Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Wednesday. Today is Wednesday, May 13th. What an interesting time it is to be alive.
Trump is flying to China this week for a summit with Xi Jinping.
Everybody is talking about the headline issues — semiconductors, soybeans, chips, rare earths.
But there is a whole other game going on behind the scenes that nobody is really covering.
Currency Swaps and the Dollar War
I follow the Treasury Department closely, and here is what I've been watching.
The US has been quietly extending currency swaps to countries in the Middle East.
A currency swap is when the US buys another country's currency, effectively giving that country more US dollars.
Why does this matter?
Because the Middle East is a small playground that has an enormous global footprint.
These countries sell oil.
Everybody touches oil.
You have roughly ten countries in that region that can meaningfully influence whether the US dollar or the Chinese yuan becomes the dominant world currency.
China has been wooing these countries hard.
In 2023, Saudi Arabia dropped the petrodollar agreement — allowing them to start pricing their oil sales in China's currency.
That was a significant moment.
So right now, the US and China are in a direct competition for currency dominance.
China is on offense.
We are on defense.
Treasury Secretary Scott Bessent's currency swap strategy is essentially this: these Middle Eastern countries are under financial stress because of the Iran war, and we are using that stress to pull them closer to us.
Give them dollars when they need dollars.
Cement the dollar's hold on the most important oil-producing nations in the world.
It's not a flashy headline.
But it is one of the most important financial geopolitical moves happening right now.
China Is Buying Gold
This is also why China's central bank bought eight tons of gold in April — the most since December 2024.
There are growing rumors that China is working toward an offshore currency backed by gold.
Those rumors gain credibility every time you see China aggressively ramping up gold purchases.
Especially now, with the Iran war changing the entire financial dynamic of the region.
And China isn’t the only one stockpiling gold.
After the major events we’ve seen happen across the globe this past year, a lot of the smart money has been heavily investing in gold as well.
Historically, gold has been one of the single best ways to position yourself ahead of dangerous world events and massive inflation spikes.
It’s how our readers locked in multiple massive gains during the last market crash.
And gold’s recent pullback is offering a great opportunity for new investors to get in, before it rockets back up.
Iran and the Summit
Iran just rejected any peace proposal and said nuclear weapons aren't even on the table.
Trump was careful in his response — he said the situation is basically on life support and that he doesn't see anything happening until after the China summit.
My suspicion is that China is pulling strings with Iran behind the scenes.
Telling them to hold firm, that they have their back.
And Xi Jinping will use that as negotiating leverage with Trump.
China plays the pivotal role in whether Iran comes to the table.
That is a powerful chip to bring into a summit.
Why This Matters to Your Wallet
I know a lot of people wonder why we get involved in any of this.
Let me be direct.
Without the US dollar as the world's reserve currency, your life gets dramatically worse.
Your net worth goes down 30%.
Your retirement accounts go down 30%.
Your interest rates go up significantly.
Everything we've built — every financial advantage Americans enjoy — is downstream of the dollar's reserve status.
These currency swaps, these financial interventions in the Middle East, they are not military adventurism.
They are strategic moves to keep us in the number one position.
Everywhere you look right now — currencies, rare earths, semiconductors, oil — there is a chess match happening between the United States and China.
This is the Great Game.
The competition behind the competition.
Most people aren't even aware it's happening.
One Final Thought
A lot of people are worried that Trump, being the mercantilist negotiator he is, might trade something long-term important for a short-term win he can bring home to constituents who aren't happy with the Iran war.
Let's hope that doesn't happen.
One of the genuine advantages of having a president who can never run again — and who has survived multiple assassination attempts — is that you get a man who has very little left to lose politically.
I imagine he wakes up every morning thinking: I get one shot to actually do what I believe is right for this country, for my kids, for my grandkids, regardless of the political cost.
That is the kind of leader this moment requires.
It's a very eventful week.
We will see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine