Friday, April 29, 2016

Taking The Petro Out Of The Dollar
GoldMoney's Alasdair Macleod considers the breakdown of the so-called petrodollar, the intimate tie over decades between the U.S.$ & revinvestment of oil revenue by countries of the Saudi Arabian Peninsula .. Macleod emphasizes how Saudi Arabia is rapidly becoming insolvent .. "It is hard to imagine Saudi Arabia, culturally stuck in the middle ages, embracing the changes recommended by McKinsey, without fundamentally reforming the House of Saud, or even without a full-scale revolution. Nearly all properties and businesses are personally owned or controlled by members of the extended royal family, not the state, nor by lesser mortals. The principal exception is Aramco, estimated to be worth $2 trillion .. The state is subservient to the House of Saud. It is therefore hard to see how, as McKinsey recommends, the country can 'shift from its current government-led economic model to a more market-based approach' ..  The country is barely government led: a puppet of the Saudis is more like it. But the state’s lack of funds is making it increasingly desperate." .. it all leads to a powerful driver for gold .. "It is hard to see how the purchasing power of dollars will not fall over the rest of the year. The liquidation of malinvestments denominated in external dollars has passed. Instead, the liquidation of financial investments carry-traded out of euros and yen is strengthening those currencies. That too will pass, but it won’t rescue the dollar."
LINK HERE to the essay

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