A. First Look: U.S. Dollar Substitute to Go Public on Oct 20th?
23 Apr 2015, TheCrux.com, By Kelly Brown, Stansberry Research
Pasted from: http://thecrux.com/dyncontent/dollar-substitute-coming/?cid=MKT035907&eid=MKT076392
The International Monetary Fund is one of the most secretive and powerful organizations in the world.
They monitor the financial health of more than 185 countries… they establish global money rules… and provide “bail-out” assistance to bankrupt nations.
And on Oct 20th of this year, the IMF is expected to announce a reserve currency alternative to the U.S. dollar, which will send hundreds of billions of dollars moving around the world, literally overnight.
According to Juan Zarate, who helped implement financial sanctions while serving in George W. Bush’s Treasury department, “Once the [other currency] becomes an alternative to the dollar, rules of the game begin to change.”
And Leong Sing Chiong, Assistant Managing Director at a major central bank, said this dollar alternative “is likely to transform the financial landscape in the next 5-10 years.”
According to currency expert, Dr. Steve Sjuggerud (recently featured on CNBC, and Bloomberg), “I’ve been active in the markets for over two decades now… but I’ve never seen anything that could move so much money, so quickly. Hundreds of billions of dollars could change hands in a single day after this announcement is made.”
“The announcement will start a domino effect, that will basically determine who in America gets rich in the years to come… and who struggles.”
Dr. Sjuggerud says if you own any U.S. assets—and that includes stocks, bonds, real estate, or just cash in a bank account–you should be aware of what’s about to happen, and know how to prepare.
Experts say this announcement, expected Oct. 20th, could trigger one of the most profound transfers of wealth in our lifetime.
B. Guest Post: This October The World Will Change – “China Is Preparing For Something Big”
21 May 2015, zerohedge.com, by Tyler Durden
Pasted from: http://www.zerohedge.com/news/2015-05-21/october-world-will-change-china-preparing-something-big
Submitted by Mac Slavo via SHTFPlan.com, “China… across the board… is preparing for something big in currency markets.”
You Tube video, (via Future Money Trends) https://www.youtube.com/watch?v=Kl4D84YqTTY&feature=player_embedded
This October may see the beginning of the end for the U.S. dollar as the world’s reserve currency. Twice every decade the International Monetary Fund meets to discuss their Special Drawing Rights (SDR) currency basket. Currently comprised of the dollar, Japanese Yen, British Pound and Euro, if China has their way a few months from now, we may well see the Chinese Yuan take its place among the world’s most trusted currencies.
U.S. Treasury Secretary Jack Lew says, “China isn’t ready for currency reserve status,” and would certainly like to see the Chinese blocked from entry, preserving the dollar’s status as the world’s go-to currency and primary mechanism of exchange for global international trade.
But while Lew and his predecessors have presided over the largest growth in national debt in world history, the Chinese have been strategically positioning, much like the United States did in the early 1900’s, to not just become the world’s largest economy, but to be the super power of the 21st century.
Forget for a moment what’s being touted by analysts, forecasters, politicians, and financial officials who say China is not ready. Focus instead on the actions being undertaken by China and you’ll understand why Chinese President Hu Jintao says that the dollar is a product of the past.
Excerpted From Future Money Trends: Already we are seeing China and Russia hoard gold with Chinese demand skyrocketing in the past give year… China is both, the world’s largest gold producer and biggest importer… so not only are they accumulating gold by the truck load, but not one ounce produced is leaving their shore.
China… across the board… is preparing for something big in currency markets. … The world has an unease about the dollar system… President Hu of China said ‘the dollar is a product of the past.’
There was a time when the U.S. dollar was backed by gold. This backing helped to solidify it as a currency that could be trusted on the open market. Today, however, for all intents and purposes, the dollar is backed by absolutely nothing.
It is this weakness that the Chinese aim to exploit and that’s why they have been actively stockpiling thousands of tons of gold in recent years. But this is only part of the story.
