Why the Global Monetary Reset Has Just Begun (Saudi, Yemen & Gold)

The Petrodollar Under Siege: How a Missile on Riyadh Threatens Your Portfolio

This video by economist and former investment banker Felix Nicholas Breen analyzes the geopolitical and economic shockwaves from a missile attack on Riyadh's King Khaled International Airport. While mainstream media focuses on the immediate casualties and war narrative, Breen argues the real story for investors lies in the potential unraveling of the 1974 petrodollar agreement—the foundational deal that has underpinned the US dollar's global dominance for 50 years.

The Attack and Its Immediate Context

A missile fired from Yemen, a proxy for Iran, struck Terminal 3 of Riyadh's main airport, killing 12 people (including one American) and injuring over 300. This is the deadliest attack on a Gulf Arab state since the war with Iraq began. Crucially, it follows a pattern of escalating threats:

• Two days prior, a plane was blown up, killing three more people, including a pilot.
• Major countries have issued travel warnings, and most airlines have suspended flights to Saudi Arabia.
• The attack comes just two weeks before Saudi Arabia's showpiece investment summit, which has not yet been cancelled.

The 1974 Deal That Runs the World

To understand why this matters for your money, you must go back to 1974. The core agreement was simple:

• Saudi Arabia agreed to price all its oil in US dollars.
• It agreed to recycle the massive proceeds back into American assets (primarily US Treasuries).
• In return, the US provided military security for the Saudi regime.

This arrangement created a self-reinforcing cycle: any country needing oil must first buy dollars, creating constant demand for the US currency. This "casino window" is the primary reason the dollar holds its value and why the US can run massive deficits. The Saudi Riyal has been pegged to the dollar at a fixed rate since 1986, meaning Saudi monetary policy has effectively been dictated by Washington for 40 years.

The Cracks in the Foundation

The attack has forced Saudi Arabia to ask a fundamental question: if America is no longer providing security, what holds up the other side of the bargain? The evidence of a shift is mounting:

• Selling US Debt: In a single month earlier this year, Saudi Arabia sold approximately $11 billion of its $140 billion in US Treasury holdings.
• Diversifying Security: Instead of calling Washington first, Riyadh has turned to France, Britain, Pakistan, and Turkey for defense pacts.
• Gold Buying by Central Banks: Despite gold having its worst quarter in 13 years, central banks globally have been buying gold into the crash—a clear signal of de-dollarization.
• The mBridge Alternative: A new system allows central banks to settle trades directly in their own currencies, bypassing the dollar. The UAE is already using it; Saudi Arabia participated in a trial but stepped back.

What This Means for Your Portfolio

The immediate impact is an oil shock. Brent crude jumped over 5% to just above $100 per barrel. This doesn't stay in Saudi Arabia:

1. First, you see it at the pump.
2. Then, in your weekly grocery shop and heating bills.
3. Finally, it hits your portfolio statement—by which point the damage is done.

The key number to watch is Saudi Arabia's official gold reserves. They have sat unchanged for years. The day they start to climb is the day the richest oil nation on earth signals it is losing trust in the paper dollar.

Practical Checks for Investors

Breen recommends three immediate checks for your portfolio:

• Know what you own: Consolidate all your holdings (pensions, workplace schemes, funds) in one place.
• The 2022 Test: Review which companies held up during the last inflation/oil shock in 2022 and which fell apart.
• The Danger Zone: Identify which stocks in your portfolio cannot absorb a sudden oil price spike.

Key Takeaway

The missile on Riyadh is not just a war story—it is a currency story and an investment story. The 50-year-old petrodollar system is showing clear signs of strain. The smartest institutional money is already moving: selling US debt, buying gold, and building alternative payment systems. For individual investors, the old "buy and hold" strategy was built for a world of cheap oil and falling interest rates. That world is gone. The skill required now is active awareness of where big money is flowing and the ability to adapt before the shift becomes a headline on the evening news.