Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19
Stock Market S&P 500 Negative Expectations Again - 13th May 19
Why Rising Living Standard in China Offers Global Hope - 13th May 19
Stock Market Anticipated Correction Starts On Cue! - 13th May 19
How Chinese Trade Issues Will Drive Stock Market Trends - 13th May 19
Amazon SCAM Deliveries for Fake Verified Purchaser Reviews "Brushing" - 13th May 19
Stock Market US China Trade War Panic - Video - 13th May 19
US Stock Market Leading Macro Economic Indicators Update - 12th May 19
SAMSUNG - BC94.L - Investing in AI Machine Intelligence Stocks - 11th May 19
US Increases Trade Tariffs Against China – Stock Markets, Gold, and Silver - 11th May 19
Who Has More To Lose In A No Deal Brexit? - 11th May 19
Gold at $1,344 Will Start Real Fireworks on the Upside - 11th May 19
Make America’s Economy Great Again - 10th May 19
Big US Stocks’ 2019 Fundamentals - 10th May 19
Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - 10th May 19
Stock Market Shake-Out Continues – Where Is The Bottom? - 10th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

World Abandoning the US Dollar as International Currency For Trade

Currencies / US Dollar Dec 01, 2007 - 12:51 PM GMT

By: Julian_DW_Phillips

Currencies The foreign exchange markets are not solely about exchange rates. They are about values, smooth flowing of international trade, about trust and reliability. The sight of the $ falling over a long period of time, with bounces and recoveries that don't change the downward trend is far more than simply a drop in value!


The $ is steadily weakening, but more than a drop in the $' international value is happening here. The loss of confidence is in the $ is accelerating each time it slips one or more percent on a persistent basis, with small short recoveries being seen in the midst of this decline. How important is this loss of confidence? Critical for it precedes policies, which long-term will lessen the role of the $ to one of the world's top 5 currencies.

Growing surplus holders don't want to dump the $ for fear of losing value in the remaining ones in their portfolio, but don't think that a dumping of the $ is what it will take to remove it from the position of principal global currency. All realize that it is the knowledge of the declining value of the $ that will bring on a major toppling of that currency. So it is a choice of a steady ‘controlled' fall or a steep decline to disaster. To get perspective on the global scene what is the thinking out there?

  • China & neighbors : - China's premier, Wen Jiabao has expressed concern at the decline in the $, of which they hold $1,430 billion which total is growing by the day. He said it was becoming difficult to manage these reserves, while their value was under unprecedented pressure. China has stockpiled £700bn worth of foreign currency, and has only to decide to slow its accumulation of the U.S.$ to weaken the currency further. Yes, Europe is now its top customer so it is acquiring the € at a rapid pace, but it has to lower the $' presence in their reserves. So, what can they do? All they can do is to speed up the spending of them on assets, other currencies and whatever else they can and as quickly as they can. The warning by the Premier was reinforced by a Chinese central bank vice-director, Xu Jian, who said the $ was "losing its status as the world currency". Korea's central bank has urged shipbuilders to issue invoices in the local currency and take precautions against the weakened $.

  • The Middle East : - Kuwait, which cited imported inflation as the reason for its decision to drop the $ peg. The Dinar has gained 4.76% since the central bank switched to a currency basket. The Saudi Riyal rose to a 20-year high after the Fed cut rates on Sept. 18 and the Saudi Arabian Monetary Agency chose not to follow. This set off an appreciation of the Riyal from the time just after al- Suwaidi questioned of the United Arab Emirate's currency peg to the $. Saudi Arabia may be considering its first revaluation in 21 years to help bridge a divide with oil-producing neighbors worried about their pegs to the $. UAE Central Bank Governor Sultan Nasser al-Suweidi said last week he was under growing social and economic pressure to follow Kuwait's lead, although he would only act in concert with Saudi Arabia and three other states preparing for monetary union. Contracts to buy 12-months futures in the U.A.E. Dirham rose the most in at least 10 years this week after al-Suwaidi's comments, to trade at a 2.5% premium to the spot price.

  • Businesses are complaining about rising costs and migrant construction workers rioted in Dubai this month to demand a pay rise to compensate for savings lost due to the $'s slide. The U.A.E. economy ministry said exchange-rate reform would be one of the ways of containing inflation driven by the dollar's slide, which was making some imports more expensive. OPEC's $6 billion development fund is hedging its exposure to the weakening $, Director-GeneralSuleiman Jasir al-Herbish said this week. Last month the central bank of Iraq, four years after the United States invaded, stated that it wished to diversify reserves from a reliance on the U.S. $.

  • Other O.P.E.C. nations : - Venezuela backed an Iranian proposal to add the group's concern over the falling $ to a summit declaration to be made today. Saudi Arabian Foreign Minister Prince Saud Al-Faisal said that no mention of the $ should be made in the declaration because he didn't want the U.S. currency to "collapse." Nigerian Finance Minister Shamsudeen Usman said last Friday that his country's laws has been changed to allow it to diversify its foreign reserves out of the $. Angola may shift its international reserves away from the $, Finance Minister Jose Pedro de Morais said. Angola has $10.2 billion of foreign-currency reserves. De Morais said around 80% of the reserves are in the U.S.$. Three of the world's big oil exporters, Iran, Venezuela, and Russia, are demanding payment in the € rather than in the $. Iran insisted that Japan should make all its payments for oil in Yen, rather than in the $.

This list of important $-holding entities concerned about the $ and one that's getting longer by the day .

We are moving to the end of the U.S. $'s 62-year reign as the world's main international currency for trade, financial transactions and central-bank reserves? Unless something is done to give real value to the $, we believe that the process has to accelerate, rupturing the global monetary system, only to bring back Protectionism in the large trading blocs, exacerbating political and economic instability. We see this rising wave of concern moving forward to a major crisis. Any calming of the situation will cause a short-term strengthening of the $ to be followed by steeper declines.

On the back of this, confidence in the precious metal markets, particularly gold and silver, will climb as a counter to the decline of the $.

Please subscribe to: www.GoldForecaster.com for the entire report.

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2007 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Bob
08 Apr 11, 09:40
Dollar value

Don't we still own a bunch of gold? What is the value of gold right now?



08 Apr 11, 12:27
gold

Bob, there are very grave questions surrounding the quantity of gold the US holds. Until all the gold in Fort Knox and the other depositories is independently assayed and inventoried WRT any lease agreements to other countries, it's impossible to say what the value of these holdings is.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules