Best of the Week
Most Popular
1.Oil Wars 2016 - US vs Russia vs Saudi Arabia vs Iran - Nadeem_Walayat
2.Crude Oil Price Crash Triggering Global Instability, Trend Forecast 2016 - Nadeem_Walayat
3.Stock Market Crash - Last Week was The 2nd and Final Warning... - Clive_Maund
4.Stock Market Crash Apocalypse or Bull Market Severe Correction? - Nadeem_Walayat
5.TShipping Said to Have Ceased… Is the Worldwide Economy Grinding to a Halt? - Jeff_Berwick
6.Crude Oil Price Crash Catastrophe, Independant Scotland Literally Begging to Rejoin the UK - Nadeem_Walayat
7.Summers: Global Economy Can't Withstand Four 2016 Fed Hikes - Bloomberg
8.Gold And Silver: New World Order: Public Be Damned, Preferably Dead - Michael_Noonan
9.Rigged U.S. Ttreasury Bond Market Double Barreled Hidden Q.E. To Infinity - Jim_Willie_CB
10.Major Stocks Bear Market Awakening - Zeal_LLC
Last 5 days
Gold Stocks Picks for Patient Pickers - 9th Feb 16
Oil Price Collapse U.S. Recession Odds 2016 - 9th Feb 16
Preparing for Crisis - It's About Risk Mitigation and Capital Preservation - 9th Feb 16
Top Silver Mining CEO: Don't Laugh, We Could See Silver $100+ - 8th Feb 16
Gold, Investment Leadership Changes Permanent? - 8th Feb 16
Stock Market Panic Decline Begins... - 8th Feb 16
How to Save Money By Growing Your Own Homegrown Tomatoes Indoors From Seeds - 8th Feb 16
US Economy Slides One Step Further Towards A Recession - 8th Feb 16
Gold Bear Market Bottom : Mr. Bear has left the PM Sector for Greener Pastures - 8th Feb 16
Stock Market At Important Support - 8th Feb 16
David Cameron Humiliated in Poland Over Refusal to Stop Taking UK Benefits, BrExit or Super State? - 8th Feb 16
Why Crude Oil Prices Could Continue FALLING From Here - 7th Feb 16
Stock Market S&P, NAS Best, Most Reliable Answers Come From The Market And You - 7th Feb 16
Stocks Bear Market Continues - 7th Feb 16
Silver COT Paving Way for Sustained Upside Breakout Sharp Rally - 7th Feb 16
US Dollar Double Top, Gold Prospects Brightening Rapidly - 7th Feb 16
Gold And Silver - Is A Bottom In? Nothing Confirmed - 7th Feb 16
Gold Stocks Something has Changed - 6th Feb 16
UK Interest Rates, Economy GDP Forecasts 2016 and 2017 - 6th Feb 16
Gold Price, Mining Stocks Rocket Higher - 5th Feb 16
Crude Oil Price Bottoms and Blues - 5th Feb 16
Gold and Silver: Ripe for a Recovery! China May well Change the Game - 5th Feb 16
How Pension Plans are Responding to Financial Repression - 5th Feb 16
Senior Gold Producer Goldcorp Takes Large Stake in Nevada's Gold Standard Ventures - 5th Feb 16
Tips for Smart Oil and Natural Gas Investing 2016 - 5th Feb 16
Another Corporate Giant Is Leaving the U.S. – What This Means for You - 4th Feb 16
TPP is Economic Warfare, Trade Can Make Everyone Worse Off / Governments are Stupid - 4th Feb 16
Gold and Stock Markets Inflection Points Galore - 4th Feb 16
Putin Cries Dyadya (Uncle), Is Saudi Arabia Listening? - 4th Feb 16
Gold Price Golden Bottom? Video - 4th Feb 16
Look North for Value-Priced Growth in Healthcare Biotech Stocks - 4th Feb 16 - TLSReport
BrExit EU Referendum - Britain's FINAL Chance for Freedom From Emerging European Superstate - 4th Feb 16
HUI Now Confirming Gold Price Move Higher - 4th Feb 16
Crude Oil Price Forecast 2016 As Good As It Gets - 4th Feb 16
Gold and Silver More 'Flight To Safety' Active February - 3rd Feb 16
Raytheon Company: A Defensive Stock for a Defensive Market - 3rd Feb 16
Is Silver Really a Weak Link - 3rd Feb 16
Gold to Beat Stocks 2016? - 3rd Feb 16
David Chamberlain Cameron, Britain's Last Chance for Freedom From Emerging European Super State - 3rd Feb 16
EU UK Draft or Daft Agreement By Donald Tusk to Members of the European Council in Full - 2nd Feb 16
Europe: Why It's Going to Get a Lot Worse Before It Gets Better - 2nd Feb 16
The Next Generational Bust Is Coming, Stock Market 70% Collapse - 2nd Feb 16
The Coming Stock Market Decline May be a Monster - 2nd Feb 16
S&P 500 Has Likely Entered a New Bear Phase - 2nd Feb 16
How and Why To Move Your Assets Offshore Before the Financial Collapse - 2nd Feb 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Financial Crisis 2016

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

© 2005-2016 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

Biggest Debt Bomb in History