World War For Resources Has Started | Greg Weldon

Global Macroeconomic Outlook & Precious Metals Analysis – Elijah K. Johnson & Greg Weldon (Liberty & Finance)

Key Concepts:

• De-dollarization: The process of reducing reliance on the US dollar in international trade and finance, driven primarily by China and the BRICS nations.
• Remnimbi (RMB): The official currency of China, increasingly used in international transactions, particularly in commodity pricing.
• BRICS: An economic bloc comprising Brazil, Russia, India, China, and South Africa, exploring alternative financial systems.
• Strategic Metals/Rare Earth Elements: Critical resources controlled largely by China, impacting global manufacturing and technology.
• Secular Decline (of the Dollar): A long-term trend of decreasing value and influence of the US dollar.
• Fibonacci Levels/Elliot Wave Theory: Technical analysis tools used to identify potential support and resistance levels in financial markets.
• Global Resource War: The increasing competition for control of essential resources like energy, food, and commodities.

I. The Geopolitical & Economic Landscape: A Global War for Resources

Greg Weldon asserts that a “global war” has been underway since 2018, initiated by China’s opening of the Shanghai Futures Exchange. This exchange prices crude oil in Remnimbi (RMB), with Russia benchmarking its crude against it. This move is framed as a challenge to the US dollar’s dominance and a struggle for control of global resources – energy, commodities, and food. Weldon emphasizes China’s growing economic power, noting it now exports and imports 3:2+ more than the US, even with a 28% decrease in exports to the US. He highlights China’s consistent trade surpluses, currently the third largest ever recorded, alongside persistent $80 billion+ monthly US trade deficits since 2020 (occurring in 62 of the last 65 months). This imbalance underscores the shift in global economic power. Weldon believes this conflict will manifest in currency dynamics, potentially involving a new global currency system, though he doesn’t rule out the dollar’s continued involvement. He points to China’s control of rare earth elements as a key strategic advantage. He states, “This is already a global war…it’s a world war for resources, commodities, energy, food.”

II. Precious Metals: Gold & Silver Analysis

The discussion centers on the recent volatility in precious metals, particularly gold and silver. Weldon attributes the initial surge in gold to China’s deliberate dumping of US Treasury bonds, reinvesting the proceeds into physical gold. China reduced its US Treasury holdings from $1.35 trillion to $676 billion. This action is interpreted as preparation for a shift away from the dollar as the primary global reserve currency. The BRICS nations’ exploration of a gold-backed digital currency (the “BRICS unit”) is also cited as a contributing factor.

Weldon details three phases in the precious metals rally:

1. Initial Phase: Driven by China’s gold purchases following Treasury bond sales.
2. Second Phase: Increased investment in precious metals mining shares, particularly the major players (Newmont, AngloGold Ashanti, Barrick Gold), signaling Wall Street’s rotation into the sector. Canadian mining shares performed well early in the year due to a weak Canadian dollar.
3. Recent Phase: A mini-breakdown of the dollar, contributing to further gains in gold and other currencies.

He anticipates a correction in gold, identifying a buying zone between $4,000 and $4,500, utilizing Fibonacci retracement levels and Elliot Wave theory for technical analysis. He advises against averaging down, preferring to wait for specific technical levels. He believes a sustained dollar decline will further support gold prices.

III. Silver’s Potential & Risks

Silver’s performance is closely tied to the Indian market. The weakening rupee has driven Indian demand for silver, leading to inventory shortages and a potential for a “squeeze.” Weldon notes that silver’s fundamentals are strong, with a fourth consecutive year of supply deficits and increasing demand. He references the historical silver squeeze attempts, highlighting the power of paper shorts held by bullion banks to control the market. He identifies a key support level for silver between $71 and $74, with a potential downside to $62, but believes a fall below $54 is unlikely. He suggests a “back the truck up” moment could occur in the mid-$60s. He emphasizes that silver is now considered a strategic metal, both in the US and China.

IV. Stock Market Risks & Potential Correction

Weldon expresses concern about the stock market’s current valuation, describing it as “frothy” and potentially “toppy.” He points to several warning signs:

• Declining Momentum: Momentum in key indices (InfoTech, S&P 500) peaked in mid-November to mid-December.
• Economic Disconnect: The stock market’s strength is not supported by underlying economic conditions, particularly consumer spending.
• Consumer Weakness: Revolving credit (credit card debt) is declining year-over-year, a pattern only seen during the 2008-2009 crisis and the 2020 pandemic.
• AI & Automation: Capital spending is heavily focused on AI and automation, potentially leading to job losses and further weakening consumer demand.
• Inflationary Pressures: Service sector inflation remains elevated, with 60% of indicators above 3% and 40% above 4%.

He suggests a potential downside of 30% for the S&P 500, based on indicators like the retail index (PNQI, XRT) and relative performance of technology stocks. However, he acknowledges the dollar’s role in supporting stock prices, anticipating that the market will likely continue to rise as the dollar declines, creating a potentially unstable situation.

V. The Dollar’s Future & Global Implications

Weldon believes the dollar is in a “secular decline,” driven by the US trade deficit and the rise of alternative economic powers. He anticipates that the dollar will be involved in any future global currency system, but its dominance will be diminished. He highlights the importance of monitoring the Arctic region, citing an expired cooperation agreement and Greenland’s strategic significance.

Notable Quotes:

• “This is already a global war…it’s a world war for resources, commodities, energy, food.” – Greg Weldon
• “China’s out exporting and out importing us three to two plus every single month.” – Greg Weldon
• “The dollar will and should be involved [in a new global currency system]. We're not the top dominant trader in the world anymore.” – Greg Weldon
• “Anything can happen. All right? And that's one of the things you got to keep in mind.” – Greg Weldon

Technical Terms:

• Futures Exchange: A centralized marketplace for trading standardized contracts for future delivery of commodities or financial instruments.
• Remnimbi (RMB): The official currency of China.
• BRICS: An economic bloc of Brazil, Russia, India, China, and South Africa.
• Fibonacci Retracement: A technical analysis tool used to identify potential support and resistance levels based on Fibonacci sequence ratios.
• Elliot Wave Theory: A technical analysis theory that suggests market prices move in specific patterns called "waves."
• CTA (Commodity Trading Advisor): A registered investment advisor specializing in trading futures contracts.
• JGB (Japanese Government Bonds): Debt securities issued by the Japanese government.
• WTI Crude Oil: West Texas Intermediate, a benchmark grade of crude oil.

Conclusion:

The interview paints a picture of a rapidly shifting global economic landscape, characterized by increasing geopolitical tensions and a challenge to the US dollar’s dominance. Weldon advocates for a cautious approach to investing, emphasizing the importance of technical analysis, risk management, and diversification into precious metals as a hedge against currency debasement and economic uncertainty. He believes the current environment presents both significant risks and opportunities for investors who are well-informed and prepared. The core message is that a major economic and geopolitical realignment is underway, and understanding these dynamics is crucial for navigating the future.