Last week, China showcased its military might and growing alliance with U.S. adversaries including Russia, North Korea and, at least for now, India. But that show of force is not the only threat posed by todays axis of evil.Equally alarming is the insidious attack by China and its allies on the U.S. dollar, ringing alarms across global financial markets. China and other central banks have been stockpiling gold, diversifying their reserves away from U.S. government bonds, driving gold prices higher and Treasury yields up. Their allies have followed suit.Does it matter to most Americans? Yes. A weaker dollar means traveling abroad and imported goods are more expensive, even without tariffs. Higher interest rates inflate borrowing costs.GOLD MIGHT GLITTER, BUT IT'S STILL MONEY. TAXES SHOULD TREAT IT THAT WAYMorgan Stanley reports, "The value of the U.S. dollar against other currencies dropped about 11% in the first half of this year, the biggest decline in more than 50 years, ending a 15-year bull cycle." The investment bank, writing last month, also noted that, "The U.S. dollar ended the first half of 2025 with its biggest loss since 1973," and predicts more deterioration over the next 12 months.While the dollar has been dropping, gold prices have surged. The Comex price for September delivery recently topped $3,600 per ounce, an all-time high. The price is up 45% over the past year.In June, J.P. Morgan analysts predicted that gold prices would move higher in large part because of continued purchases by central banks. They wrote, "Gold holdings by central banks amount to nearly 36,200 tonnes and account for almost 20% of official reserves, up from around 15% at the end of 2023, according to reported IMF data through the end of 2024."CHINA'S CENTRAL BANK CALLS ON STATE BANKS TO REDUCE US DOLLAR PURCHASES"Diversification away from U.S. dollar reserve holdings, while still moderate, has been accelerating in recent years The U.S. dollar share ended the year at around 57.8%, marking a 0.62 percentage point decline."Not all central banks have participated in the recent gold-buying spree. J.P. Morgan cited China, Poland, Turkey, India, Azerbaijan, Czechia and Iraq as the main players not exactly a Whos Who of U.S. allies.Investors, too, have bought gold, especially in China. "ETF inflows have sharply gained momentum, with year-to-date total inflows amounting to 310 tonnes translating to around 10% in total global holdings. This has been fueled largely by a 9.5% increase in U.S. holdings and a 70% increase in Chinese ETF holdings."Why is China ditching dollars and buying gold? To undermine the U.S. currency and the U.S. itself. Beijing is pressing hard to dethrone the dollar and promote widespread adoption of the renminbi as the worlds reserve currency.That is not going to happen any time soon, given Beijings currency manipulation, lack of reliable economic data and faltering economy. But raising doubts about the dollars strength serves Chinas purpose, reducing investor appetite for dollar-denominated Treasuries. That forces the U.S. government to pay higher interest rates to attract buyers a scenario already playing out.COULD THE US DOLLAR LOSE ITS RESERVE CURRENCY STATUS TO CHINA?The anti-Trump media has aided Chinas cause with incessant alarmism about President Trumps economic policies, especially his tariff program. Not surprisingly, the drumbeat of stories about tariffs, immigration enforcement, cuts to government agencies and high federal deficits has weighed on public optimism.Optimism is important. People dont buy homes, expand businesses or leave jobs for better opportunities unless they feel positive about the future.A gloomy consumer could easily stall U.S. growth. Ironically, Bloomberg recently asked, "The U.S. economy is still in pretty good shape. The unemployment rate is low and gross domestic product expanded at a 3.3% annualized pace in the second quarter. Yet Americans dont exactly see it that way, and the nagging question is why? Five years into an epic economic and stock market boom, why is everyone so negative?"CLICK HERE FOR MORE FOX NEWS OPINIONMaybe Bloomberg should check its own headlines: "U.S. Inflation to Rise as Higher Tariffs Feed Through" and "Trump Trade War Signals End of a Golden Era."Readers may have been surprised to see the Financial Times run a piece titled "Bond investors count on Trump tariff revenues to rein in U.S. debt," suggesting that tariff income will "bolster U.S. public finance in a sharp switch from earlier this year" when investors had a uniformly negative view. When a lower court ruled Trumps tariffs illegal last week, even critics admitted tariff revenues were substantial, valuable and would help reverse some of the damage from Joe Bidens spending spree.Neither China nor the liberal media will break the U.S. dollar or the economy. For the dollar to lose its reserve status, another currency would have to emerge and that is not happening. Europe remains stagnant politically and economically, and Japan is in turmoil.Meanwhile, investment incentives in the One Big Beautiful Bill Act, combined with new White House trade deals, are already boosting U.S. investment. Jobs and tax revenues will follow.Treasury Secretary Scott Bessent told NBCs Kristen Welker over the weekend that we will see "substantial acceleration" in the economy by years end. If he is right, expect the dollar to rebound and Chinas ambitions to be thwarted, at least for now.CLICK HERE TO READ MORE FROM LIZ PEEK