Somewhere in Nevada, 35,000 Nvidia H100 GPUs are running at full capacity. Drawing 50 megawatts of power. Training the AI models that will touch every industry on earth. The analysts covering these chips are watching Nvidia’s order backlog, TSMC’s yield rates, and Microsoft’s capex guidance.

Almost none of them are watching the Strait of Hormuz.

They should be.

On February 28, 2026, the Iran war began. And four supply chain shocks started moving through the global economy simultaneously — each one invisible on its own, devastating in combination. This piece connects those dots.

Shock 01 - The Financing Loop

$126 billion in Gulf sovereign capital — drying up

The AI boom wasn’t just built in Silicon Valley. It was financed from the Gulf. Most people don’t know this. Let’s fix that.

In 2025, the seven largest Gulf sovereign wealth funds committed a record $126 billion in global capital — 43% of all sovereign capital deployed worldwide. A historic high. And a disproportionate amount of it flowed into American AI.

These governments were converting oil — a finite, politically vulnerable commodity — into equity stakes in the technology that will define the next fifty years. Petrodollars becoming petabytes.

The free-flowing petrodollars that turbocharged the AI funding cycle are tightening. And in a sector that runs on the assumption of infinite capital availability, tightening is its own kind of crisis.

Since the war started, Gulf economies are burning cash on defense, reconstruction, and economic stabilization. Saudi PIF had already scaled back US equity holdings by 33% in late 2025 — before the war even started. Analysts now model up to $2 trillion in broader Gulf commitment slowdowns.

The $40 billion Andreessen fund. The $100 billion BlackRock-MGX data center partnership. The OpenAI round. These are the next phone calls that don’t get returned.

Shock 02 - Helium + Tungsten: The Invisible Chip Killers

Two elements. Both inside every AI chip. Both failing simultaneously.

This is the shock that almost nobody is connecting to AI. And it’s actually two shocks compounding into one.

Helium isn’t for party balloons. Inside a chip fabrication plant, it cools silicon wafers during deposition, detects microscopic leaks in vacuum systems, and enables EUV lithography — the process that etches circuits at 2 nanometers. The process that makes Nvidia’s H100 physically possible. There is no viable substitute.

On March 2nd, Iranian drones struck Qatar’s Ras Laffan Industrial City — one of only two plants on earth that produces semiconductor-grade helium. QatarEnergy declared force majeure. Production will take a minimum of two to three months to restore, with full supply chain normalization taking four to six months, per Kornbluth Helium Consulting.

27–30% of global helium supply went dark simultaneously. TSMC, Samsung, and SK Hynix — who collectively manufacture more than half the world’s advanced AI chips — are now on rationing protocols. South Korea’s stock market lost $500 billion in market value in four trading days.

Then there’s tungsten. And this one started before the war.

Tungsten hexafluoride fills the microscopic contact structures inside every advanced semiconductor chip. It’s also in the drill bits that manufacture PCBs, the ion implantation components in fab equipment, and the sputtering targets used in deposition. No substitute exists at advanced nodes.

China controls 80% of global tungsten production. In February 2025, Beijing placed tungsten on its export control list — requiring individual export licenses and detailed end-user documentation for every shipment. Prices began accelerating. Then the Iran war hit and defense sector demand for tungsten — armor-piercing munitions, drone components, missile guidance systems — exploded. BMO now forecasts a supply deficit for all of 2026. Western alternative supply chains are three to five years from meaningful capacity.

DRAM and HBM chip prices nearly doubled in Q1 2026 versus Q4 2025, per Counterpoint Research. Intel’s Q1 earnings call was blunt: “There’s no relief as far as I know. There’s no relief until 2028.”

Shock 03 - The Petrochemical Squeeze

$25B in annual Gulf exports blocked. Hardware costs surging at every level.

Walk into any data center and look past the servers. The cables between racks. The plastic casings. The printed circuit board laminates inside every switch and storage array. The foam packaging around every component shipped from Taiwan.

All of it is downstream of one thing: petrochemicals.