In addition to their physical gold holdings, the Chinese have been using a secret gold accumulation strategy that no one is talking about :
The headlines for gold these past few years have only focused on physical gold accumulation by China, Russia and Eastern central banks. But what they have missed is a 7,000 year-old strategy that China is doubling down on.
According to data compiled by Bloomberg, in 2013 asset purchases by Hong Kong and [Chinese] mainland miners increased to a record $2.2 billion. China is buying gold mines at a record… something completely missed by both, the mainstream investor and even the gold analysts who tend to only focus on the bullion sales, which haven’t been disclosed officially since 2009. Although, according to Bloomberg, based on trade data the physical bullion stockpile has likely tripled since then.
China, who is aggressively buying gold, would spark an event if it disclosed how much gold it has stockpiled. But imagine the true disclosure when you add up all their deposits… not just in China, but offshore. $2.2 billion is equivalent to 46 metric tons of physical gold… but when buying gold deposits in the ground this could be upwards of 5,000 metric tons. And that is just one year of record mine buying from China.
It’s been rumored that China may disclose those gold holdings ahead of the IMF’s decision this October in an effort to prove to the world that their currency is not only worthy of admission into the SDR basket, but that it is more trustworthy than the U.S. dollar itself.
The winds of change are blowing and the Chinese will soon be taking the helm of the global economy. They know a major event is coming and they have been preparing for it by acquiring the one asset that has survived the test of time as a mechanism of exchange.
For those desperately trying to figure out where they should be putting their money before the next major market event takes shape, consider following their strategy.
C. Three Currencies Ready for a HUGE Revaluation
27 Feb 2012, WallStreetDaily.com, By Karim Rahemtulla, Chief Resource Analyst
Pasted from: http://www.wallstreetdaily.com/2012/02/27/three-currencies-ready-for-a-huge-revaluation/
Both the U.S. dollar and euro are doomed. Why? Because in addition to being in slow-growth economies, saddled with debilitating debts, they’re the victims of an enormous increase in money supply. The obvious result is serious inflation and the devaluation of both currencies in the coming years.
Even if the United States doesn’t add to its already bloated debt, the interest on it – coupled with massive money printing – virtually guarantees higher prices. Same goes for Europe, as the region is printing money out of thin air to bail out its ailing countries and banks. However, the euro and dollar’s pain could easily be your gain.
You see, the situation is rapidly creating a new currency world order. Specifically, three currencies are poised for a massive upward revaluation…
The Three “Super Currencies” of Tomorrow
There’s a trio of currencies that you must include in your portfolio today. Backed by solid fundamentals in countries that rely on growth, not artificial monetary stimulation, these three currencies operate on an entirely different playing field than the dollar and euro. And they’re set to undergo huge revaluations in the coming months. Without further ado…
Currency #1: Chinese Yuan
As the dollar and euro decline, the Chinese are busy plowing the yuan into assets that increase in value. Things like mines, factories, other currencies and natural resources.
At current levels, the yuan is a bargain. Of course, the Chinese government deliberately sets the exchange rate artificially low – rather than allowing it to float freely on world markets – in order to profit from Chinese goods and services.
With the world balking at this arrangement, the Chinese will have to revalue the yuan in a big way over the coming years. Why? Two reasons…
1) The Chinese aren’t just goods producers these days… they’re big consumers, too. This means reduced dollar reserves and more yuan will be invested abroad.
2) The Chinese will be forced to revalue the yuan more frequently and by greater amounts – something the country was unable to do as it was busy accumulating dollars.
As a tandem, these two catalysts will force the value of the yuan higher in the years ahead.
Currency #2: Indian Rupee
Having dropped by more than 20% against the dollar over the past couple of years, the rupee is an absolute steal right now.
The Indian Central Bank controls the rupee closely. And in an effort to combat the financial crisis and make Indian goods and services more competitive, it’s allowed the currency to depreciate.
The result? An artificially weak rupee that will appreciate due to the trend in global growth and money flow.
With Indian GDP growth set to outstrip all Western economies in the years ahead, the country will have to raise interest rates to quell inflation.
