Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17
Bitcoin Doesn’t Exist – Putting the Banks Out of Business - 9th Dec 17
China’s Struggle for Market Economy Status - 9th Dec 17
Is Gold Really Strong? - 9th Dec 17
Bitcoin Parabolic Mania - 8th Dec 17
SPX Make a 61.8% Retracement - 8th Dec 17
Gold, Stocks and Bonds - The 3 Amigos Update - 8th Dec 17
Gold Stocks Break, Gold to Follow - 8th Dec 17
4 Charts That Show How Trump Tax Cuts Will Trigger A Recession - 8th Dec 17
Precious Metals Breaking Down! 3 Amigos to Abort? 4 Horsemen to Ride? - 7th Dec 17
Bitcoin Just Smashed Through $12k… Wait, $13k… Now $14k… This Is Getting Ridiculous! - 7th Dec 17
Stock Market Tops Look Like This - 7th Dec 17
Crude Oil, Oil Stocks and Invalidation of Breakouts - 7th Dec 17
Bitcoin Doesn’t Exist – 2 - 7th Dec 17
British Pound Sterling Volatility In Crucial Week of Brexit Talk - 6th Dec 17
Day Trading vs Swing Trading: Which One is the Better Strategy? - 6th Dec 17
Crude Oil and Negative Divergences - 6th Dec 17
EU Bailins Coming – 114 Italian Banks Have NP Loans Exceeding Tangible Assets - 6th Dec 17
Bitcoin Doesn’t Exist - 5th Dec 17
Advantages of Car Insurance to Protect a Vehicle - 5th Dec 17
How High Will Gold Go? - 5th Dec 17
The Loonie Takes Flight -- BUT a "Labor Miracle" is NOT the Reason Why - 5th Dec 17
The True Meaning of Bitcoin's 'Success' - 5th Dec 17
Gerald Celente: Middle East Wild Cards Could Bring Down Markets, Drive Up Gold - 5th Dec 17
Silver’s Positive Fundamentals Due To Strong Demand In Key Growth Industries - 4th Dec 17
Stock Market Positive Expectations, But Will S&P 500 Continue Higher? - 4th Dec 17
Bitcoin Achieved What The Gold Market Never Could & Never Will? - 4th Dec 17
Stock Market Top Distribution Starting - 4th Dec 17
Understanding Real Time Forex Trading - 4th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

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

© 2005-2018 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

Catching a Falling Financial Knife