The 50-year deal that made the dollar the world's oil currency is breaking down, which is bad for the US dollar and good for gold and China.

• The UAE is leaving OPEC and warned it may start pricing oil in Chinese yuan if it runs out of dollars during the Iran war.
• Gulf states hold over $2 trillion in US assets, so the US is giving them cheap dollar swap lines to stop them from selling and crashing US markets.
• The Iran conflict closed the Strait of Hormuz, cutting Gulf oil exports and draining the dollar reserves their economies depend on.
• Central banks are dumping US Treasuries for gold at the fastest pace in 50 years, spooked by the US freezing Russia's reserves in 2022.
• China is winning because it makes real things the US military needs, like rare earths and missile parts, while the US relied on printing dollars.
• The US bond market is now running foreign policy: every time the 10-year yield hits 4.4%, Trump backs off military threats.

Outlook: If the Strait of Hormuz stays closed, expect higher food and gas prices, a weaker dollar, and a possible big stock market drop with gold rising.