Posts Tagged ‘currency crisis’

China and the Goldfinger Syndrome

China and the Goldfinger Syndrome

Courtesy of JESSE’S CAFÉ AMÉRICAIN

I have had some interesting discussions recently with correspondents about the problem which China has with its very large US dollar reserves.

To summarize what I think, China is attempting to diversify their portfolio of US Treasury dollar holdings. They are obviously accumulating ‘real goods’ including stockpiles of basic materials, gold, silver, oil and investments in the means of production in their own region and in key regions around the world.

This is more difficult than it might appear on the surface. Real goods are often strategic, and governments are sometimes reluctant to allow them to be acquired by a government considered a potential threat. The first difficulty is the strategic importance of some assets, such as the China’s offer for the purchase of Unocal.

But there is also a need for confidentiality, stealthiness if you will. If word were to leak out that ‘China is dumping its Treasuries’ there would be a run on the market and the Chinese could lose a portion of their reserve wealth rather quickly.

Now, would it matter. Well, yes. It would matter because US dollars are still the currency of choice for most international trade including the all important international commodity, oil. If you think that philosophically dollars have no value because they are just paper, I would be more than happy to dispose of them for you. Limited time offer, of course.

I also posited that China, while accumulating its real goods quietly against the constraint of perturbing the markets, could do short term hedges against the less catastrophic scenario of further dollar devaluation by going into the very deep and liquid financial assets markets, and hedging risk with CDS and other obvious investments including shorts of various types.

As anyone who has attempted to acquire a company or take a substantial position in or out of an asset or company, at some point you can affect the price, making other participants aware that the asset is in play, and end up selling or buying against yourself. In the case of China it could also trigger a run on the bank of the US, which is an immediate endgame.

With regard to the use of financial instruments, someone raised the obvious issue of counter party risk. Well, of course it is an issue. But less so if you are merely hedging…
continue reading


Tags: , , , , , , ,




Currency Wars

Currency Wars

Courtesy of JESSE’S CAFÉ AMÉRICAIN

"In his latest letter, Mylchreest reckons we are now in the ‘Third Gold War’ since the Second World War and this is being waged between the USA in conjunction with other western countries/institutions, notably the IMF, and various opposing sectors worldwide. In his contention, the U.S. and its allies lost the first of these ‘gold wars’ to the French (then under De Gaulle) and the second to the Middle East, helped significantly by the then pro-gold stance and purchasing power of the German Deutsche Bank .

This latest Gold War has been/is being fought covertly. "High profile sales of physical gold have, for the most part, been replaced by sales of "paper gold" in the form of futures, OTC options and unallocated gold, etc." asserts Mylchreest. But this time he reckons the veil has been lifted and the whole charade is beginning to unravel. Instead of France or Arab nations, the opponent this time is China – the 800 pound gorilla – potentially an even more formidable opponent, with a huge treasury of trillions of dollars with which to back its moves. It’s not just that it is the Chinese government which is the major participant, but also now that gold and silver ownership is being promoted to the populace there by government institutions, there is the huge pent-up, and growing interest in precious metals of the rapidly increasing Chinese middle class and its potential to affect the global demand patterns."

China: the Gorilla in the Third Gold War, Lawrence Williams

The gold war as described above is just one front in a greater and more general ‘currency war’ that is evolving as the empire of ‘the US dollar as the reserve currency,’ which has been in place since the end of WW II, declines and finally falls in the profligacy and crony capitalism of the Federal Reserve Bank and the Treasury.

This battle may manifest itself more publicly later this year in the debate over the reconstitution of the basket of currencies that the IMF’s Special Drawing Rights (SDR) will contain.

What Will Be the New World Reserve Currency

Russia Calls for Changes to the SDR

The SDR may not be the successor to the dollar hegemony in the short term. The BRICs may lobby hard enough to legitimize it,…
continue reading


Tags: , , , , , , , ,




Conversation with John Rubino

Conversation with John Rubino  

John Rubino John Rubino is the co-author, with GoldMoney’s James Turk, of The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street (Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He now writes for CFA Magazine and manages and edits the terrific websites DollarCollapse.com and GreenStockInvesting.com.
 

“This is the end of a long era and the beginning of another that is not going to be nearly as nice.” John Rubino

 
Our first conversation was on the phone, the day Ben Bernanke was named “Person of the Year” by Time Magazine
 
Ilene: So what do you think of Ben Bernanke winning the Time’s person of the year award?
 
ben bernanke, person of the year, timeJohn: First, this was obviously a lame year – not much competition. Second, it’s a great negative indicator, like Time’s “Home Sweet Home” edition just prior to the housing collapse. Ben Bernanke is part of the old monetary order, in which it was acceptable to create paper money in infinite amounts to finance a growing government. The peak of his popularity coincides with the end of the system he helped design.
 
Ilene: Do you think Bernanke will get reappointed?
 
John: Oh yes, he fits the times perfectly. Most of the people in charge think he did a great job. He’ll be reappointed and he and Alan Greenspan will be identified with the future crisis, they’ll be the guys who are in the history books as the Fed Chairmen who ran us off a cliff. And it couldn’t happen to two nicer guys as far as I’m concerned.


continue reading


Tags: , , , , , , , , , , , , , , , , , , ,




 
 
 

Zero Hedge

The Market's Day Of Reckoning Looms

Courtesy of ZeroHedge View original post here.

Authored by Sven Henrich via NorthmanTrader.com,

Well, they’ve done it again. By “they” I of course mean the US Federal Reverse and all the other central banks combined. Synchronized global easing it is called and the once again giant inflows of artificial liquidity are dominating the price action in markets irrespective what’s going on with earnings or growth. The stock market is not the economy, the economy is not the stock market. The stock market is liquidity and the stock market is the primary tool with which cent...



more from Tyler

Phil's Favorites

What is an oligarch?

 

What is an oligarch?

Boris Yeltsin shakes hands with Russia’s most powerful businessmen in Moscow. AP Photo

Courtesy of Joel Samuels, University of South Carolina

With the impeachment hearings for President Donald Trump under way, several American diplomats and ...



more from Ilene

The Technical Traders

When Oil Collapses Below $40 What Happens? PART III

Courtesy of Technical Traders

This, the final section of this multi-part research article, will continue our exploration of the consequences that may result from our ADL predictive modeling system’s suggestion that Oil may continue to fall to levels below $40 over the next few months. 

In Part I and ...



more from Tech. Traders

Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



more from Biotech

Insider Scoop

Glass House Group Appoints Graham Farrar As President

Courtesy of Benzinga

Glass House Group, a California-based cannabis and hemp company, earlier this week appointed Graham Farrar as president.

In his new role, Graham will oversee the company’s short and long-term business strategies, budgets and operations, and report up to Glass House Group CEO Kyle Kazan.

A long-time entrepreneur and an original team member of both Sonos (NASDAQ: SONO...



http://www.insidercow.com/ more from Insider

Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

more from Chart School

Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



more from Bitcoin

Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



more from Kimble C.S.

Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



more from Lee

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>