The Gulf exports $20–25 billion worth of petrochemicals through the Strait of Hormuz annually. Since February 28th, that flow has been choked.

Kingboard Laminates — the world’s largest supplier of copper clad laminates, the substrate material that every single printed circuit board is built on — raised prices 10% immediately after the war started. Not after months of negotiation. Immediately.

CCL is in everything. Every server motherboard. Every GPU PCB. Every networking switch in every data center rack. HP, Dell, Lenovo, Acer, and ASUS have already warned enterprise clients of 15–20% price hikes heading into H2 2026.

Layer energy costs on top. US data centers consumed roughly 200 terawatt-hours of electricity in 2025 — about 4% of total US consumption — growing at 15–20% annually. The same war pushing petrochemical prices higher is pushing energy costs up simultaneously. Capital Economics flags that energy costs alone could meaningfully dent AI infrastructure ROI projections.

IDC models a full percentage point drop in global IT spending growth if this conflict extends past 90 days. One point sounds small. At the scale of a $5 trillion global technology industry, it’s $50 billion in deferred investment. Hardware capex inflation per new data center build is estimated at 8–12%. Chip delivery timelines have extended by one to two quarters minimum.

The AI boom is not dead. The demand is real. The investment thesis hasn’t changed.

But the assumption that AI infrastructure could scale infinitely, cheaply, and without geopolitical friction — that assumption just got stress-tested. By a war. By a trade conflict. By two invisible elements almost nobody was watching. And it didn’t pass cleanly.

The next time someone tells you the AI boom is unstoppable — they’re probably right about the destination.

They might be wrong about the timeline. And they’re almost certainly wrong about the price.

With the U.S. fermenting its debt bomb, bond yields rising, and the dollar weakening, lurking right around the corner, lies another massive shock to the fragile global economic system - the Bank of Japan.

(BOJ might be my second favorite central bank.)

The tiny island is becoming a massive threat to global finances. So let's dig into the hows and whys of the matter.

Let’s start with what's happening in Japan.

1. Yen has been becoming weaker since the pandemic.

   

2. The country is experiencing a population decline. As of 2025, Japan's fertility rate stood at 1.3%, well below 2.1% of the population replacement level, coupled with an ageing population.

2. The country is becoming less innovative as years go by. In 2024, the Global Innovation Index ranked Japan as the 13th most innovative country, down from fourth in 2007, the first year of the index. It has been surpassed by Korea at 6th and China at 12th.

3. The country’s GDP is also shrinking. Japan’s GDP stood at $4.2 trillion in 2023 compared to $6.1 trillion in 2012, and it might even fall behind India as early as 2027.

While GDP is not a measure of the development of a country, it does make for a great selling proposition for investors and companies alike.

An aging population, shrinking economic growth, coupled with low innovation, has turned Japan into a state where global investors go to borrow money cheaply and leave, thanks to the country’s creative negative interest rate experiments.

Japanese Prime Minister Ishiba even warned the globe that the “country’s fiscal situation is undoubtedly extremely poor, worse than Greece’s,” while addressing the parliament on May 19.

Not a dig towards Greece, just putting things into perspective.

The land of the rising sun is heading towards a sunset. This is partly because of its over-reliance on the U.S. and absorbing economic punches so that the U.S. can stay afloat.

Two atomic bombs can change people a lot.

So what did the U.S. do, and how might it bite them back?

Apart from illuminating the streets of Japan like the freaking sun back in 1945, the U.S. might have also given Japan the asset bubble of the 1980s, from which the economy never really recovered.

Back in September 1985, under the Plaza Accord, the U.S. decided to devalue the dollar against the French Franc, the British Pound, the German Deutsche Mark, and the Japanese Yen.

Why? Because the dollar was getting too expensive (thanks to a certain cigar-smoking central banker), which would have contributed to fewer foreign investors coming into the country.

The promise was to appreciate the Yen 10% against the dollar, but things got out of control or were let to get out of control, and the Yen appreciated 25% within a span of a few months after the treaty was implemented.

