Best of the Week
Most Popular
1.U.S. Inner City Turmoil and Other Crises: Ron Pauls Predictions for 2015 - Dr_Ron_Paul
2. What’s In Store For Gold Price in 2015? - Ben Kramer-Miller
3.Crude Oil Price Ten Year Forecast to 2025: Importers Set to Receive a $600 Billion Refund - Andrew_Butter
4.Je ne suis pas Charlie - I am not Charlie - Nadeem_Walayat
5.The New Normal for Oil? - Marin_Katusa
6.Will Collapse in Oil Price Cause a Stock Market Crash? - OilPrice.com
7.UK CPI Inflation Smoke and Mirrors Deflation Warning, Inflation Mega-trend is Exponential - Nadeem_Walayat
8.Winter Storms Snow and Wind Tree Damage Dangers, DIY Pruning - Nadeem_Walayat
9.Oil Price Crash and SNP Independent Scotland Economic Collapse Bankruptcy - Nadeem_Walayat
10.U.S. Housing Market Bubble 2.0 Meet the Pin - James_Quinn
Last 5 days
Possible Stock Market Pop-n-drop in Store For SPX - 26th Jan 15
Risk of New Debt Crisis After Syriza Victory In Greece - 26th Jan 15
How Eurozone QE Works: A Guide to Draghi's News - 26th Jan 15
Comprehensive Silver Price Chart Analysis - 26th Jan 15
Stock Market More Retracement Expected - 26th Jan 15
Decoding the Gold COTs: Myth vs Reality - 26th Jan 15
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch - 26th Jan 15
Draghi's "No-growth" QE Money for Stocks, Zilch for the Economy - 25th Jan 15
Unjust and Undeclared Wars - 25th Jan 15
The European Central Bank Commits Monetary Suicide - 25th Jan 15
Stock Market ECB EQE week - 25th Jan 15
Gold And Silver Timing Is Most Important Element - 25th Jan 15
The Best Way to Invest in the Next Alibaba Internet Stock IPO - 25th Jan 15
The Outpatient Surgery Business Rains Cash into Healthcare Stocks - 25th Jan 15
Stock Traders Flock to Gold GLD ETF - 24th Jan 15
10 Reasons Why You Need an Offshore Bank Account - 24th Jan 15
Goldman Sachs Blankfein - Regulation is Like Background Noise - 24th Jan 15
Gold in Euros Surges As ECB To Print Trillion Euros and Greek Election This Sunday - 24th Jan 15
Gold Bear Market Rally or New Bull ? - 24th Jan 15
Euro-zone 'QE already Working' Says IMF Lagarde - 23rd Jan 15
ECB and EU LTRO and QE for Dummies: Or, Make These Trades - 23rd Jan 15
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices - 23rd Jan 15
Market Should Not Doubt' Mario Draghi ECB QE - 23rd Jan 15
Francs, Bonds, Barrels, and Bail-Ins - 23rd Jan 15
Are Plunging Petrodollar Revenues Behind the Fed’s Projected Rate Hikes? - 22nd Jan 15
Stocks Bear Market Lessons from History - 22nd Jan 15
Russia's Plans for Arctic Supremacy - 22nd Jan 15
166 Trillion Reasons Why Bank Stocks Are So Cheap - 22nd Jan 15
Will Gold Price Break Out Once Again? - 22nd Jan 15
The Cult of Central Banking - 21st Jan 15
Five Stock Market Questions Wall Street Hopes You’ll Never Ask - 21st Jan 15
China's Yuan Enters the Currency "Big Leagues" to Take on the Dollar - 21st Jan 15
Investor implications of QE by the ECB - 21st Jan 15
Deflation Bonanza! And the Fool's Mission to Stop It - 21st Jan 15
Messin' With My Financial Brain - 21st Jan 15
Are Stock Market Buyouts Checking Out? - 20th Jan 15
Legal “Steroids” Are Making This Tech Stock a “Buy” - 20th Jan 15
Are Stock Market Storm Clouds Massing? - 20th Jan 15
The Swiss Release the Kraken! - 20th Jan 15
The European Union, Nationalism and the Crisis of Europe - 20th Jan 15
Swiss Say No to QE - 20th Jan 15
Gold Demand Explodes as Volatility and Fear Stalk Market - 20th Jan 15
The Truth About This Stock Market "Meltdown" Indicator - 20th Jan 15
Markets 2015 More Of The Same? - 20th Jan 15
Is Market Sentiment Shifting to Gold? - 20th Jan 15
U.S. Dollar’s Major Breakout and Gold’s Simultaneous Rally - 19th Jan 15
Silver Price Breaks Out on Swiss France Euro Decoupling - 19th Jan 15
Gold Bullish Inverse Head and Shoulders Pattern - 19th Jan 15
Bundesbank Announces Repatriation of 120 Tonnes of Gold from Paris and New York Federal Reserve - 19th Jan 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of US Markets 2015 Report

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

© 2005-2014 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