Tag Archives: dollar collapse

A Dollar Collapse – And Gold Revaluation – Is Inevitable

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , , , ,

“Furthermore, in the main, historians educated as Keynesians and monetarists do not understand the economic history of money, let alone the difference between a gold standard and a gold-exchange standard. These similar sounding monetary systems must be defined and the differences between them noted, for anyone to have the slimmest chance of understanding this vital subject, and its relevance to the situation today…

…The pricing of financial assets, and today’s extraordinarily low interest rates indicate that a flight from the dollar is the last thing expected in financial markets. If they were still alive, de Gaulle and his economic advisor, Jacques Rueff, would be instructing the ECB, as successor to the Bank of France, to dump all dollars for gold immediately. And probably to dump all other foreign fiat currencies for gold as well. However, today, it is likely that other actors will blow the whistle on the dollar, such as the Chinese, and the Russians.”

The quotes above are from Alasdair Macleod’s piercing essay on the gold standard and the mechanics underlying an inevitable collapse of the U.S. dollar: Why A Dollar Collapse Is Inevitable. No one can claim to understand the modern monetary system without reading this piece from Macleod. It also explains by Modern Monetary Theorists are full of shit.

As the antithesis to the dollar, gold will soar. I was looking at some charts with a colleague earlier this week and was startled to discover that a very quiet bull move has begun in the miners.

Like the move that began in late 2015, it seems that some of the junior miners per GDXJ have gotten the party going. As you can see in the chart below, GDXJ is up 12.8% since December 7, 2017. GDX is up 9.5% since March 1st. Some individual stocks are quite a bit more than the indices: AEM up 18% since March 1st, EXK up 49.7% since Feb 9th, Bonterra up 25% since March 1st, etc.

I’ve had several stocks in my Mining Stock Journal that have outperformed the sector my several multiples. Some of them are risky junior exploration stocks and some are lower-risk producers. A good example is EXK, which I presented in the August 24, 2017 issue at $2.16. It closed Friday at $3.06, up 41% from my buy recommendation. This is just one out of many examples. You can learn more about the Mining Stock Journal here: Mining Stock Journal Information.

Is The World About To Take A “Gold Shower?”

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

The 1944 Bretton Woods international monetary system as it has developed to the present is become, honestly said, the greatest hindrance to world peace and prosperity. Now China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over the world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it…Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

The above is an excerpt from William Engdahl’s essay, “Gold, Oil, Dollars, Russia and China.” The essay is a must-read if you want to understand how the dollar was cleverly forced on the world as the reserve currency and how it is about to be cleverly removed and replaced with a trade system that reintroduces gold into the global monetary system.

Unfortunately, the U.S. educational system presents a fraudulent account of world financial and economic history from Bretton Woods to present.  Fed on a steady educational diet of U.S. propaganda, anyone raised and educated in the U.S. will wake up one day to an economic cold shower and eventual poverty unless they’ve taken the steps necessary to protect their savings (if they have any).

Let’s face it, the entire western monetary system is basically a fraud. It is privately made and privately owned, with the entire international payment system being controlled by the FED – which is totally privately owned – and the BIS (Bank for International Settlement, in Basle, Switzerland – also called the central bank of centrals banks). – from an interview with Peter Koenig, geopolitical analyst and a former staff-member of the World Bank

Without a doubt, the Russia-China led BRICS axis is working toward a “reset” of the U.S.-centric dollar reserve global currency system: “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

That quote was delivered by Putin at the annual BRICS summit in Xiamen, China.  I don’t know how Putin could have more plainly, yet diplomatically,  laid out the inevitable demise of the dollar’s status as the world’s sole reserve currency.

The news report from the Nikkei Asian Review of a gold-backed yuan oil futures contract to be traded in Shanghai was treated with predictable skepticism from the those who require an event to have already occurred in order to “see it.”

That report surfaced shortly after the BRICS summit in China.  I suspect China intentionally has made the world aware of its plan to roll out this contract eventually well ahead of the actual event.  China is imminently launching a yuan-denominated crude oil contract on the Shanghai Futures Exchange.  Please note, for anyone skeptical of this event, that  the announcement came from the vice chairman of the China Securities Regulatory Commission.  I suspect that once this contract is trading smoothly with a high level of liquidity, the next logical step would be to enable the users of this contract  to convert the yuan received for oil into gold.  The gold-backing would be an incentive “sweetener” to use this contract instead of dollar-settled futures contracts.

A gold-backed, yuan-denominated oil futures contract makes sense certainly from the perspective that Russia and China are already settling Russian energy sales to China in yuan.  They have also set up a mechanism by which Russia can convert the yuan received into gold.  Furthermore, the Central Banks of Russia and China combined, are  by far, the two largest buyers of gold in the world.  Why else would Russia/China accumulate a massive Central Bank gold reserve other than to eventually reintroduce gold as a currency stabilizer and a trade settlement “equalizer”  into the global monetary ?

Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia. – William Engdahl, ibid.

The consequences for America as a whole will be catastrophic. Currently the parabolic issuance of U.S. Treasury debt is funded primarily by a recycling of dollars used to settle the majority of global oil trades. Once a dollar-alternative for settling oil trades is established, the amount of dollars available to finance U.S. debt-fueled consumption will rapidly decline. But it’s the ability of the U.S. to issue debt unfettered right now that keeps the U.S. economic system from collapsing. The Fed’s printing press will be the only alternative to immediate collapse. History has shown us what the end of that pathway looks like. It’s far worse than waking up and stepping into an ice-cold shower.

The Daily Coin has published a fascinating interview with William Engdahl:   Gold, China and The Deep State.

Wave Good-Bye To The Dollar’s Reserve Status

Financial Markets, Gold, Housing Market, Market Manipulation, Precious Metals, U.S. Economy, , , ,

“Paper Money Eventually Returns To Its Intrinsic Value – Zero” – Voltaire

Set aside all other financial, economic and political concerns continuously shoved in our collective faces by the mainstream media.  It’s a distraction – to a large degree intentional.

These are the ONLY events that matter right now:    this, “China Begins To Reset The World’s Currency System,” and this,   “Venezuela Is About to Ditch the Dollar in Major Blow to US: Here’s Why It Matters.”

Once the dollar is no longer regarded or used as the reserve currency, third-world poverty will engulf everyone in this country below the upper half percent wealth stratum…except those who possess a fair amount of physical bullion.  I just bought more gold and silver coins from a friend yesterday who had an uncontrollable urge to get their house painted and needed to sell some to me to fund it.  It won’t matter what the house looks like in a couple years but they would never take my word on that.

The level of assumed entitlement in this country by the middle class is absurd…

All the money and all the banks in Christendom cannot control credit…Money is gold and nothing else – JP Morgan’s 1912 Congressional testimony on “the justification of Wall Street”

Trump has suggested permanently removing the Treasury debt-ceiling. The Treasury debt-ceiling is the last remaining barrier to the ability of the Fed and the Government to create an infinite amount of fiat currency.  Debt that is issued behaves exactly like printed currency until that debt is repaid.  The non-repayment and continued issuance of the amount of debt outstanding is the critical point to understanding this concept.  Since the early 1970’s, the Treasury debt outstanding has grown continuously.

Printed Treasury certificates created in this manner behave no differently than printed currency. This is a reality that economists completely ignore.  Most analysts who think they understand monetary economics look upon this concept with disdain. The continuous issuance of an increasing amount of credit of any type is no different that outright currency printing (until the amount of outstanding credit is paid off, which it never has been since the demise of Bretton Woods in 1971).

Removing the debt-ceiling gives the U.S. Government, in conjunction with the Fed, the power to print an unlimited amount of Treasury notes. Historically, a large portion of these notes have been funded with recycled petro-dollars. The “QE” implemented by the Fed funded $2.5 trillion of the Treasury issuance.  I don’t know where the funding for the next round will come from unless the Fed prints a lot more money.  I suspect it will. The price of gold (and silver) spiked-up on Friday in correlation with the announcement of Trump’s proposal.  That’s your warning shot…

Trump Is Already Betraying His Voters

Financial Markets, Gold, Housing Market, U.S. Economy, , ,

Posted from St. Martin (the French side, of course!).  I kind of expected this to happen, as close friends and colleagues can attest.  Trump is not only NOT going “drain the swamp,” he’s populating it with a different breed of swamp monster.   His choice for AG is a red-neck, right-wing senator from Alabama who, 80 years ago, would have been a member of the inner circle of the Third Reich.  Ditto for the names that have been floated for Secretary of State.  As for Treasury Secretary, the names floated for the position bear the unmistakable mark of the Wall Street beast:  $6$6$6.  They are every bit as vile,  if not worse, than the thieves that moved through there the last 12 years.  Jamie Dimon?  Steve Mnuchin?  Give me an F-ing break.

It is what it is.  Out with the old, in with new old.   James Kunstler penned another epic post that deserves a thorough perusal:

For all practical purposes, both traditional parties have blown themselves up. The Democratic Party morphed from the party of thinking people to the party of the thought police, and for that alone they deserve to be flushed down the soil pipe of history where the feckless Whigs went before them. The Republicans have floundered in their own Special Olympics of the Mind for decades, too, so it’s understandable that they have fallen hostage to such a rank outsider as Trump, so cavalier with the party’s dumb-ass shibboleths. It remains to be seen whether the party becomes a vengeful, hybrid monster with an orange head, or a bridge back to reality. I give the latter outcome a low percentage chance.

