corner the gold market at a time and date of their choosing. Doing so would send the price of gold soaring. An attack would send investors around the world rushing to protect their wealth with gold against volatility. This too would force the price of gold skyward. Analysts predict an attack on Taiwan could result in gold hitting $3,000 an ounce and going as high as $5,000 an ounce.⁶

Conclusion

Gold has been consistently breaking price records. The last 18 months have seen the greatest net gold bullion purchases by central banks worldwide since 1950. BRICS nations are leaning into gold to further their de-dollarization agenda. The Middle East conflict is sending people flocking to safe haven assets like gold.

A Chinese attack on Taiwan could send gold prices to unheard of heights. In addition, the stock market is predicted to fall between 20 and 30%⁷ during the initial attack. Coupled with a trade war, the US economy could be stuck in a negative growth loop for years. This moment in time presents an opportunity to protect one’s retirement funds and potentially grow them with gold. A Gold IRA is designed to secure your nest egg from global instability and economic chaos. Contact American Hartford Gold today at 800-462-0071 to learn more.

Notes:
1. https://www.telegraph.co.uk/business/2024/05/01/xi-jinping-vast-gold-war-chest-enable-china-take-taiwan/
2. https://tradingeconomics.com/china/gold-reserves
3. https://www.telegraph.co.uk/business/2024/05/01/xi-jinping-vast-gold-war-chest-enable-china-take-taiwan/
4. https://www.newsweek.com/china-may-preparing-deploy-economic-nuclear-option-1894985
5. https://www.newsweek.com/china-may-preparing-deploy-economic-nuclear-option-1894985
6. https://seekingalpha.com/article/4635246-gold-may-skyrocket-if-china-invades-taiwan
7. https://seekingalpha.com/article/4635246-gold-may-skyrocket-if-china-invades-taiwan

• Biden proposes massive new taxes targeting businesses and high worth individuals
• The new taxes could hurt corporations, IRAs, and the housing market
• Investigate a Gold IRA to protect your assets before these taxes take effect

Prepare for Higher Taxes

On top of facing record inflation, interest rates, and debt, Americans should now brace for higher taxes if the Biden administration has its way. As a former White House economist put it, Biden’s latest budget is a mix of tax hikes, handouts, and living with debt. While this government tries to fund its left-wing agenda, those interested in protecting the value of their savings should consider taking steps now to insulate themselves from new taxes.

New Taxes

Biden’s new budget includes steep tax increases on businesses, high worth individuals, and retirement plans. His proposal amounts to a gross tax hike exceeding $5.1 trillion over 10 years. It creates more complex rules for taxpayers at all income levels. According to the Tax Foundation, the promised higher taxes would decrease economic output and incomes and reduce US competitiveness.¹

²

The Tax Foundation maintains that the plan’s promised deficit reductions are based on several unrealistic assumptions. The decrease takes for granted that the 2017 tax cuts will be left to expire, despite Congress signaling otherwise. It also presumes the child tax credit won’t go beyond 2025 which goes against Biden’s platform. And it factors in robust economic growth that falls far short of what the Congressional Budget Office is predicting.

Businesses and corporations are hard targets in this proposal, facing a 33% increase in taxes. The Tax Foundation has found corporate income tax to be the most harmful tax for economic growth. US businesses are already hampered by one of the highest corporate tax rates in the world. Increasing it will further crush growth in an economy already on the cusp of recession. Studies have shown that lowering the corporate tax rate significantly boosts investment in the US – yielding economic benefits to every level of society.³

Beyond business taxes, the proposal includes raising the top individual income tax rate to 39.6%. It also intends to tax long-term capital gains at ordinary income tax rates and limit retirement account contributions for those with large IRA balances. For some taxpayers, Biden wants households to pay a minimum 25% tax rate on unrealized capital gains. In other words, you’d be paying taxes on profits you haven’t even collected yet.

Beefing Up the IRS

New tax laws don’t matter if they can’t be enforced. Biden plans to preserve the $80 billion funding for the IRS that was in the Inflation Reduction Act. It calls for an additional $104.3 billion in IRS funding on top of that.⁴

Another problem with Biden’s new tax plan is that it is exceptionally complicated, which is saying something when it comes to tax codes. A new higher corporate alternative minimum tax meant to be put into effect has been consistently postponed. The reason for the delay is that it is too complex to enforce, even for the IRS.

The Housing Market

The proposed taxes meant to help a stalled housing market are most likely going to make it worse. Biden has called for tax credits to subsidize home purchases and developers. But boosting demand though subsidies is likely to cause housing prices to go even higher. And market dynamics mean most of the credits will stay in the pockets of developers and financing agencies with no guarantee of more houses being built.

Reactions to the Budget

Kevin Hassett is a former Chairman of the Council of Economic Advisers. He said. “It’s just astonishing, this budget. What they’re doing is they’re borrowing to gin up GDP, but they’re not really getting much GDP out of it. In fact, they’re wasting a lot of the money.”

