"The day of the U.S. dollar as the global currency standard is a thing of the past."

...at least according to Chinese President Hu Jintao. He told the Wall Street Journal that recently.

Yes, China is getting awfully brave these days. And they certainly are not quiet about how much they detest the U.S. dollar.

But what everyone fails to realize is China can afford to be brave. China is growing so fast that they are about to overtake the U.S. economically.

One day, we won't be able to hide behind our status as the "holders of the world reserve currency." That privilege will go to the next superpower.

When it happens it will be the greatest shock to the U.S. dollar in history. How soon will it happen? To know that, you need to watch the other superpower's growth - China. Many economists estimate that China will dominate the world in just eight short years. The chart below seems to agree with them.

China Becomes the Top Economic Powerhouse in
the World in 8 Years!

I know, I know...some people are still in denial on this one.

But you can see from the chart above, China's GDP will overtake ours by the year 2019. (On the chart, that's where China's dark red line crosses our declining blue line.)

So you can see why the Chinese president is flexing his muscles. The sad truth is America is compeltely unprepared when his prophetic words come true...as a nation or as individuals.

While the U.S. has been publicly sacrificing our dollar's value to prop up the U.S. economy, China has been quietly making their country (and currency) more valuable.

China Did Their Homework While the U.S.
Fell Asleep at the Wheel!

For instance, during the recession, China struck deals with six nations to trade with them directly in their local currencies. Before that nations had to convert to dollars before they traded with any nation.

That means they effectively cut the U.S. dollar out of their international trading - a major blow to the dollar.

Meanwhile, the Chinese are now allowing their currency to play a more prominent role in global trading. For years, China would not allow their currency, the yuan to trade anywhere.

But in 2010, China allowed the yuan to trade offshore for the first time in Hong Kong. Then they gave the green light for the yuan to trade vs. Malaysia's ringgit. Next they went one step outside of Asia, and allowed the yuan to trade vs. the Russian ruble.

After that, China opened up its bond market to foreign banks. Now even big U.S. corporations can buy up their bonds.

Then you'll remember that back in August of last year, McDonalds had a yuan bond sale. In November, Caterpillar did the same thing. Both bond auctions went very smoothly. (Two more big votes for the yuan!)

It goes even further than corporations. Ever since all of this started to unfold, big banks such as HSBC, BBVA, JP Morgan Chase and Citigroup have all been doing road shows in Latin America to encourage the use of the yuan in trade with China.

Roll the hands of time forward to just this past week and we see France's Sarkozy encouraging the IMF to include the yuan in its SDRs (Special Drawing Rights). This basket of currencies already includes the dollar, euro, yen and the British pound.

So as you can see, the yuan is gaining traction from all over the world. Remember...it was that way for the dollar too before it became the world's reserve currency.

Therefore, I suppose it's no surprise that the yuan just hit a 17 year high vs. the greenback just a couple of weeks ago.

A Coming Nightmare for the U.S.!

Now here lies the problem.

When the yuan becomes the world's reserve currency, the U.S. will be forced to exchange its dollars into yuan to pay its debts to other countries (just as other countries have to convert into dollars today).

In other words, you will see the ultimate "currency shocks" hit America!

When this all starts to unfold, everyone will lose whatever faith remains in the U.S. dollar. Without its reserve status, the dollar's value will shrivel up quickly.

Americans will become poorer relative to much of the rest of the world and America's GDP will continue to decline as a percentage of World GDP.

As a result, America will continually lose more and more influence in the world. You only have to look at the declining line on the chart above to see where it's all heading.

Even now, you can see that there is a shift taking place. The shift of power is moving from the "West" to the "East" as more Asian economies continue to grow much more rapidly than that of the U.S.

How to Profit from this Power Shift...

So the real question becomes how to profit from these currency shocks. I say one of the easiest "no brainer" ways to do this is to simply buy and hold Asian currencies (including all the little guys who will profit from the Chinese yuan gaining in strength).

It will cause many currency shocks through the years, just as it did when things were changing from the British pound being the world's reserve currency to the dollar being the reserve currency.

Now the same thing is about to happen again as money moves away from the U.S. and towards Asia (in particular, China). Simply buying and holding Asian currencies (yes, including the yuan) will let you profit as these shocks continue.