For the rest of this, click here:  Boo Hoo – America Didn’t Get What It Expected

The stock market continued a stunning move higher last week despite evidence of
widespread financial market turmoil signaled by the bond and currency markets globally.
With evidence mounting everyday that the U.S. economy continues to deteriorate, the
behavior of the U.S. stock market can only be explained as being a product of the enormous pool of liquidity created by the Fed – printed money plus rampant credit availability – that piled into any and all stocks moving higher. This will ultimately turn into a momentum move in the other direction that will inflict serious damage on the system.   – Excerpt from the latest Short Seller’s Journal

 

Silver Signals The Flight To Real Safety Is On Again

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , ,

Gold is powering higher because the dollar is dropping. The dollar index is down 1.7% in the last 3 1/2 trading sessions. It’s down 2.3% vs the euro in the last 5 1/2 days, down 2.1% vs the yen in the last 3 days and down nearly 2% vs. the Swissie since Sunday night.

This is NOT about the political chaos connected to the U.S. election. That’s a sideshow distraction to the real problems going on behind the scene.

The U.S. economy is starting to collapse. This is becoming glaringly evident from most of the data, notwithstanding the highly manipulated economic reports like auto sales.

The movement back into non-fiat assets is starting again – anything connected to debt, like housing, is a de facto fiat asset. The best indicator of this is not gold, but silver. Silver was correlating with SPX for most of October, when the investment “thesis” was “a strengthening economy is good for industrial metals.”

The graph below illustrates this. It shows silver’s movement vs. the SPX for the last 3 months:

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Silver correlated almost perfectly with the movement of the SPX for most of October (shaded area on the graph). But silver has moved up while the SPX has been selling off (including today, Nov 2nd) the past 4 trading sessions. This signals a switch from silver performing as an “industrial” metal to silver functioning as a “monetary” metal.

Certainly based on the gold-silver ratio, silver is extraordinarily cheap to gold and thus represents a prototypical “value” trade as the markets begin to accept and reflect economic reality and reject the politically-charge propaganda about a “healthy” economy coming from the Fed, the White House and the Democratic candidates.

IRD sponsor’s the Mining Stock Journal, which provides unique commentary and insight into the precious metals and mining stock market.  It also presents typically an under-followed junior mining stock investment idea and, when warranted, large-cap trade.  A few issues ago I recommended First Majestic calls.  As of today,  those calls are up over 50% from offer side at issue to bid side right now.   New subscribers also receive all of the back-issues.  You can subscribe by clicking here:  Mining Stock Journal.

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Willem Middelkoop: The New SDR Will Lead To Gold And Silver Shortages

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My Shadow of Truth partner has posted a compelling interview on his Daily Coin website with Willem Middelkoop.  “The Chinese are not too happy about the current dollar world reserve system and have been quite open and vocal about their wish to change the existing monetary system toward a next phase…”

The Daily Coin/Willem Middlekoop:

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Where Is The IMF’s Gold?

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , , ,

In mid-2009, the IMF announced that it was going to sell a portion of its gold.  It ended up selling 403 tonnes of its then-reported 3218 tonnes of gold.  Back then the original announcement made it sound like the IMF was trying to push down the price of gold with a big sale announcement, as the price of gold went parabolic after the 2008 de facto collapse of the financial system.   The excuse for the gold sale was to “shore up” IMF finances.  However, historically, the IMF has sold off portions of its gold holdings as a policy to reduce gold’s role in the global fiat currency system.

At the time, India and China jointly delivered a research paper which suggested that, if the IMF were interested, the two countries would be interested in buying all of the IMF’s gold. The IMF limited its sale to the 403 tonnes:   200 tonnes to India, 2 tonnes to Mauritius and 10 tonnes to Sri Lanka.  By  December 2010 the IMF concluded the sale of the balance of the gold without ever disclosing the buyers.

The IMF’s gold comes primarily from the member countries, who pledge gold to the IMF as part of the cost of their “quota” assigned to become a member country.  25% of a country’s “quota” were to be paid in gold.  The IMF states that its gold is held in various depositories, like the NY Fed, around the world.  The truth is that most of the gold “pledged” to the IMF has likely been leased out by the custodial Central Banks.

Curiously, over the IMF’s 71 year history, it sold its gold intermittently.  Each time the demand by Central Banks to buy that gold has far exceeded the amount of gold offered.  This is an important point to note because it drives home the point that gold is significantly undervalued and that real Central Bank demand emerges when large quantities (100’s of tonnes) of gold are offered for sale.

