Best of the Week
Most Popular
1.Gold Price Trend Forecast, Where are the Gold Traders? - Bob_Loukas
2.Stocks Bear Market of 2017 Begins? Shorting the Dow At its Peak! - Nadeem_Walayat
3.Betting on President Trump Leaving Office Early, Presidency End Date - Betfair Market - Nadeem_Walayat
4.Why Stock Market Analysts Will be Wrong About 2017 - Clif_Droke
5.Is This The Best Way For Investors To Play The Electric Car Boom - OilPrice_Com
6.Silver Price 2017 Trend Forecast Update - Video - Nadeem_Walayat
7.Gold Price Set For Very Bullish 2017, Trend Forecast - Austin_Galt
8.10 Things I learned From Meetings With Trump’s Transition Team - - John_Mauldin
9.How Investors Can Profit From Trumps Military Ambitions - OilPrice_Com
10.Channel 4 War on 'Fake News', Forgets Own Alt Reality Propaganda Broadcasting - Nadeem_Walayat
Last 7 days
The Mother of All Financial Bubbles will be Unimaginably Destructive when it Bursts - 19th Feb 17
Gold’s Fundamentals Strengthen - 18th Feb 17
The Flynn Fiascom, the Trump Revolution Ends in a Whimper - 18th Feb 17
Not Nearly Enough Economic Growth To Keep Growing - 18th Feb 17
SPX Stocks Bull Market Continues to make New Highs - 18th Feb 17
China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors - 18th Feb 17
Gold Stock Volume Divergence - 17th Feb 17
Gold, Silver, US Dollar Cycles - 17th Feb 17
Inflation Spikes in 2017, Supporting Gold Prices Despite Increased Odds of March Rate Hike - 17th Feb 17
Roses Are Red... and So's Been EURUSD's Trend - 17th Feb 17
Gold Trade Note Sighted - 17th Feb 17
Gold Is Undervalued Say Leading Fund Managers - 17th Feb 17
NSA, CIA, FBI, Media Establishment 'Deep State' War Against Emerging 'Trump State' - 16th Feb 17
Silver, Gold Stocks and Remembering the Genius of Hunter S. Thompson - 16th Feb 17
Maps That Show The US’ Strategy In Asia-Pacific - 15th Feb 17
The Trump Stock Market Rally Is Just Getting Started! - 15th Feb 17
Tesco Crisis - Fake Prices, Brexit Inflation Tsunami to Send Food Prices Soaring 10% 2017 - 15th Feb 17
Stock Market Indexes Appear Ready to Roll Over - 15th Feb 17
Gold Bull Market? Or was 2016 Just a Gold Bug Mirage? - 15th Feb 17
Here’s How Germany Buys Time From China - 15th Feb 17
The Stock Trader’s Actionable Guide to Trump - 15th Feb 17
Trump A New Jacksonian Era? The Fourth Turning (2) - 14th Feb 17
Stock Market Yet Another Wall Street 'Witch's Brew' - 14th Feb 17
This Is Why You Don’t Own A Lot Of Stocks - 14th Feb 17
Proposed Tax Reforms Face Enormous Headwinds - 14th Feb 17
BBC Inside Out Tesco Rip off Offers - Determined to Lose Big Spend Customers! - 13th Feb 17
Is the UK An Economy Built on Debt? - 13th Feb 17
Stock Market VIX Cycles set to Explode in March/April 2017 – Part 2 - 13th Feb 17
Stocks At Record Highs - Will Uptrend Accelerate? - 13th Feb 17
US Dollar: 'Rumors of My Death are Greatly Exaggerated' - 13th Feb 17
Is This The Top Commodity Play For 2017? - 13th Feb 17
Trump a New Jacksonian Era? - 13th Feb 17
Stock Market at High Tide - 13th Feb 17
Channel 4 War on 'Fake News' Ends - The New News Age - 12th Feb 17

Market Oracle FREE Newsletter

State of Global Markets 2017 - Report

Prepare for This Seismic Currency Shift (and Profit)

Currencies / Forex Trading Jul 14, 2014 - 03:11 PM GMT

By: Money_Morning

Currencies

Peter Krauth writes: We all know the U.S. dollar is the de facto world reserve currency.

And if you've been reading my column for a while, you also know its status is being seriously challenged.

China and Russia have taken the biggest steps to that end so far.


But it seems we may already be in the planning stages to consolidate currencies, with the ultimate goal of establishing a single currency for the entire planet.

Hard to envision, but the signs are there.

That's something not meant to benefit you or me, but there are ways to leverage this intensifying trend to your advantage...

