On September 25th, just 40 days before the U.S. election day countdown, the veil of the U.S. House of Cards was once again lifted, with another black swan event taking flight. U.S. police have stated that on September 23rd local time, the campaign office of candidate Harris in Arizona was damaged by gunfire. Harris plans to visit Arizona later this week. It is reported that this is the second criminal act of vandalism at the office in recent weeks. Previously, around midnight on September 16th, the front window of the office was suspected to have been hit by gunfire.

However, it is intriguing that since no one was in the office at the time of the incident, law enforcement has categorized it as a property crime. The aforementioned event also serves as a footnote to the ongoing rise in U.S. election risks and the frequent occurrence of ugly incidents, following Trump's two assassination attempts since July, and even staging the first assassination where he narrowly escaped death with the "grim reaper." Trump recently joked, "Being the President of the United States is a dangerous profession..." These events have also intensified concerns about the U.S. economy, with the United States around November 2024 being filled with various uncertainties.

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Furthermore, the United States' "proxy" in the Middle East, Israel, has been mired in long-term warfare, and the two major global geopolitical risks in the Middle East and Eastern Europe are continuously dragging the U.S. economy into a dilemma. This seems to be one of the deep reasons why the Federal Reserve unexpectedly set the first interest rate cut of this round to a substantial 50 basis points last week. Because the aforementioned series of risk events or potential black swans could trigger a U.S. economic recession. This is particularly evident in the United States' ever-increasing federal debt.

The latest development is that on September 24th, the international rating agency Moody's warned that without substantial measures to reduce national debt, the United States will lose its only AAA rating among the world's three major rating agencies. Following Moody's downgrade of the U.S. credit rating outlook from "stable" to "negative" last year, this is Moody's second alarm for the debt-ridden U.S. economy.

The report shows that Moody's is waiting to observe how the new U.S. Congress and the White House will consolidate fiscal conditions next year before making a decision on the U.S. sovereign debt rating outlook. One of the core issues to focus on next is how to properly resolve the U.S. government's debt ceiling issue. Among the world's three major rating agencies, S&P downgraded the U.S. rating to AA+ as early as 2011, and Fitch also downgraded the United States last year.

Analysts believe that once the U.S. election risks rise, or if some unpredictable black swan event occurs, even if the country can complete the election work in November, by January 2025, which is when this round of debt ceiling expires, it is expected that both the House and Senate and the White House will still be deadlocked over the new debt ceiling dispute. This could lead to the possibility of multiple U.S. government departments, and even the White House, shutting down.

This could lead to Moody's ultimately stripping the United States of its AAA rating at this point, at which time the United States will no longer be able to finance and borrow globally with the highest quality score, and the status of U.S. Treasury bonds as foreign exchange reserves of many countries in the world will also plummet. In this regard, Moody's Senior Vice President William Foster stated that the new federal government after the November election must deal with the expanding budget deficit. If corrective measures are not taken, the debt situation will become increasingly unsustainable and will not be consistent with the AAA rating: "The tax and expenditure policies of the U.S. government will affect the size of future budget deficits and the extent of the expected decline in U.S. fiscal strength, which could have a significant impact on the U.S. sovereign credit situation."

It is worth noting that as of August this year, Israel, which is "on fire," has been downgraded by Fitch and Moody's respectively. Fitch predicts that Israel's budget deficit will reach 7.8% of GDP in 2024, while the figure was 4.1% in 2023. It is expected that by 2025, Israel's debt-to-GDP ratio will still remain above 70%. The International Monetary Fund also predicted three weeks ago that among developed countries, only the United States and Israel have the highest proportion of deficits to GDP, from this perspective, the United States being downgraded by Moody's is also getting closer.

Similar to Trump's recent multiple warnings that "if Harris wins, Israel will disappear within two years," the debt dilemma of the United States and Israel is equally precarious. And once it loses its AAA perfect rating, it will also lose its "face" as the world's largest economy. At the same time, the downgrade also indicates that the bonds that the United States has been financing and borrowing from many countries around the world for many years may pose a risk of not being repaid on time.

In this regard, Moody's stated in its report on September 24th that the U.S. government "will ultimately resolve any debt ceiling disputes and continue to repay debts in full and on time." However, the agency also predicts that the 10-year benchmark U.S. Treasury yield will rise from the current 3.73% to 4%. This is also inconsistent with the trend that the Federal Reserve's interest rate reduction cycle should have significantly lowered U.S. Treasury yields. The 10-year U.S. Treasury is the anchor for measuring the health of the U.S. economy. U.S. Treasury yields move inversely to prices and holdings, so when the price of this term U.S. Treasury plummets and falls into a selling spree, it indicates that global buyers' trust in U.S. Treasury bonds has also plummeted across the board.It is intriguing to note that some media have reported that the White House attempted to prevent rating agencies from downgrading the United States, but these efforts were unsuccessful. Even in response to Fitch's downgrade last year, which warned that "they are closely monitoring whether foreign central banks are massively liquidating U.S. Treasury bonds," U.S. Treasury Secretary Yellen immediately responded, expressing "strong opposition." In a statement, she angrily stated that she disagreed with the decision to downgrade the rating and emphasized that U.S. Treasury bonds remain the safest and most liquid assets in the world.