In the past, this wasn’t an issue, since India wasn’t a global player when it came to importing goods and services. It was a closed, insulated economy, where the majority of the population bought locally.
But with the Indian middle class approaching some 400 million people, the country is beginning to import more goods. Such a reality will lead to inflation, which will force the central bank to tighten monetary policy.
Currency #3: Canadian Dollar
The Canadian dollar has a bright future. For starters, Canada is rich in natural resources like oil, timber and gold.
As the prospects for global growth pick up, all three are in huge demand from developed and developing economies alike – a trend that will remain for years.
Canada also has its fiscal house in good order. Its AAA credit rating is secure, as the country quickly tackled its debt issues in the early part of this century. As a result, the Canadian dollar has almost doubled against its U.S. counterpart in the past decade.
In addition, Canada didn’t have to bail out its banks or financial system because of lax lending practices. Quite the opposite, in fact. Thanks to their financial strength, Canadian banks are now expanding into the United States in record numbers.
In short, Canada has a lot going for it. It supplies emerging markets… it has a strong and fiscally responsible financial system and government… it will benefit from a U.S. economic recovery… and it maintains a transparent and trusted economy.
Bottom line: Remember that we’re talking currencies here, so a move of 10% to 15% would be huge. These three will represent the new world order in the currency market over the coming years – and the gains will reflect that.
D. The Golden Yuan Is Coming – Here’s How to Play It
21 Jan 2014, moneymorning.com, By Peter Krauth, Resource Specialist, Money Morning
Pasted from: http://moneymorning.com/2014/01/21/golden-yuan-coming-heres-play/
The U.S. dollar has been the world’s de facto reserve currency for almost 90 years.
But this financial dominance may be nearing its end.
In recent years, China’s been floating the idea the yuan should take on the dollar’s role as the world’s reserve currency.
In fact, the Chinese have already negotiated numerous bilateral trade deals that completely bypass it.
And they’ve even called for efforts to “de-Americanize” the global economy.
Whatever happens, China’s economic rise foreshadows increased influence.
It’s a trend that not only has serious implications, but also great profit opportunities, if you know what to expect…
A (Very) Brief History of Reserve Currencies
Along with reserve currency status come the roles of financing international trade and acting as a store of value for governments worldwide.
When we look back over the past 500 to 600 years of reserve currencies, an interesting pattern emerges.
As this chart shows, since the mid-1400s, there have been six different reserve currencies.
Tied for the shortest lifespan are Portugal and the Netherlands at 75 years, while the longest tenures are Spain and the UK, both at 110 years.
The average has been about 95 years… and the U.S. dollar has presided for the past 88 years.
As you can see, reserve currencies come and go. It’s not a question of if, but when. And it appears the greenback’s dominance has reached its twilight.
Until 1971, when Nixon closed the “gold window,” overseas dollars were backed by gold. That meant foreign governments could redeem their American dollars for gold at $35 per ounce.
But the 1950s and 1960s saw ballooning deficits, inflation, and swelling debt from welfare and warfare as America’s share of the world economy shrank.
So Kissinger and Nixon hatched the petrodollar system, whereby the United States would provide political and security support to Saudi Arabia’s royal family. In exchange, all oil deals would have to be transacted exclusively in dollars, and the House of Saud would buy lots of Treasury’s with their greenbacks.
In effect, this guaranteed a constant and elevated (though artificial) demand for U.S. dollars worldwide.
But still, using the unbacked dollar as a world reserve currency is a massive experiment in fiat money. It’s never been tried before… and it’s unlikely to end well.
The Emerging Yuan
In the past few years China established a string of currency swaps with other nations to settle trade, bypassing the dollar completely.
The goal is to help internationalize the yuan by gradually growing its level of acceptance. It’s working.
On Dec. 4, 2013, the Wall Street Journal reported that China’s growing slice of the world’s economic pie saw the yuan overtake the euro and yen in trade finance.
