BRICS' developments to 'rival' the industrial revolution, 'dramatic' implications coming - Peter Grandich
|Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!|
(Kitco News) With the BRICS summit just less than a week away, investors are not paying enough attention to geopolitics, according to Peter Grandich, Founder of PeterGrandich.com, who sees new alliances between China and Saudi Arabia as having "dramatic" consequences.
The BRICS summit taking place in Johannesburg, South Africa, on August 22-24 is not likely to have any "earth-shattering" announcements, but what will matter are the new plans for the next three years, Grandich told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
"What is happening with BRICS nations is going to rival the industrial revolution because I don't think people understand how many countries are moving away from working with the United States or using its dollar," Grandich said.
The consequences of it all will be the U.S. eventually losing the dollar's status as the world's reserve currency, which will trigger a much bigger debt crisis domestically, Grandich pointed out.
"The dollar as a world reserve currency has been one of the reasons we've been getting away with the type of debt crisis that we've allowed to happen," he said.
Grandich gave his outlook on what these geopolitical matters mean for the price of gold and silver. To get his price forecasts, watch the video update.
Why China matters
Investors must also keep a close eye on China this fall since developments in that region could define the macro environment for the next year.
China has been seeing a significant slowdown and using its monetary policy tools to increase stimulus. This week, the People's Bank of China lowered the rate on its one-year loans by 15 basis points to 2.5% and cut its short-term policy rate by ten basis points.
This was in response to slowing economic indicators, including industrial production, retail sales, fixed-asset investment, and property investment.
A major economic slowdown in China could have severe geopolitical consequences, Grandich warned.
"When people start to suffer, governments like to take their minds off it. And one of the ways governments take minds off it is by getting themselves involved in wars," he said. "This could expedite whatever their long-term plans were regarding Taiwan. And that would be another geopolitical firestorm I don't think the United States is even close to handle."
What happens in China in the next "30, 60, maybe 90 days" will be critical and could have "dramatic impacts on all of us for 2024 and beyond," Grandich added.
There has also been an increase in trade deals between China and Saudi Arabia. Grandich outlined their significance in the video above.
This is where Wall Street is making a mistake
Domestically, markets will be surprised how much the Federal Reserve is willing to hold rates at elevated levels before caving in on that rate cut.
After raising rates to 22-year highs at the July meeting and bringing the fed funds rate to a target range of 5.25%-5.5%, the U.S. central bank will want to see at least a quarter of declining economic numbers before cutting rates, Grandich elaborated.
"That's where Wall Street is making this mistake. It has got so used to the Fed always helping the equity market. And I think they're going to be wrong that the Fed will be helpful in the next 12 months as well," he said.
Grandich highlighted uranium, copper, gold, and silver as the best commodity plays for this and next year. To get his forecasts for the most upside potential, watch the video above.