Best of the Week
Most Popular
1.Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - Nadeem_Walayat
2.Gold And Silver – A Reality Check - Michael_Noonan
3.The Killer Ape, Human Evolution, Artificial Intelligence and Extinction End Game - Nadeem_Walayat
4.Stock Market S&P 500 Volatility-Based Price Probability Range - Richard_Shaw
5.A Stocks Bear Market Is Now More Likely Than Not - Richard_Shaw
6.Money Supply and the Fed’s Serious Inflation Risks - Zeal_LLC
7.More Selling for Stock Market, Gold? - Brad_Gudgeon
8.Gold, Silver Precious Metals: a Critical Week Ahead - Rambus_Chartology
9.Gold Price Change in Character - Gary_Savage
10.Advice for Biotech Investors: 'Hold Your Powder' 'til Winter - TLSReport
Last 5 days
Stock Market Rally May be Broken - 9th Oct 15
Gold Stocks Major Breakout - 9th Oct 15
Contrarian Investing - Being the 10th Man - 9th Oct 15
U.S. Can Expect Recession in 1-3 Years - 9th Oct 15
The Greater Economic Depression Deep State - 9th Oct 15
Financial Markets Calm Before the Storm? - 9th Oct 15
Stock Market History Calling, Says Performance will be Crappy for Another ~10 years! - 9th Oct 15
Why This Feels Like an Economic Depression for Most People - 9th Oct 15
Dr Copper Back from the Dead - Time to Buy or Blink - 8th Oct 15
Glencore Rout Blamed on Short Sellers Playing With CDS - 8th Oct 15
The Real Reason for the Refugee Crisis You Won’t Hear About in the Media - 8th Oct 15
US Stocks: The [Trend]Line Between Bull and Bear Market - 8th Oct 15
Bundesbank “Reassures” Re. Gold Bullion Reserves as Deutsche Bank Shocks With €6 Billion Loss Warning - 8th Oct 15
How Our Aversion To Change Leads Us Into Danger - 8th Oct 15
Moving Stem Cell Research Forward: Bernie Siegel of the Genetics Policy Institute - 8th Oct 15
Stock Market VERY IMPORTANT Turn Date - 7th Oct 15
The 5th Convergence…An Economic & Financial Superstorm That Will Devastate America - 7th Oct 15
Summers Grades Janet Yellen's Fed Performance 'Incomplete' - 7th Oct 15
Gold Versus Central Banks Paper Ponzi - 7th Oct 15
QE3 is Over Get Ready for QE4 - 7th Oct 15
How to Profit from Government Mandates in Biofuels - 7th Oct 15
A Key Oil Price Trend That Everyone Is Missing - 6th Oct 15
Stock Market Turn Appears to Have Been Made - 6th Oct 15
Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective - 6th Oct 15
Peter Schiff Predicts Gold Price Breakout - Video - 6th Oct 15
Theresa May Declares War on Immigration - Conference Speech Full Transcript - 6th Oct 15
Is Russia Plotting To Bring Down OPEC? - 6th Oct 15
Target Date Funds As Aid In Retirement Investment Portfolio Design - 6th Oct 15
Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - 6th Oct 15
Redesigning Internet and Facebook to Explore Their Full Potentialities... - 5th Oct 15
Nightshades Curb Your Enthusiasm - 5th Oct 15
U.S. Recession Watch, High-Yield – Rising Defaults - 5th Oct 15
The Social Challenge to Find Humanity in Capitalism - 5th Oct 15
Fed Interest Rate Hike: "I don't care. It doesn't really make much of a difference" - 5th Oct 15
Gold Rose 2.2%, Silver Surged 5.4% After Poor Jobs Number On Friday - 5th Oct 15
Gold, Silver Precious Metals: a Critical Week Ahead - 5th Oct 15
Stock Market Correction Still in Force - 5th Oct 15
Gold Price Change in Character - 5th Oct 15
Putin’s Blitz Leaves Washington Rankled and Confused - 4th Oct 15
More Selling for Stock Market, Gold? - 4th Oct 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Prepare for This Seismic Currency Shift (and Profit)

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

By: Money_Morning


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 :

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:

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

© 2005-2015 - 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