He continued, “”And so Biden is borrowing money from the Chinese to give jobs to illegal aliens and he’s doubling down on that in the budget, and it’s absolutely economic nonsense. It’s got to stop.”⁵

Senator Rick Scott said, “Prices keep going up, interest rates keep going up, and taxes keep going up, but President Biden wants to add another $6.4 trillion in debt over the next four years with more reckless, inflation-fueling spending.” And Senator John Cornyn said the massive new taxes on the job creators will cause prices to increase.⁶

Conclusion

The Biden administration is adding high taxes onto its legacy of inflation, debt, and government handouts. Analysts think that if even half of his tax proposals make it through Congress, businesses and individuals will suffer. Before these taxes become law, Americans interested in protecting their retirement savings from heavy new taxes should investigate a Gold IRA from American Hartford Gold. Learn how precious metals can safeguard your future today by calling 800-462-0071.

Notes:
1. https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/
2. https://taxfoundation.org/blog/biden-budget-taxes/
3. https://taxfoundation.org/blog/biden-budget-taxes/
4. https://www.reuters.com/world/us/biden-budget-plan-would-raise-us-taxes-by-4951-trillion-over-decade-treasury-2024-03-11/
5. https://www.foxbusiness.com/economy/former-white-house-economist-warns-bidens-budget-catalyzes-economic-disaster
6. https://www.foxbusiness.com/economy/former-white-house-economist-warns-bidens-budget-catalyzes-economic-disaster

• Gold prices are reaching record heights with no slow down in sight
• Numerous forces are aligning to push gold prices higher
• Americans are moving into Gold IRAs to gain both tax-advantages and the wealth protection of physical precious metals

Gold Prices Continue to Rise

“There is a perfect storm brewing in the gold market,” says Phillip Streible, the Blue Line Future Chief Market Strategist. And a recent price surge is proving him correct. Gold rose 1.3% to hit a new record of $2,141.60 per ounce, $150 above its February lows. Prices rose on the hopes of a Fed pivot on interest rates, geopolitical risks, and a potential stock market crash.¹

Market watchers were surprised by the scale of gold’s rise. Experts are saying momentum is helping the precious metal to continue its upward trajectory.

²

Saxo Bank said increased demand came from the rising risk of a falling stock market. Ole Hansen, senior strategist at the bank, pointed to weak US manufacturing data as a signal for an impending market correction. There is also growing concern that the ‘Magnificent 7’ tech bubble is about to burst.

Gold’s ascent is boosted by the belief in upcoming interest rate cuts by the Federal Reserve. The exact date of when the cuts will happen is unknown. Swap markets show an almost 60% chance of a rate cut in June.

Central banks are also providing critical support to gold prices even as interest rates spiked last year. Typically, gold goes down when interest rates increase because interest paying securities become more attractive than non-interest paying metals. “Speculation over a Fed rates pivot and continued geopolitical tensions keep gold shining,” said Ewa Manthey, commodities strategist at ING Group.³

Geopolitical risks are also supporting gold’s safe haven demand.

“We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with ongoing wars and the upcoming US election,” said the ING Group.⁴

Attacks on shipping in the Red Sea increase the risks to energy and supply chains. In addition, the conflict in the Middle East threatens to broaden into a wider regional war that could have global economic implications. Volatility is further amped up as a contentious US presidential election goes into full swing, bringing a new level of uncertainty with it.

Bullion was also supported over the Lunar New Year. Chinese consumers are seeking safe haven assets against the turmoil in the country’s stock market and collapsing real estate sector.

The prospect of another regional bank crisis is also fueling interest in gold. New York Community Bank is down 80% since January while other regional banks are down 40%. A collapsing banking system will have two effects on gold. Investors will flock to the precious metal as a safe haven asset to protect the value of their portfolios from the impact of a banking crisis. It may also cause the Fed to cut rates sooner to provide relief for banks being crushed by high interest rates.

Gold – Room to Go Higher

Gold has risen more than 600% since the turn of the millennium.

Analysts think that there is significant underinvestment in the gold market right now. There is already critical support to keep gold above $2100. Streible continued, “I think we could be easily back at $2,500. If you go since 1990, within the first 30 days of the first interest rate cut, gold futures on average have had a rally of about 6%. So if you go 6% from here, that’s going to be about another $150 higher. So I think $2,500 is a realistic target.”⁵

Conclusion

All the contributing factors that elevate gold prices are coming into alignment. Interest rates are set to be lowered, reducing the holding cost of gold and competition from interest bearing assets. A rise in global risk if fostering demand for safe haven assets. A tech bubble ready to burst and a banking crisis about to erupt hold the potential to irreversibly damage retirement funds, increasing the need for the security provided by precious metals. A Gold IRA from American Hartford Gold can combine the benefits of wealth protecting precious metals with the tax advantages of an IRA. Contact us today at 800-462-0071 to learn more.

Notes:
1. https://www.mining.com/gold-price-sets-new-record-on-fed-pivot-geopolitical-risks/
2.Google
3. https://www.mining.com/gold-price-sets-new-record-on-fed-pivot-geopolitical-risks/
4. https://www.mining.com/gold-price-sets-new-record-on-fed-pivot-geopolitical-risks/
5. https://finance.yahoo.com/video/gold-prices-hit-2-1k-152713687.html