Best of the Week
Most Popular
1.SNP Offers Labour Deadly Death Embrace Alliance, Holding England to Ransom, Destroy UK From Within - Nadeem_Walayat
2.Gold And Silver – Most Widely Used Currency In Western World? Stupidity - Michael_Noonan
3.Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - Nadeem_Walayat
4.Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - Nadeem_Walayat
5.Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - Mike_Shedlock
6.Leaders Debate Election 2015 - Natalie Bennett Green Party Convincing Anti-Austerity More Debt Argument - Nadeem_Walayat
7.Labour Economic Collapse vs Coalition Recovery - UK Election Forecast 2015 - Video - Nadeem_Walayat
8.China’s Stock Market Mania; How High can Red-chips Fly? - Gary_Dorsch
9.Gold and Misery, Strange Bedfellows - 31st Mar 15 - Dan_Norcini
10.Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - Nadeem_Walayat
Last 5 days
U.S. GDP Sucking Spoilt Milk From A Bloated Dead Sow - 3rd May 15
Stocks, Gold and Oil Markets Chopsville - 3rd May 15
UK Election 2015 Forecast - The Most Probable Outcome is... - 3rd May 15
Kate Gives Birth to Coalition Government - 2nd May 15
Stock Market Correction Time? - 2nd May 15
Gold And Silver - Thieving Bankers Operate In Open; Public Have Eyes Wide Shut - 2nd May 15
U.S.A. Caught In Enormous Policy Vise - ZIRP & QE Destructive Influence - 2nd May 15
Crude Oil Price Bear Market Is Over - 2nd May 15
Gold and Silver Bear Squeeze Comes and Goes - 2nd May 15
UK Election Forecast 2015 - Who Will Win? - 1st May 15
Gold Developments Say New Mine Supply Is Peaking - 1st May 15
Emerging Mexican Silver - 1st May 15
Investigating The U.S. GDP Deflator: Wildly Differing Results Depending on Your Choice - 1st May 15
JP Morgan Cornering Silver Bullion Market? - 1st May 15
Baltimore Riots Whose Fault? - 1st May 15
Monetary And Economic Insights From Incrementum’s Advisory Board - 1st May 15
Your Best Stock Investment in the "Cloud" Is Right Here - 1st May 15
Stock Market Kondratieff Waves and the Greater Depression 2013- 2020 update - 1st May 15
How One Chart Is Changing My Outlook on Crude Oil Prices - 1st May 15
The Real Reason Why Obama Wants to Lift Sanctions on Iran - 30th Apr 15
Gold and the New U.S. and UK Recession - ZIRP to Continue - 30th Apr 15
Uranium Price Is About to Rocket - 30th Apr 15
Immigration Crisis Drives a Deep Wedge Between E.U. States - 30th Apr 15
Labour Leads in Nick Clegg's Sheffield Hallam Seat, Latest Ashcroft Opinion Poll - 30th Apr 15
Is the Fed about to Ignite the Stock Market Sell in May and Go Away Trade? - 30th Apr 15
Bill Gross on Pimco Hiring Bernanke and Fed Interest Rate Hike 2015 - 30th Apr 15
The European Stock Markets Trend Is Up. We're In. Are You? - 29th Apr 15
Putin: Czar Of Natural Gas, Crude Oil, Uranium & GOLD - 29th Apr 15
BEA Reports Weak U.S. 1st Quarter 2015 GDP Growth at 0.25% - 29th Apr 15
Why Labour Cannot Win Sheffield Hallam and other Lib-Dem / Conservative Key Marginal Seats - 29th Apr 15
Stocks, Bonds and Real Estate Financial Hurricanes Headed Our Way - No Where to Hide! - 28th Apr 15
Bitcoin Price Counterintuitive Signs - 28th Apr 15
Stock Market Valuations - Maybe I am Crazy - 28th Apr 15
Gold Price Rises, Silver Surges – Physical Demand and Greece, Ukraine, Russia Risks - 28th Apr 15
The Insurance "Game" Has Changed – and Investors Can Profit - 28th Apr 15
Prelude to a Japanese Revival - 28th Apr 15
Why You Could Make ANOTHER 100% in China Stock Market Starting Now - 28th Apr 15
CIA Prefab State Terror for Human Bondage - 28th Apr 15
Greece: Down and Probably Out - 27th Apr 15
Biotech Stocks and the Power of Context - 27th Apr 15
Strawberry Picking Undervalued Gold Stocks - 27th Apr 15
Rock-Paper-Silver - 27th Apr 15
Gold Flows East - China, India Import Massive Quantities of Gold from Switzerland - 27th Apr 15
Conservatives Start to Pull Away from Labour in Opinion Polls, But is it too Late? Election Forecast 2015 - 27th Apr 15
Gold and Silver - It's ALL about The Big Picture After All - 27th Apr 15
Sheffield School Places Election Crisis - Affluent Schools Demand Increase in Funding - 27th Apr 15
Labour Bribes Voters With Housing Market Stamp Duty Cut and Rent Controls - 27th Apr 15
Stock Market SPX Index at Resistance - 27th Apr 15
Society's Leaders Have Been Digging a Bottomless Economic Pit - 27th Apr 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The War on Cash!

