Tag Archives: reserve currency

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…

Hugo Salinas Price: The World Will Hyperinflate Into A Gold Standard

Financial Markets, Housing Market, Market Manipulation, Precious Metals, , , ,

If one can only see value in paper currency terms, one cannot see value at all

Hugo Salinas Price – website link – posted a couple of comments on Stewart Dougherty’s guest post earlier this week. I concluded that his insights needed to be shared on the front of this blog and he gave me permission to edit them together to make them easier to read for everyone.  “I know my comment was complex but I wanted to condense the thoughts I have developed over three decades:”

I would like to take this chance to share a few of my thoughts on this. To me it is pretty clear that the American gold is encumbered. Not because of the usual reasons found on the web but because America defaulted on its gold under the Nixon administration. There are still, many foreign claims on that gold.  If America starts to use that gold officially, the gold vultures, like the bond vulture funds, will be out en masse and with force.  So it is in America’s best interest to ignore that gold – and gold in general.

The world has (finally) realized that a country with the reserve currency is not something a country should want and that the dollar can fail. The danger is that it will fail to soon. That is why the euro was created for example. The currencies from the individual countries were all issued from the US treasury.  Meaning that if the dollar went the way of the dodo, the European currencies would die with it. Enter the euro, issued from gold [the euro was originally partially backed by gold].  The gold held by the ECB is priced on a mark to market basis. You can check the website of the ECB, its number one asset is listed as gold and, sadly, gold receivables [meaning that gold is leased out].  Most of the Eurasian landmass followed this initiative [pricing Central Bank gold on a mark to market basis] – for instance, the BRICS countries.  All that is needed a rebalancing of the gold holdings of major countries. Enter China. They had way too little gold and way too many dollars. But last year they also started to mark their gold holdings to market.

Seems to me the world is ready to hyperinflate into gold.  After all, all currencies have already hyperinflated in the financial world.  When the run on real things happens, as a system operator, you don’t want that since a functioning printing press is worth way more than gold. So you want to guide the hyperinflation into a useless metal and use this gold to help equalize the tradeflows. They cannot implement a global political & economic system when things are unstable because it will fail again and soon.  Just as all reserve currencies did since late 1400.  If I were in the position of the globalists, I would aim for the Roman model. Split the money concept. Currency for spending and settling debts but use gold and silver as a final debt extinguisher.  This would function to prevent the kind of mess the EU countries are now  in. The debts of the south are the assets of the North. This is a recipe for disaster.

Let me elaborate on why I think that the world is ready to hyperinflate in gold terms. The Western public will not hold an asset that goes nowhere, at least in currency terms. The public in the East were never fooled that way. Some  – I think rightly – joke “if one can only see value in paper currency terms, one cannot see value at all”.  I also think gold is wealth and not money. Gold has always been funny in that way. So many people worldwide think of it as money even though its supply tends to dry up as the price rises.

First the Comex will be thrown under the bus to destroy the paper leverage (price suppression) game. Maybe the LBMA as well though I would not be surprised as well if it’s allowed to stay alive. Then the prices can rise and the message will sent:  “gold is the new wealth reserve to balance trade imbalances and then the Western hyperinflation will be killed.”  Central banks lose most of their gold reserves (and that is good) and gold can do what it did for millennia again, settle trade imbalances.

As usual, in historical terms, most of the average people wont have it besides a few grams. But it will be people, not institutions that control it and will help to create a decentralised counterforce to the centralized system we live in that is hopelessly out of touch with reality.

A last thing, courtesy of JS mineset, of the countries that value their gold on a  mark to market basis (a few others may have followed since this graph was created:

 

De-Dollarization is Now Assured – SDR Bonds Have Been Approved

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

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.

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

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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…

This Is Why I Believe Rickards Is Wrong About The IMF SDR

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James Rickards has been quite vocal in his view that the price of gold is headed much higher.  Yet, in the same breath he aggressively promotes the  idea of using the IMF SDR to replace the dollar as the world’s reserve currency.