As the Yen became unreasonably strong, people started speculating with their cash in the real estate market and the stock market, thanks to the deregulation that the U.S. imposed on them under the treaty.

The difference between a child’s soap bubble and an asset bubble is - when the asset bubbles pop, it makes a lot of noise.

And boom, an explosion happens in the Japanese economy in 1992. What was supposed to be a lost decade for the Japanese economy (can’t print their way out of it unlike others), started becoming two lost decades and then three lost decades.

And how did the U.S. help them in coming out of a crisis that the U.S. catalyzed? By making them buy U.S. T-bills to stabilize their economy. Fair argument. After all, you are buying the safest and most liquid asset known to mankind.

The money, which could have been invested in their own economy (which would have been a bit riskier), was rather shipped to D.C. to buy bonds. Risk-averse.

Every time the U.S. was in crisis and turned on its printer, Japan was first in line to buy those bonds, knowing very well that this is not sustainable in the long run. But how do you say no to your dear friend who is also your protector after all?

This became a snowball effect. The U.S. found a foreign national entity willing to buy their debt at each auction, and Japan found an asset that they thought was reliable and stable.

And they lived happily ever after.

The Black Swan event

But just like all fairy tales, things come to an end, sometimes not so happily.

With Japan becoming hooked to the U.S. T-bills like a crackhead, they accumulated the largest foreign holding of U.S. bonds at a staggering value of $1.1 trillion, enough to tip the needle in the wrong direction.

All of this was no concern at all until Trump imposed tariffs on the already smoke-huffing dragon economy.

With China standing its ground on tariff negotiations and East Asian countries like South Korea, Japan, and public enemy number 1, China, agreeing to a “rules-based” multilateral trade system, Japan has found its voice again.

The country threatened that it would unleash its bond holdings in the market to get more favorable trading terms with the U.S..

But at this point, they actually might have to do it.

See, the stock market makes a lot of noise, but the real action is in the money markets, i.e. bonds or treasuries.

Japan’s 40-year bonds have hit an all-time high at 3.6%, because, as if already investors were not keen on investing in the country or holding their bonds, but tariffs put them on shakier ground.

Inflation and oil prices aren’t helping Japan either. Headline inflation reached 3.4% in April 2025, driven primarily by food and energy costs.

War in the Middle East made oil expensive for a brief moment this week - giving a teaser to Japan about what might happen, because the east Asian country imports every single drop of oil and is highly susceptible to changing prices and its correlation with inflation.

This might force Japan’s hand to sell its beloved possession of the U.S. T-bills.

Timing couldn’t be worse.

The U.S. bonds are also kissing 4.6% and might run upto back breaking 5% by the end of the summer if bond holders do not see deficit spending coming under control.

The U.S. 20-year bond auction held on May 21 didn’t go to plan either. There was very low demand for U.S. debt as global investors expect the U.S. to default on its obligations (which they might - on purpose).

This is the global margin call, which Japan might start as it realizes that it is sitting on toilet paper branded as U.S. T-bills. The black swan event.

The U.S. needs to focus on making Japan happy to discourage them from selling the T-bills. Japan’s bazooka to the head first, then China’s assault rifle to the chest later. Get priorities right.

It’s surprising how the safest asset can suddenly become an anchor around your neck in a span of five years. While many would argue that this was years in the making (I agree), but how quickly things turned on the U.S. T-bills is still astonishing.

Well, the U.S. lawmakers aren’t dwindling thumbs either, they are trying to wean off their printing habits, prepping to devalue the dollar, default on existing debt (kinda; will talk about it in another story) and looking for alternative debt buyers apart from Japan and China.

The U.K. overtaking China as the second biggest foreign bond holder, and Trump’s beautiful trip to the Middle East is not serendipity. It's crisis management.

Gold is hitting all-time highs, and people are flocking to the shiny metal like there is no tomorrow.

I mean, it seems like there is no tomorrow—Trump’s reciprocal tariffs aren’t yielding the dealmaking he anticipated, markets are spooked, the dollar has been challenged by its own minters, and during times of such chaos, people are reverting back to the OG store of value: precious gold.