Advice from Chicago That's Sure to Be Followed Globally

"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before." -Rahm Emanuel

That, I'm afraid, is exactly what will happen when (not if) the next major economic crisis hits. I'd even venture to guess it's Rule No. 1 in the "central planners" rulebook.

Major new laws like FATCA (Foreign Account Tax Compliance Act) and a growing acceptance by major governments of a digital currency, like Bitcoin, are simply setting the stage.

The ultimate goal is to establish and roll out a single, planetary currency regime. There will, quite simply, be no alternative available.

It's all about control.

In 1969 the IMF created an international reserve asset called the SDR (Special Drawing Rights) to support the Bretton Woods fixed exchange rate system then in place. Any IMF member that wanted to participate in the system required official reserves of gold and broadly accepted foreign currencies.

Those assets were to be available to buy up that nation's currency in forex markets in order to help maintain existing (fixed) exchange rates.

However, two of the key reserve assets, gold and the U.S. dollar, were in too short supply to accommodate expanding world trade at the time. So the SDR came to life.

Yet only four years later the Bretton Woods system broke down, especially after Nixon closed the gold window. By March 1973 the world's major currencies were "unpegged" and began to trade freely at market-determined rates against each other.

The SDR's role was severely diminished... for a while.

To save the U.S. dollar's dominant position, Nixon and Kissinger hatched the petrodollar system, guaranteeing a constant and elevated (though artificial) demand for U.S. dollars worldwide.

Consolidating Signs Are Everywhere, but We're Not Worried

China and Russia right now appear to be the biggest threats to U.S. dollar hegemony, a topic I've discussed here and here. An ever-increasing amount of trade and large transactions between China, Russia, and several of their trading partners (swap deals) are taking place in their own currencies, bypassing the U.S. dollar completely.

But another significant trend I see emerging is one of regional currencies. The euro has been around since 1999 and is used today by 23 countries encompassing 334 million Europeans. Another 210 million people use other currencies that are pegged to the euro.

And despite challenges to the euro's integrity, there's considerable political will to ensure its survival. After all, it was Mario Draghi, president of the European Central Bank, who said, "...the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

With the BRICS currency reserve pool and BRICS Development Bank likely to be officially announced this summer, the foundation's being set for a potential new regional currency for its members in the future.

That could establish a currency to be used by a consolidated 41% of the world's population.

If you add in the portion of the world using the U.S. dollar, the euro, and currencies pegged to these, more than half the world will be using essentially just three different currencies...all of them fiat.

You may think this is all at best "hogwash" or, at worst, a long way off. But the fact is this is being discussed by highly influential political and financial leaders.

In a recent discussion between Ben Davies, CEO of Hinde Capital (a fund manager focused on precious metals) and former Greek Prime Minister George Papandreou, this very topic was raised.

Davies asked Papandreou if, during his tenure, policymakers had "...discussed a change of the monetary order?" Papandreou said they had, and that it included discussion "...about exploring a basket of currencies that could involve an asset like that (gold)".

And the smoking gun? He went on to say that yes, it would be along the lines of the SDR.

Even hedge fund maven George Soros has said in interviews that the international financial system is broken, and we can't afford these imbalances. He goes on to say that we need a new currency system, and the SDRs provide the ingredients.

As it turns out, the IMF increased the amount of SDR allocations to members nearly tenfold to about $316 billion equivalent in the aftermath of the financial crisis.

We already have the Bank for International Settlements (BIS) which acts as the central bank for central banks.

So it's easy to see the SDR as the next logical step for "central planners."

Even James Rickards thinks the future of the international monetary system will be a race to SDRs and gold, but that gold will win it.

Keep in mind, too, the SDR was initially defined as equivalent to 0.888671 grams of fine gold, which was worth one U.S. dollar at the time.

In your quest for profits you could look to make bets on some of the undervalued currencies you'd expect to be part of the SDR as it migrates toward its potential new role as a one world currency. But that involves plenty of speculation and once again fiat currencies that pay little if any interest.

As a twist on playing gold, you may want to consider silver instead. Right now, it's still very cheap relative to gold, and it too has been used as money numerous times throughout history. Since it's cheaper than gold ounce for ounce, it could have a role in smaller value transactions.

Consider the Sprott Physical Silver Trust (NYSE Arca: PSLV), which stores its metal in Canada (not with a bank-owned custodian), offers potential tax advantages for some U.S. investors, and the ability to redeem for physical bullion for a certain minimum value.

In the end, it's a safe bet that "central planners" won't let the next major financial crisis "go to waste." So let's make our play one step ahead of theirs.

I'll keep you up to date on profit opportunities as the situation continues to progess...

Source : http://moneymorning.com/2014/07/14/prepare-for-this-seismic-currency-shift-and-profit/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning 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

Catching a Falling Financial Knife