| Hello Reader, In a recent Over My Shoulder issue, my longtime friend Louis Gave, co-founder of Gavekal Research, laid out four scenarios under the title, “What US-China Decoupling Means for the US Dollar.” (You can read his full report for yourself by joining us today for just $9.95 a month. Only until tomorrow night, though.) The US-China relationship is more tense than at any time over the last decade. At the same time, China is now the largest oil importer in the world... and paying for its crude in US dollars. 
Louis states, “The fact that the world’s largest commodity importer pays for these imports using another nation’s currency was an anomaly, even when the US and China got along. It developed because China’s demand for commodities grew so fast after 2000 that no parallel financial system could be set up in time. “Yet as US hostility towards Beijing increases, Chinese policymakers will inevitably fret about US banks’ ability to fund their country’s vital trade.” His analysis shows that this will end in one of four possible scenarios: - China could simply stick with its reliance on US dollars. This is the scenario the market is pricing in today.
- The US could move to cut China off from the US dollar system. This would likely lead to an implosion of Chinese economic growth, cause commodity prices to crater, and the world economy to enter a deflationary bust “that could make the 1930s look like a walk in the park.”
- China could set up a sort of gold-renminbi standard to conduct much of its trade. This would be bullish for gold and bearish for the dollar.
- China convinces commodity exporters to accept renminbi, which would be bullish for renminbi bonds.
Let’s hope we won’t see scenario 2 in our lifetimes, but obviously, scenarios 3 and 4 are both negative for the US dollar. How likely is it that they come to pass? Louis thinks it’s quite likely: “Markets are priced for Chinese commodity purchases to continue in US dollars, but every geopolitical wind—and domestic policy wind in both China and the US—is blowing the other way.” This is valuable information the likes of which you’ll be privy to every week as an Over My Shoulder subscriber. And right now, you can join us at 33% off. I suggest you try Over My Shoulder for a month. Spend $9.95 to get a month’s worth of top-notch research from world-renowned experts... and if you’re not satisfied, just tell us to stop billing you the next month. It’s really that simple. But hurry—our discount offer is ending tomorrow, September 6, at midnight. Click here to sign up now. Your contemplating the future of the dollar analyst, 
John Mauldin
Co-founder, Mauldin Economics | 