Makes sense.

But what if gold is overbought? After all, even the markets' grim reaper, Jim Cramer, said, “Gold is a tremendous value.”

And if it is, then what?

Subscribe now

The Sunrise

So let's start with why gold is rising.

It's the usual suspects: global markets are losing faith in the dollar as the reserve currency due to years of weaponizing the greenback, US T-bills are losing buyers, and existing holders expect the US to default on its commitments.

After all:

• If your expenses increase - the US budget deficit jumped 23% YoY to $1.3 trillion in the first two fiscal quarters of 2025 (October to December and January to March); and

• Your revenue increases marginally - in Q1 and Q2, US govt revenue totaled $2.2 trillion, up 3% YoY; basically keeping up with inflation.

• You need to take on debt to operate - The US govt borrowed $1.1 trillion in the first five months of fiscal year 2025, including $307 billion in February, or $8 billion a day since October 1.

Your creditors are bound to lose faith in your repayment capabilities. Yes, the US government can indeed survive by just making interest payments and rolling over its bonds when they hit maturity, but that's the case when the global financial markets want to hold US bonds.

Reciprocal tariffs have not only made friends into foes, but also pushed bondholders to exit US assets to gain liquidity to make tariff payments - poetic.

Stocks, bonds, and the dollar plunging, is partly due to foreign asset holders are dropping US assets faster than a bad habit.

As of April 4, nearly $28 trillion worth of treasuries are outstanding, and foreign entities like Japan, China, India, and the U.K., among others, collectively own $8.8 trillion of those, according to the U.S. Treasury.

That's nearly 30% of T-bills held by foreign entities with Japan and China topping the list at $1.1 trillion and $784 trillion.

Treasury yields jumping high after Trump’s ‘Liberation Day’ was a kickback from one of its biggest bondholders and close ally Japan. According to the Financial Times, nearly $20 billion worth of treasuries were sold by Japan in the wake of tariffs, pushing the yields high.

The yen carry trade that we experienced last summer, which shaved off 10% of the U.S. equities market in 2 trading sessions, might be around the corner. If Treasury Secretary Scott Bessent is unable to make a sensible deal with Japan, a massive global margin call on US bonds might be imminent.

Why bond yields matter, because rising bond yields mean that the creditors wants a higher premium to hold risky bonds - i.e. US T-bills is on shaky ground.

What happens if the yields spike - refinancing gets difficult and issuing new debt gets difficult, as creditors don't want to lend to a sketchy debtor. Thus, a massive rush to stockpile gold.

Gold rising is a warning to the dollar minters that global markets would rather stockpile gold with limited liquidity than the highly liquid dollar.

Even Trump posted on his social media platform - “He who holds the gold, makes the rules.” That's when I knew it was the top. Marginal ups, but a correction is due.

Nothing new under the sun

What goes up must come down. Why though?

The disposition effect.

The disposition effect is a behavioral finance concept that describes how investors tend to sell assets that have increased in value (their "winners") while holding onto assets that have decreased in value (their "losers"). This happens because of two main psychological reasons:

Loss Aversion: People feel more pain from losses than pleasure from gains. So, they avoid selling losing investments because doing so would mean accepting the loss.

Seeking Pride, Avoiding Regret: Selling a winning asset feels good because it locks in a profit, boosting pride. Holding onto a losing asset avoids the regret of admitting a bad investment decision.

For example, if you own two stocks—one has gone up 20% and the other is down 20%—you’re more likely to sell the stock that’s up to "secure" the gain, while keeping the losing stock in hopes it will recover.

And in our case, gold is the winner and stocks or bonds are the losers, but the lag effect of the market will weigh heavily on gold. If Trump, a pro-crypto President is making a pivot to gold, things might be worse than anticipated for the dollar.

Imagine a company takes $100 worth of loan and invests some of that in the market. Now asset prices drop along with a recession knocking on the door. Suddenly, the company is behind on its loan payments. What to do? Sell some of its investments to meet payments - simple.

But what assets do you sell – the ones that made you the most money, to “book profits.”

