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China and Russia Strengthening Their Alliance Against a Common Enemy (the U.S.)

China and Russia Strengthening Their Alliance Against a Common Enemy (the U.S.)
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While the countries that made up the Allied forces in WWII such as the US., Great Britain, and France were celebrating the 75th Anniversary of D-Day last week, there was another gathering going on in Eastern Europe.

In a meeting that harkens back to the Axis powers of WWII, the leaders of China and Russia met in Moscow.

Chinese President Xi Jinping and Russian President Vladimir Putin held 3 days of talks aimed at celebrating the long-standing relationship between Beijing and Moscow and strengthening their bond for future prospects.

It was hard not to see the similarities between now and 75 years ago when you look at these two gatherings.

The D-Day celebration has been a contentious point over the years between Russia and the world.

Putin has attended the gatherings in the past but his presence hasn’t always been well received.

This year he simply wasn’t invited to attend.

In response, Russia has minimized the importance of the Normandy celebration, creating his own “counter-summit” with the Chinese.

At this meeting, Putin and Xi talked about how close they might work more closely together as allies against a contentious backdrop of US policy.

This is a shift between the two countries who have historically been at odds due to differences in their own unique interpretations and implementations of communism.

In recent years though they have forged a common bond over their issues with the US.

With Russia being affected by US sanctions, and China taking an economic hit in a trade war, they both currently have a vested interest in loosening America’s control over the world and the world’s financial markets.

They are both seeing their export-reliant economies damaged by these factors, straining tensions toward a breaking point.

The biggest thing coming out of this meeting is an agreement to move away from the US dollar.

Using trade, rubles, and yuan, and most importantly, Gold,  the two countries will work together to prop up their own currency in order to devalue the greenback.

The Chinese telecom company Huawei has even agreed to build a 5G network in Russia despite the fact that the U.S. believes them to be an espionage threat.

These policies are adding to the economic Cold War that has been going on for the last few years.

Since 2014 Putin has been cultivating Russia’s relationship with the Chinese, turning away from the West.

As noted in a recent Washington Post article, “the Financial Times reported Wednesday that Putin and Xi are expected to release a number of statements during their visit, including one that denounces “hegemonic dominance of the international system.”

This is a direct shot at the American economy and financial system.

Much like WWII, superpowers are combining forces and strengthening alliances...

However, Trump was elected on an “America First” agenda and has shown no signs of changing that track.

Time will tell what this Russian-Chinese alliance will produce. Time will tell how Trump will deal with it.

One thing that’s certain is that any attempt to dethrone the US dollar will cause rocky economic times ahead.

And on that note, hedging against a dollar fall--whether due to internal reasons (e.g. inflation) or external threats (China and Russia)--is always a wise measure to take.

As history has shown, precious metals constitute the most effective means to protect your wealth against a dollar decline.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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