In the latest episode of the Shadow of Truth, we discuss the interesting shift occurring in the IMF’s SDR structure and what it means for the U.S. dollar as a reserve currency.  We also discuss why the price of gold will likely begin to move much higher as we move from summer into autumn – we also discuss why GLD is a total fraud:

Central Bank Interventions Have Become Extreme

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , , ,

There are no markets anymore – only interventions.  – Chris Powell, Treasurer of GATA

Markets are supposed to act as information transmission mechanisms, with asset prices reflecting all of the fundamental information that goes into the process of “price discovery.”  But when Central Banks and Governments interfere – or intervene – in markets, it completely disrupts the information transmission, price discovery function of markets.

If Central Banks and Governments interfere with markets, there’s no reason to even have markets and it becomes completely useful to participate in financial markets in any capacity, unless of course you have access to the inside information connected to the market intervention.

The extreme volatility of the markets right now is nothing more than 100% evidence of Federal Reserve intervention in U.S. markets.  It also reflects the extreme degree to which the Fed is interfering and manipulating the markets.  Take yesterday for example:

This intra-day graph reflects the tug-of-war that occurred among the Fed’s interventions to prevent the market from a catastrophic drop, the hedge fund algo programs trying to time the Fed’s interventions and the rest of the market trying to unload extremely overvalued stocks.   That demonstrates the degree to which the U.S. capital markets have gone completely off the rails.

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It is now widely understood and accepted that Central Banks are actively buying stocks in order to support the equity markets.   Japan openly admits this.  The Swiss National Bank files SEC 13-D filings disclosing its purchases.

If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market.

Dr. Paul Craig Roberts and I co-authored a report which discusses the issue of Central Banks buying stocks.  As it turns out, the Fed is likely the entity funding the Swiss National Bank’s purchases of stocks like Apple and Google.  You can read the entire article here:   Central Banks Have Become A Corrupting Force

With Central Banks attempting to control the direction of markets as a means of dictating policy, it has made any participation in the financial markets completely meaningless.

This will not end well.  History tells us there’s a limit to a Government’s ability to manipulate markets.  At some point the money printing and market support mechanisms will fail and the result will be much worse than if they had let the markets freely determine the outcome.  It’s not a question of “if,” it’s just a question of “when.”

China-Russia Yuan-Ruble Trade Will Reshape Global Financial System

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , ,

Trade settlement in local currencies between China and Russia, according to “official” statistics, account for 7% of their bilateral trade.  But the dollar amount has grown 700% in the last year.

Growing cooperation between Russia and China has become one of the hottest topics in the global economy. It is signaling the emergence of a strong alliance of one the world’s richest and strongest economies, which is expected to reshape the existing western-dominated economic model (RT.com link)

This part of an ongoing, systematic plan to remove the dollar as the global reserve currency.   China, as we all know, has been methodically establishing currency swap facilities with most of its major trading partners which enable a limited amount of bilateral trade settlement in local currencies.  These deals have been signed with many western countries, including the UK, France and Switzerland.

“There is a reason to believe that this trend will continue in the coming years and the role of the yuan will increase rapidly not only in international trade, but as the currency of international reserves of the central banks,” he said [Aleksandr Prosviryakov, PricewaterhouseCoopers LLC, Russia].

The writing is on the wall for the dollar.  It’s only a matter of time before the plug is pulled.  It has been my view that China has been working toward de-dollarizing the global financial system in an attempt to avoid a massive global economic shock and the ensuing chaos, which would likely precede a global military conflict.

Certainly the massive transfer of physical gold from the west to east has been part of the process in ending the petro-dollar.

I hope China’s plan to precipitate a peaceful transition from a dollar reserve currency system to a new currency system is successful.  I find it hard to believe that the U.S. will relinquish its power without a big fight…

I Have Good Company With My View That Rickards Is Full Of B.S.

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, ,

All this says to me that people who are perceived as being credible keep circulating these absolutely preposterous myths. But if people want to believe the fairly tale that the United States still has all its gold safely vaulted in places like New York and Fort Knox, they are telling you that this is how all this synthetic gold has in fact been created.

That quote and the one below is from Hong Kong-based fund manager, William Kaye on King World News (LINK).

The U.S. government is essentially communicating to people through its agents that we still have all that gold in our vaults and to prove it, here is the serial number.  So, if necessary, just show up with this piece of paper and we will deliver the gold.

I have said all along that Rickards is a front for the Government and is trying to sell the idea of using the IMF SDR to the world as a reserve currency replacement for the dollar.   In other words, the elitist insiders high up in Government know that the dollar’s days are numbered.   But the dollar is by far the highest percentage component of the SDR  (42%). This remedy would extend the ability of the U.S. to kick  the can of its economic demise down the road.  Too bad for the U.S. that the IMF SDR will not be the dollar replacement.

My Easy Trade idea is still valid.  It’s bounced nicely from its low on Friday and we’ve made a nice gain in the fund from taking delivery of the stock from the puts I shorted Friday morning.  For anyone who buys the report, I will still offer free options trading advice/strategies if you email me after you’ve read the report:   Easy Trade Idea.