And that's the story of gold, folks.

The drop might be temporary, depending on how bad the recession is [if it even occurs], will the Fed step in to drop rates, and how quickly de-globalization is happening.

Remember, kids, deglobalization is not possible in the long run without secular inflation.

Since taking office nearly 90 days ago, the administration has taken the most drastic step yet: trying to reorder the global trading system through reciprocal tariffs.

The hopeful outcome of tariffs can an either two case: use tariffs as a negotiating tool or use tariffs as a revenue-generating tool. But what if, tariffs can do both?

Trump’s love for tariffs isn’t new.

The boy has been consistent with a push for reciprocal tariffs since 1987, and in a world where opinions and ideologies change as quickly as hashtags, consistency means everything.

To get a deeper understanding of Trump’s MAGA mindset, we need to look at what his closest economic advisors think and believe, and Treasury Secretary Scott Besentt tops that list.

“President Trump's tariff policies have begun the process of reorienting our international economic relations,” Besentt said during a speech at the Economic Club of New York on March 6. “Economic security and national security are inseparable.”

It has never been clearer that economics is arguably the biggest arsenal that nations have at their disposal and is very tightly knitted to their military actions.

The history

The US has been the economic and military powerhouse since World War 2 and designed the global order around its economy in the name of the Bretton Woods Agreement.

Under this agreement, nations were to tie their currency value to the dollar, which is pegged to the gold. The US will also impose their military bases on the lands of these allies like Japan, Germany and the U.K., while neutral nations like Brazil and India can make individual deals and all communist countries like Russia, Cuba, and many South American nations were shut out of this order completely.

This slowly started cementing the role of the US dollar as a global reserve currency, but it came with its own biteback in the name of the Triffin dilemma.

As the global economy grew, so did the need for the greenback, but the quantity of gold globally remained relatively the same.

To manage this, President Nixon removed the dollar’s peg to the gold, giving birth to a new fiat currency in the name of USD, backed by absolutely nothing. But by then, the dollar was too deeply entrenched in the global economy and scaling back was not an option. Welcome to the era of petro-dollar.

This set the ground for a neo-liberal world started by Regan and Thatcher in the 80s. This global order had cornerstones like low tariffs, free capital movement, and security guarantees to countries [like South Korea and Taiwan] that adhered to US ideologies.

In other words, by making the world richer, nations will become friendlier to the US and its allies and implement their Western ideologies.

Now the flood gates are open for everyone to use the dollar, which drives up the demand and value of the currency. Welcome to the era of the essential and expensive dollar.

The rising dollar made manufacturing in the U.S. more expensive, which in turn, hollowed out the U.S. economy over time as manufacturers rushed to cheaper places to make items.

Fast forward to Trump bringing out his tariff chart on the White House lawn on April 2 and sending markets in a free fall to erase over $5 trillion in just 4 trading days.

These tariffs more or less mark an end to the neo-liberal order - and we are going through an adjustment period.

Tariffs for re-industrialization

To gain something, you have to give up something.

The U.S. wanted to gain the economic center for its currency and be the conductor of the global economic show, and in exchange, it gave the world its manufacturing spine.

Trump has been pushing to bring industries back to America and feels that punishment of tariffs is better than positive re-enforcement of Biden to subsidize industries to move factories to America.

America’s manufacturing industry dropped from a global production of 25% in 1950s to a mere 16% in 2025 and majority of this pain was felt in the heart land of the country and by the middle class, according to the Cato Institute.

Manufacturing is becoming a smaller and smaller part of the US GDP, sliding to 11% in 2021, down from 16% in 1997, according to World Data.

This manufacturing loss was picked up by China, whose global production share increased from 4.9% in 1995 to 31% in 2025. A costly trade America made for cheap TVs and Shien clothing.

Trump is trying to re-industralize America while trying to keep the dollar’s status of global reserve currency.

But how?

The potential plan

First, create a reign of terror that a madman is at the helm and will burn his own house to keep the fight ablaze. There is some genius to that.