There’s two reasons for this.  First, if you study Rickard’s background going all the way back to his role in the Iran hostage crisis, you’ll see that he’s been lifetime “front man” for the most powerful interest groups that control this country behind the scenes.  First and foremost he’s a front-man for the Pentagon.

I’ve been told separately, independently from two different sources that the elite insiders in the Department of Defense know that the demise of the dollar is inevitable.   That there’s nothing that can be done to prevent it.

Which brings us to the second reason that Rickards is trying to pimp the IMF SDR like a magic elixir snake-oil salesman.  The U.S. dollar currently represents 61.2% of the IMF SDR:   SDR Currency Basket.

If the U.S. Government can persuade the world to accept the IMF SDR as a replacement for  the dollar, the U.S. Government will still have de facto control over the world’s reserve currency and therefore can continue to defer the systemic collapse of the U.S. into the future.   Please note the absence of Chinese yuan or Russian rubles from the IMF SDR basket.

I have always believed that China and Russia would never accept an IMF SDR as the global reserve currency, even if the U.S. and EU were willing to put those two respective currencies in the basket.  The biggest clue for me has been the rate at which both China and Russia are accumulating gold in their currency reserve accounts and working to eliminate the use of the dollar in their trade agreements.

But this article, reinforces my view – BRICS To Form Their Own “IMF:”

The BRICS nations — Brazil, Russia, India, China and South Africa — are reportedly close to finalizing their long-awaited development bank and currency reserve, each valued at $100 billion, in what has been billed as a historic challenge by the world’s emerging economies to a global financial architecture that has been dominated by the U.S. and Western Europe since its post–World War II inception.

The BRICS nations first announced their plans for the bank in March 2013 but struggled to reach an agreement over China’s desire to hold a greater stake in the institution. But a Brazilian government official told Reuters last week that the five members were ready to split funding and control equally, clearing the last major hurdle for a launch in 2016.

To economists in the developing world, who have long criticized the World Bank and IMF as anathema to the countries they purport to help, the New Development Bank holds tremendous promise. Critics say the West has taken advantage of its monopoly in international lending to wield outsize influence in the economic and political affairs of developing countries, dictating development models that further entrench these countries’ subservience to the West.

But unlike the U.S. and Europe, who are in lockstep on most things, the BRICS countries have little in common but a shared ambition to rebalance the global economic order.

I would suggest that anyone who wants to see the issues clearly should place a little less “faith” in the information being disseminated by people like Jim Rickards.  I would also suggest that the  unwillingness of Russia/China to cooperate with the U.S. on the matter of the U.S. dollar is the reason recent military aggression by the U.S. toward Russia and China…

The Goverment’s (Fed’s) War On Gold

Gold, Market Manipulation, ,

Michael Kosares of USA Gold – a Denver-based precious metals coin and bullion dealer – has written a must-read essay about the Fed’s war on the price of gold.  Without question, the war has intensified amid rising doubts globally about the use of the dollar as the reserve currency.  Not only has this war on gold intensified, it has become blatantly obvious to anyone with more than one brain cell in their head.

Please take the time read this in its entirety – it’s not long but it’s full of insight:

I can’t remember the exact quote but when I used to trade and Mr. Volcker was Fed chairman, he said something like ‘gold is my enemy, I’m always watching what gold is doing’, we need to think why he made a statement like that. If you’re a central banker or one of the congressmen or senators, watch what gold is doing because this is a no-confidence vote in fiscal and dollar policy. 
– Rick Santelli, CNBC

Here’s the rest:   So How Goes The War On Gold?

There’s just no telling how much longer the Fed and its agent bullion banks can keep using paper to manipulate the price of gold and silver, but I believe the end is getting close.  When the demand for deliverable physical gold/silver overruns the enormous paper short interest, the move up will redefine shock and awe.