At Rory’s prescient behest, we have been way out in front of the curve on the Silk Road and on the issue of China using the IMF to push aside the dollar as the reserve currency. Casey Research finally caught up with their own Silk Road piece – more than a year after the Shadow of Truth was chatting about it.
Rory’s Daily Coin has been all over the restructuring of the IMF’s SDR, something on which the mainstream and alternative media has been conspicuously silent. As Rory reports below, the IMF has approved China’s issuance of an SDR-denominated sovereign bond issue:
This is a major first step in delivering a realistic blow to the dominance of the U.S. dollar as world reserve currency. It is no secret that China has been making international moves to make the Renminbi (RMB) a more attractive currency on the global stage. This latest move solidifies the RMB as a world currency.
You can read the rest of Rory’s analysis here plus I suspect we’ll chat about this in tomorrow’s episode of the Shadow of Truth plus we are going to rant about something that is on everyone’s mind: NBC’s abortionist coverage of the Olympics: Global De-dollarization Is Now Assured.
The stock market is extremely overvalued – it could easily crash through the bottom hit after the Lehman crisis [S&P 500 closed at 676.53 on March 9, 2009] – Alasdair Macleod on Shadow of Truth
It’s getting harder for perma-bulls to make the argument that the U.S. economy is in a state of recovery. It’s getting even harder for them to justify the current stock market valuations. Not only are all of the reliable economic metrics pointing toward the early stages of what could be a deep economic recession, if the trailing twelve month GAAP earnings of the S&P 500 index companies were adjusted by using the GAAP accounting standards that were in place in 1980 – or even 1990 – the current stock market would be the most overvalued in history.
The U.S. stock market is behaving as if it is getting ready to drop like Niagra Falls:
When you see a genuine top, all the old hands say ‘this is absolutely crazy’ but they throw in the towel and buy at the top along with everyone else – that is a genuine bubble…But recently there’s a fairly strong body of expert opinion that is very cautious about the outlook for the market…that’s consistent with the end of the “B” leg of Elliot technical anlaysis, which proceeds a very nasty “C” leg and which could take us to the lows we saw post-Lehman and likely overshoot that low by a reasonable degree. – Alasdair Macleod
The technical analysis cited above by Alasdair Macleod is supported and reinforced by the rapid deterioration in corporate revenues, earnings and credit quality. The banking system in particular has releveraged itself both on and off balance sheet to a level that far exceeds the levels that blew up the financial system in 2008.
The condition of the U.S. economic and financial system is compounded by the fiscal condition of the U.S. Government, which will be forced to raise the debt ceiling limit again before the end of year. Furthermore, the U.S. political landscape can best be described as a three-ring circus – if you are an optimist – and a complete disaster if you are a realist.
All of the guys at the top level of Government/Central Bank authority do recognize they have a problem they just don’t know how to get out of it…there is not exit for this problem. – Alasdair Macleod
For now, the best solution coming from the elitists running the United States is to blame the volatility in the U.S. stock market on China. While this notion is patently absurd, it’s permeated the propaganda being thrown at the American public by the media.
Rory and I hosted Alasdair Macleod on our Shadow of Truth show this week to discuss the primary economic signals which are warning anyone not in denial about the inevitable catastrophe headed toward the global financial and economic system:
The global economic system, including and especially the U.S. economy, is starting to collapse. Negative economic reports have been continuously streaming since late last fall. Even by the Government’s own manipulated numbers, the GDP in the U.S. contracted in Q1. From the majority of the economic reports for April and May – nothwithstanding the absurdly fraudulent U.S. Government non-farm payroll report – it is likely that Q2 GDP will be at least as negative as it was in Q1.
Interestingly, and something which has gone completely unnoticed, there’s been a big rally in the junior mining stock sector, which is up 18% since March 10. The junior mining stock sector of the market has outperformed everything since March. This tells us that the smartest money is expecting a big move in gold and silver (click to enlarge):
That makes sense because of what the other markets are telling us. The Shanghai Containerized Freight Index and the Baltic Dry Index are both telling us in tandem with each other that the global economy is tanking – it’s done – it’s toast. – Rory Hall, Shadow of Truth
Perhaps most puzzling is that, in the face of contracting economic activity, bond yields in the big western economies are spiking higher (see below). This should not be occurring. In our opinion, not only is the system collapsing but the Fed and ECB are losing their ability to control the markets, with spiking bond yields as primary evidence.
In this latest Shadow of Truth market update, we discuss some of the big indicators telling us that the system is collapsing.
Since early April, the yield on the 10yr Treasury has spiked up 38%. This graph below shows the big move lower in the price of the 10yr Treasury (price moves in the opposite direction of yield – Central Banks and big investor – e.g. pension funds – have lost $10s of billions in their Treasury positions since early April – derivatives losses are trebled in magnitude – click to enlarge:
This graph shows the recent big spike up in the German 10yr bund yield:
I have not been able to find any analyst who can say for sure when China will announce the updated status of the PBoC’s (China’s Central Bank) “official” gold holdings. Even more uncertain is the guesstimates on what number China will report. While no one expects China to report its true gold holdings, we will be releasing a video on our Shadow of Truth channel shortly in which Alisdair Macleod discusses why he thinks China will report somewhere between 3,500 and 8,100 tonnes.
Pravda published an article in which it asserts that China has accumulated 30,000 tonnes of gold:
According to Duowei News, to ensure its domination, China is saving up gold. According to unconfirmed reports, China already has about 30,000 tons of the precious metal. If this is true, it means that China will be capable of brining the US dollar down in an instant.
While no one with any sort of knowledge about the gold market believes that the United States has anywhere close to the 8,100 tonnes it has been reporting since 1971 – in fact, any remaining gold likely has been or will be leased/hypothecated – there is a raging debate as to how much gold China owns. Again, I believe Alisdair Macleod has what I believe is the most definitive estimate, which he has backed up with painstaking research and documentation: China’s Gold Strategy