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Currency

  • Tue, Sep 30, 2014 - 04:21pm

    #12

    Jim H

    Status Diamond Member (Offline)

    Joined: Jun 08 2009

    Posts: 1798

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    Currency

DC said,

Why would they sell it back for unbacked fiat currency that has an upcoming expiration date?

For whatever reason, we don't talk about the obvious here.  We talk about the strong dollar.. and how it could get much, much stronger from here.  But we don't talk about this;

http://www.zerohedge.com/news/2014-09-29/europe-china-start-direct-trading-euros-yuan-de-dollarization-expands

De-dollarization has been an ongoing theme hidden just below the surface of the mainstream media for more than a year as Russia and China slowly but surely attempt to "isolate" the US Dollar. Until very recently, direct trade agreements with China (in other words, bypassing the US Dollar exchange in bilateral trade) had been with smaller trade partners. On the heels of Western pressure, Russia and China were forced closer together and de-dollarization accelerated from Turkey to Argentina as an increasing number of countries around the world realize the importance of this chart. However, things are about to get even more dramatic. As Bloomberg reports, China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency in a "fresh step forward in China’s yuan internationalization." With civil unrest growing on every continent and wars (proxy or other) at tipping points, perhaps, just perhaps, the US really does want rid of the weight of the USD as a reserve currency after all (as championed here by Obama's former right hand economist)… now that would be an intriguing 'strategy'.

As Bloomberg reports, China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency…

The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world’s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.

Once the loss of reserve currency status becomes more clear to all market participants.. and the dollars that are now abroad start coming back to their maker (printer)… who is going to want them anyway?  Who in their right mind will be willing to take them in trade for Gold once the dollar decline sets in?

For now what we are seeing is the continuation of the game of opposites.  Swiss decide to peg to the Euro and print Francs?  Kill Gold!  Dollar is ever more threatened through Yuan swap agreements which will ice it out of it's role as the currency of international transactions, and therefore reduce WW demand for it?  Kill Gold and run up the dollar vs. other currencies!  Who you gonna believe, what the writing on the wall says, or what the painted FX markets are telling you?  But hey.. the dollar is really gaining strength because of the taper, right?  And it's clear that the US is in a self-sustaining recovery.. so there will be no need to print again.  In fact, we will be raising rates in 2015.. right?  If you believe all that.. well… you are sheeple.