S&P 500 has fallen 10% since tariffs were announced on April 2 and are down 17% from their all-time highs in February.

Trump has even said, “I am not even looking at the stock market” with Besentt beating the same drum, arguing that their focus is on Main Street rather than Wall Street.

This gives the admin negotiating leverage. Vietnam and Israel have already said that they will drop their tariff rates on US commodities to 0% in exchange for the same rate from the U.S.

Japan, India, and Germany are negotiating their trade deals with the U.S. for a favorable number, with over 50 countries doing the same. But the real tariffs game is against someone else, America’s new favorite enemy - China.

Second, reciprocal tariffs.

Since the start of the trade war with China in 2018, the dragon economy has managed to up the US every single time with the same rate, managing to always impose higher tariffs by a few percentage points.

Trump even said on April 7 that if China doesn't roll back its retaliatory tariffs against America, he will increase the tariff rate by another 50%, bringing the total to 104%.

To survive the current global economic system, countries need the USD and to get them, you have to export goods to the US, which gives America an advantage when it comes to negotiating with China.

The Trump 1.0 tariffs failed because China exported goods to other countries like Mexico, which then exported them to the US. But with a flat rate of tariffs, China will be forced to come to the negotiating table.

The hope is to create a level playing field where China and the US tariffs are at parity and currency devaluation doesn't work to attract manufacturing hubs.

Third, a Mar-a-Lago Accord.

Weaken the dollar for wider use but maintain it as a reserve currency. A weaker dollar will help industries set up shop in the US, albeit making existing big-dollar holders poorer.

This is the same as the Bretton Woods Accord, minus the dollar being linked to gold. Nations that decide to peg currencies to the dollar can appreciate their paperback when the dollar gets stronger, maintaining parity in conversion. Also, countries might have to pay a premium - like a monthly subscription fee for US protection and use of the dollar.

“The international trading system consists of a web of relationships – military, economic, political,” Besentt said during the EC of NY speech. “One cannot take a single aspect in isolation.”

For this to pan out, major economies have to agree to peg their currencies to the dollar - which is going through an interesting flux at the moment.

ALSO READ: Why Japan joining the de-dollarization bandwagon is important

These tariffs are not only a method of negotiations, generating revenue but also rejigging the global order. And, China said that it will 'fight to the end' if the US insists on tariff measures.

Prep for war

A weaker industrial sector puts a country at a disadvantage when it comes to potential wars and conflicts.

If a nation is self-reliant for its essential needs, supply chain disruptions emerging due to conflicts can be easily managed. This was very well visible during the COVID-19 pandemic when the US was running low on PPP gear and face masks due to high reliance of supplies from China.

Imagine if war breaks out with China over Taiwan; how is America supposed to fight a war while being low on supplies?

Vice President JD Vance even pointed out during his speech at the American Dynamism Summit in Washington, DC, on March 18, that Bejing manufactured more commercial ships in 2024 than all of America’s production since WW2.

Even one of the greatest macro investors, Ray Dalio, wrote in a tweet on April 2 that tariffs “are necessary in times of an international great power conflict to assure domestic capabilities for production.”

It seems like the US is preparing for war, starting with building a stable industrial pipeline and an independent economy. China, on the other hand, already has this capability and is stockpiling copper, an indicator of potential conflict.

With reciprocal tariffs being imposed, many countries are finding it difficult to come to terms with getting treated the way they were dishing out, with some even retaliating in their own way.

And no, I am not talking about the nasty bickering between the US and Canada. Something major is happening in Japan, which is going under the radar akin to the majority of Japanese monetary policies.

Tariffs on EVs are threatening global financial markets. The US threatened Japan with 25% tariffs on its EV cars, which could be a massive blow to the Japanese economy. Nearly 9% of Japan’s workforce is employed in the automobile industry, which accounts for nearly 14% of its manufacturing GDP.

Tariffs have threatened the dragon and it is ready to fire back.

“Given the economic balance, it is in our national interest to diversify our investment,” the Japanese Ministry of Finance said in a statement on March 1.

