Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14
Currency Wars, the Ruble and Keynes - 21st Nov 14
Stock Market Investor Sentiment in The Balance - 21st Nov 14
Two Biotech Stocks Set to Double on One Powerful Catalyst - 21st Nov 14
Swiss Gold Poll Likely Tighter Than Polls Suggest - 21st Nov 14
Gold's Volatility and Other Things to Watch - 21st Nov 14
Australia Stock Market and AUD Dollar Analysis (ASX200 and AUDUSD) - 21st Nov 14
New Algae Research May Have Uncovered an “Energy Forest” Under the Sea - 21st Nov 14
The Cultural and Political Consequences of Fiat Money - 20th Nov 14
United States Social Crisis - No One Told You When to Run, You Missed the Starting Gun! - 20th Nov 14
Euro-Zone Tooth Fairy Economics, Spain Needs to leave the Euro - 20th Nov 14
Ebola Threat Remains a Risk - New Deaths in Nebraska and New York - 20th Nov 14
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14
My Favorite Stock McDonalds Just Got Kicked Off My “Buy” List - 19th Nov 14
European Economies in Perpetual State of Shock, What's Scarier Than Deflation? - 19th Nov 14
Breakfast with a Lord of War and Nuclear Weapons - 19th Nov 14
The U.S. Economy’s Ebb and Flow - 19th Nov 14
What You Need to Know Before Investing in Alibaba - 19th Nov 14
Forget About Crude Oil Price Testing 2009 Low - 19th Nov 14
What Blows Up First? Part 5: Shale Oil Junk Bonds - 19th Nov 14
Bitcoin Price Did We Just See an Important Slump? - 18th Nov 14
How to Profit From Oversold Crude Oil Price - 18th Nov 14
Stock Valuations Outrunning Profits Growth - And the Band Played On - 18th Nov 14
ECB Buy Gold Bullion? Japan's Monetary Policy Dubbed "Ponzi Scheme" - 18th Nov 14
Gold, Silver, Crude and S&P Ending Wedge Patterns - 18th Nov 14
How High Could USD/JPY Go? - 18th Nov 14
On Obama and the Nature of Failed Presidencies - 18th Nov 14
Globalism Free Trade Immigration Connection - 18th Nov 14
An Epiphany From Hell - Buy Gold and Silver - 18th Nov 14
Too Difficult to Get a U.S. Home Loan - 18th Nov 14
Has the Gold Bear Trap Been Set - 18th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

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

© 2005-2014 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