However, in the context of the escalating global currency war, especially with the Federal Reserve's continuous misuse of the U.S. dollar's reserve currency status over the years, and even its repeated refusal to allow countries such as Germany, India, and Venezuela to repatriate gold previously stored in the New York vaults, it is increasingly inevitable that doubts about the safety and stability of U.S. debt will arise. Compared to gold, which has an inherent credit value, U.S. Treasury bonds are losing their luster.

In fact, against the backdrop of the Federal Reserve's likelihood of continuing to open the floodgates of the U.S. dollar QE printing press, it is possible that the dollar will return to the zero interest rate level before 2020, or this could happen within two years. Since the significant rate cut of 50 basis points in September, rate cuts will become a regular operation for the Federal Reserve for a long time to come, and even when specifically needed, they could be reduced to negative interest rates. This is because some U.S. congressmen have proposed that if U.S. Treasury bonds are issued on the basis of negative interest rates, then several countries holding U.S. debt globally would have to pay interest to the United States for holding U.S. debt. In other words, the Federal Reserve's rate cut operation this time marks the beginning of a new round of global currency harvesting cycle.

According to a recent warning from Nomura analysts, whoever takes over the White House, there is a possibility of refusing to repay debts on time in extreme cases. The world's richest man, Musk, has warned more than once that due to being mired in debt, the United States is quickly heading towards bankruptcy... This will also be another black swan flying out of the United States, and it seems to be one of the reasons why global creditors have been continuously掀起ing a wave of U.S. debt selling and gold hoarding for a long time.

According to the latest international capital flow report released by the U.S. Department of the Treasury on September 19, the report, which is two months behind schedule as per convention, currently only releases data up to July. In July, overseas creditors sold a total of $42.5 billion in U.S. Treasury bonds, with at least eight major creditors selling U.S. debt. Among them, China, Japan, the United Kingdom, Belgium, France, Switzerland, India, and Mexico, these eight major countries collectively sold U.S. Treasury bonds.

It is worth mentioning that China, the second-largest holder of U.S. debt, sold $3.7 billion in U.S. Treasury bonds in July, reducing its total holdings from $780.2 billion in June to $776.5 billion, which is a historical low range since the U.S. financial crisis. Over the past 12 months, China has shown a U.S. debt holding level of $700 billion for 10 months. This is in stark contrast to the long period before 2019, when it maintained a scale of over a trillion dollars and even held a higher scale than Japan for several months, maintaining the status of the largest holder of U.S. debt. Looking at the long cycle, it is very rare.

The international financial team exclusively queried the historical data of the U.S. Department of the Treasury and noted that China held about $1.32 trillion in U.S. debt in November 2013. Compared with the current holdings of $776.5 billion, over the past nearly 11 years, China has quickly accumulated a net sale of U.S. Treasury bonds with a scale as high as about $543.5 billion, with a cumulative net sale ratio of about 41%.

Wharton Business School professor Kent Smelting believes that the changes in the global economic and trade pattern and the decline in the dominant position of the U.S. dollar have greatly accelerated some major U.S. debt holders to reduce their holding ratios. At the same time, gold, as a global economic hard currency, has been breaking through historical highs in price recently. Even several gold observers predict that the price of gold will reach a new high of $3,000. Against this backdrop, the U.S. precious metal institution MoneyMetals released a new report on September 23, stating that the central banks of China, the world's largest oil importer, and Saudi Arabia, the world's largest oil exporter, have been significantly increasing their gold reserves over the past two years.

The institution's report shows that there is evidence that since the beginning of 2022, the Saudi central bank has been secretly buying 160 tons of gold in Switzerland, contributing to the current gold bull market. As shown in the figure below, since 2022, gold prices have risen, but Saudi Arabia continues to import gold. Although Saudi Arabia played a key role in the birth of the global dollar standard in the early 1970s, this time they may even become the key to the disintegration of the global dollar standard.

Analysis suggests that Saudi Arabia may be secretly increasing its gold reserves to break free from the shackles of the petrodollar on its economy. The hoarding of gold just happens to be a layout for Saudi Arabia's potential suspension of the petrodollar agreement in the future. Especially in the U.S. election year and in view of the innumerable connections between the United States and Israel in the Middle East, Saudi Arabia, as a major country in the Arab world, has seen a surge in the probability of abandoning the petrodollar agreement signed in the 1970s in the face of potential U.S. downgrades and bankruptcy risks.Reports from Wall Street media several weeks ago indicated that Saudi Arabia has accepted partial settlement in yuan for its oil exports to China. According to the analysis of former officials from the U.S. Treasury and the Federal Reserve, such as Bozar, the world is witnessing the decline of the petrodollar and the strong rise of the petroyuan. This seems even more evident against the backdrop of the yuan recently approaching the 7 mark and launching a major counteroffensive.

It is worth mentioning that a report from the World Gold Council shows that in September 2017, China's gold reserves were approximately 1,842 tons, and currently, China's gold reserves stand at a historical high of 2,264 tons. This indicates that over the past seven years, 422 tons of gold reserves have been shipped to China in batches from overseas gold trading markets such as Switzerland, the United States, and the United Kingdom.