According to the Journal, “That made the yuan the second-most used currency in trade finance but still well behind the U.S. dollar, which backs 81% of trade finance.” The yuan now accounts for 8.7%, but it’s gaining quickly.
In October ( of 2013), China announced a 350 billion yuan ($60 billion) swap for euros with the European Central Bank. That ranks second only to its previously established 360 billion yuan swap line with South Korea. There’s even a 400 billion yuan agreement in place with Hong Kong.
There are as many as 25 such swap agreements in place with various nations, estimated to be worth nearly $1 trillion. Corporate debt issued in yuan has nearly doubled in the past couple of years to around $50 billion.
So clearly, the yuan is being readied for internationalization.
China’s central bank has stated the yuan would become “basically convertible” by 2015.
E. Larry Summers has a major warning for the US economy, and everyone should be paying attention
6 Apr 2015, BusinessInsider.com, by Myles Udld
Pasted from: http://www.businessinsider.com/larry-summers-on-asian-infrastructure-investment-bank-2015-4
This is a big deal.
On Monday, we published Larry Summers’ latest op-ed in The Washington Post, which opened with the former Treasury Secretary and Harvard president writing, “This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system.”
What Summers is referring to is the creation of the Asian Infrastructure Investment Bank (AIIB), a new banking consortium led by China that will back investment in Asian and emerging-market economies. This bank serves as a direct challenge to the World Bank and the IMF, the traditional sources of international funding, and organizations in which US economic interests have a strong voice.
The AIIB’s founding members include Russia, Brazil, and India, as well as major European economies like France, Germany, and the UK.
Last week, Business Insider’s Mike Bird outlined how the formation of the AIIB has been an embarrassment for the US government all along.
Here’s the key point from Bird (emphasis ours):
“The infrastructure bank isn’t going to be a massive boom for the UK economy, or even for nearer nations like Japan, and the US will not retaliate. The point is that the UK is willing to take a very modest improvement in economic and political ties with China in exchange for a small deterioration in ties with the US. Pretty much every country has decided that this is the right move.”
And so while the US has been the dominant global economic power of the past 50 years, the point is that now countries all across the globe are seemingly falling over themselves to be more closely aligned with China.
In his op-ed on Monday, Summers continues (emphasis ours):
I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.
This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the U.S. approach to global economics. With China’s economic size rivaling that of the United States and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the United States have rendered the architecture increasingly dysfunctional.
In his post, Summers has some policy prescriptions for US lawmakers, among which is a suggestion that US leaders have a “bipartisan foundation,” which is the kind of thing you can write when you’re not an elected official but which few people in and around US politics likely believe is anywhere near possible.
But the point of Summers’ commentary is clear and significant: The global economic tide has started receding from the US and moving toward China.
Additionally, showing how fast the world is ditching the dollar for greener shores:
Diplomatic disaster: U.S. humiliated by allies’ rush to join China’s new AAIB bank
Excerpt pasted from: http://ian56.blogspot.com/2015/03/rebellion-against-empire-in-europe.html
– The UK, Germany, France, Italy, Switzerland Luxembourg have now all agreed to join. Australia and South Korea are now said to be considering reversing their previous decision to obey the US and not join.
– The US and IMF have capitulated and now say they will “co-operate” with AAIB.
– AIIB now has 32 member countries, it is 50% owned by China. The AIIB was formally launched by Chinese President Xi Jinping last year. It is one element of a broader Chinese push to marginalize the US Dollar in international trade and to create rival organizations outside of US Dollar control for the world’s financial and trading systems.
– Update 03/29:- Australia, Russia, Netherlands, Turkey, S Korea & Brazil add to a large number of countries joining China’s new AAIB bank, further marginalizing the US and it’s levers on the world’s financial institutions. The full list of 46 countries set to join China’s new AAIB bank, China gloats, US isolated. Now we have news (on 03/31) that even Israel is joining AAIB.
tick, tick, tick….
(News & Editorial/Is An Unwelcomed Wealth Transfer Coming To The US this Fall?)