Chinese Yaun to Take First Place from U.S. Dollar

Currencies / China Currency Yuan Feb 19, 2013 - 04:23 PM GMT

By: Ned_W_Schmidt

Currencies

Our headline came from the T-shirt of a young soccer player. Her opinion of coming in second in a tournament was quite clear. For her, getting a trophy for second place was the equivalent of getting the trophy for first loser. In soccer, no one wants to win second place. Same is true for currencies as being ranked in second place is indeed acknowledging one has become first loser.


"China Passes U.S. to Become World's Biggest Trading Nation"

Above was the title of a recent news article that carries a clear message for investors.(Bloomberg, 9 February) Last year U.S. total international trade, imports and exports, was $3.82 trillion while China's was $3.87 trillion. In terms of trade, China is now in first place, and the U.S. is now first loser. Those roles are not going to be reversed. China's dominance of global trade is both acknowledged and expected to continue to grow.

Two events ended the dominance of the British pound as the global currency. Those events led to the dominance of the U.S. dollar as a reserve currency. One was that the U.S. became the world's creditor during World War I. Second was the rise of the U.S. to dominate world trade. When one nation dominates both world trade and the world's credit system, the rest of the world has really little choice. They had to use the U.S. dollar for trade and to repay debts.

The same set of circumstances is now in place with China. China has become the banker for the U.S. just as the U.S. did for Great Britain, as it was losing the great part of its names. The Renminbi is now going on to be the winner, and the U.S. dollar is now first loser.

Schmidt Median US Dollar Index

In the chart above of our measure of the U.S. dollar's value note that the dollar has traded down to a lateral move that has been developing for several months. That pattern is now a support level, or resistance level. It is readily evident in the currency markets as little change has occurred. Investors should remember that all persistent resistance levels, support or over head, are taken out with a vengeance. That is likely to be the case with U.S. dollar in the months ahead.

Other factors are also adding support to the Renminbi's bright future and dollar's

dreary outlook. The U.S. has taken no, repeat no, action to restrain the Obama deficits. The so called spending sequester of the U.S. government is not a spending cut. It is a reduction in the rise of spending. U.S. government spending will continue to increase, relying on China for financing. When will the U.S. government be forced to issue Renminbi denominated bonds to finance the Obama deficit?

Additionally, China fosters success and encourages prosperity. In the U.S. the Obama Regime is determined to confiscate as much income and wealth as possible. Could China someday be a better place for wealth to reside than in the U.S.? Has it already become so?

North American investors, as well as those in the EU, really have only two good investment choices today. One is to buy Gold. As we sent out an important message on buy signals this week to readers we are not today including a graph of Gold and our indicator.

Second choice is Renminbi denominated bank deposits, and some other Renminbi denominated investments. Chart below portrays the performance of the Renminbi in U.S. dollars over the past two years. While we do not expect the Renminbi to appreciate dramatically in the short-term, the long-term potential is extremely attractive. Think of it as the tortoise in the great investment race of the future against the imaginary hares.

US$ vs Renminbi

By Ned W Schmidt CFA, CEBS

Copyright © 2011 Ned W. Schmidt - All Rights Reserved

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report , monthly, and Trading Thoughts , weekly. To receive copies of recent reports, go to www.valueviewgoldreport.com

Ned W Schmidt Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

Free Report - Financial Markets 2014