Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
Trump Stocks Bull Market Furious Rally Towards Dow 20k as Bear Mantra Persists - 8th Dec 16
More Talk About More Economic Growth and More Globalization - 7th Dec 16
Cracks In US Treasury Bond Market, The Japanese Factor - 7th Dec 16
The Rise of Anti-Establishment Italy - 7th Dec 16
Trump Likely to Drive Another Bump in Stock Market Buybacks — Here’s How to Hedge - 7th Dec 16
World War II and the Origins of American Unease - 7th Dec 16
Online CFD Trading for Traders on a Budget - 7th Dec 16
Silver Bullion Price Buying Opportunity for 2017? - 7th Dec 16
The Imminent Multi-Trillion Dollar Surge In Social Security & Medicare Costs - 7th Dec 16
Gold Bullion Price Buying Opportunity for 2017? - 6th Dec 16
Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market - 6th Dec 16
THE Gold Play for 2017 - 6th Dec 16
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

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