There is a world currency war being fought right now. It is a battle to try and dethrone the king currency: The US Dollar.

Many countries around the world are dumping US dollars. Some are publicly announcing their sell off while others are quietly exchanging US dollars for commodities, the euro and possibly IMF bonds.

Two weeks ago the US dollar was hammered after Russia stated it will reduce the share of U.S. treasuries in its reserves. Russia has the world's third largest treasury reserve, worth $404.2 billion.

The US dollar is no longer Russia's basic reserve currency. Russia's euro-based share of reserve assets has recently increased to above 47.5%. This is a trend occurring in many nations as fear that the US dollar will fall from the top is increasing.

China has been far more diplomatic, or at least trying to make it appear that way as they have much to lose by upsetting the US government. China has been getting rid of its US dollars by using them to purchase commodities; a smart move on their part as they are uncertain about the dollar's future and desperately need commodities such as copper to fuel their infrastructure expansion plans.

Be sure to monitor China's spending on commodities over the summer months as it could lead the charge in dethroning the US dollar and simultaneously staging another commodity run, especially for copper.

On June 12th an amazing story was reported. Two Japanese men were detained in Italy after attempting to smuggle $134 billion worth of US bonds over the border into Switzerland. Who on earth could own that much in US bonds? Certainly not an individual, nor a large company. That only leaves a government body. But it couldn't be the Japanese government. They are one of the US' biggest allies right? Something smells fishy here.

The details of this $134 billion smuggling attempt are weak at best and as expected, conspiracy theories are rampant. There is no one individual who lays claim to this astronomical amount.

Unless you do a lot of reading you probably haven't heard this story yet as the media doesn't seem to want to talk about it. If in fact it is true, and these bonds are real, could you imagine the mass exodus that would occur from the US dollar?

US authorities are in a panic to get to the bottom of this and ensure Japan was not trying to pull one over on them. If Japan was attempting to sell or dump US bonds after proclaiming their confidence in the US dollar, there could be major political ramifications.

The bottom line is the US is set to issue trillions of dollars in US debt over the coming years. They need buyers for this debt. The US has to appear in control of its money for this debt to be smoothly purchased by other countries.

Our team at Pinnacle believe periods of hyper inflation are around the corner. The US dollar will have a very difficult time sustaining its value as national debt has ballooned to over $11.4 trillion dollars. The nonpartisan Congressional Budget Office has recently conducted an independent analysis of Obama's budget proposal and the current and future state of US debt. Their predictions should be taken very seriously.

Obama's budget proposal will force the US to borrow almost $9.3 trillion in the next decade. This is $2.3 trillion more than he originally proposed. The CBO has predicted that deficits under his policies will exceed 4% of the overall economy in the next 10 years. Peter R. Orszag who is a White House budget director has said these levels would "not be sustainable."

Countries around the world do not want to be heavily invested in a country whose White House budget director is predicting an unsustainable economic future.

Inflation will come at some point (it is not an IF, but rather a WHEN) and as an investor you must be prepared.

All the best with your investments,