And the Japanese put their money where their mouth is by selling US Treasuries.

The dragon country huffing fire

As of December 2024, the Bank of Japan held nearly $1.07 trillion worth of US T-bills, down from $1.1 trillion in December 2023. At its peak in November 2021, the BoJ held $1.3 trillion worth of US bonds, with the Asian central bank holding nearly 15 percent of all foreign-held US debt.

This is important because Tokyo is arguably the biggest foreign buyer of US debt. In recent years, however, the BoJ has been cashing in on its holdings to shore up the Yen.

In the last five years, the yen has weakened against the dollar by nearly 40% and if not for the BoJ interventions from time to time, the picture would have been much worse.

Last August, when BoJ hiked rates by a measly 25 bps, the US equity markets wiped out close to $3.5 trillion in two trading days.

What forced the BoJ’s to bite the hand that feeds it - weakening of the Yen and sticky inflation. The idea was simple- sell US T-bills, and use the cash to buy the yen to support it from further deterioration.

What happened though? A big chunk of US equities that global investors were speculating on by borrowing cheaply in Japan thanks to ultra-low interest rates had to liquidate their longs and rush back with their capital to Tokyo to pay on their floating interest rate credit.

But what happens when Japan puts a fire sale on its US T-bills to save its own economy and is it happening right now?

The answer is it would be catastrophic to the US Treasury market not only because many bondholders will finally realize how much unrealized losses they are sitting on, but they will also lose one of a kind of ‘primary subscriber.’ And yes, it is happening right now, but in a much-controlled manner.

A slow move away from the dollar rather than pulling the plug quickly.

Washington DC is aware of it and does not like the harsh reaction of its eastern ally.

Treasury Secretary Scott Bessent even said in a brief public statement this month that trust between allies is essential and interdependence makes sudden moves by one side risky.

Rome wasn’t built in a day, neither did it wither in one

Japan is one of the few economies that can undermine the USD’s prestige in the world and it is following a major global south trajectory to ditch the dollar.

President Trump who I believe is good at understanding major trends, picked the de-dollarization trend long before he even stepped into the Oval Office, tweeting on his Truth social media platform that he will impose 100% tariffs on countries that are pivoting away from the dollar.

But that is easy to do if it's a handful amount of nations that have limited trading relationships with the US, but a lot more difficult when all major economies are making the pivot.

Many nations have already moved with Russia and China settling nearly 100% of trade between them in rubbles and yuan.

India also started making global payments in rupees and the biggest shock came when Saudi Arabia, the king of the petrodollar refused to renew its petro-dollar trading deal last year, and registered interest in settling oil trades in other currencies like the yuan and rupees.

Even Kenya has moved to buy oil from the Gulf region in Kenyan shillings last year with their President William Ruto even urging Africa to dump the dollar in 2023.

With countries inching away from the greenback, the dollar’s share of global reserves has fallen from more than 70% in 2000 to 59% in 2024, according to Brooking’s Institute’s Aug. 2024 report.

The dollar will not be challenged head-on but might suffer death by a thousand cuts.

So who replaces the mighty USD?

While many countries have been slyly pushing for their currency to replace the dollar, but it won't be possible, because the US has something that no one else does - The Federal Reserve.

No nation can provide a stable exchange value coupled with infinite liquidity, powers that only the US Fed possesses.

So de-dollarization experts came up with an alternative, why not revert to basics - a gold-backed currency system.

According to a JPMorgan Aug. 2024 report, central banks across the globe are stockpiling gold in anticipation of a currency crisis. The Public Bank of China, the Reserve Bank of India, and the Federal Reserve were major gold buyers of 2024.

In Q4 2024, central bank net gold purchases were 332 tonnes, compared to 117 tonnes in Q4 2019, an increase of 183% over five years.

Gold prices have surged since 2020 hitting an all-time high of $3,057 last week.

It does make sense that nations would want to peg their currencies to gold rather than relying on the USD, but unless a major global credit event or a massive downturn in the US economy is felt or a currency crisis hits the global financial markets, the dollar will be the undisputed king.