Monday, October 31, 2016

China, Gold & The Fate Of The U.S.$
"There is little doubt that the rapid expansion of both dollar-denominated debt and monetary quantities since the financial crisis will lead us into a currency crisis. We just don’t know when, and the dollar is not alone. All the major paper currencies have been massively inflated in recent years. With the dollar acting as the world’s reserve currency, where the dollar goes, so do all the other fiat monies. Until that cataclysmic event, we watch currencies behave in increasingly unexpected, seemingly irrational ways. The fundamentals for Japan are not good, yet the yen remains the strongest currency of the big four. The Eurozone risks a systemic collapse, overwhelmed by political and financial headwinds, yet the euro’s exchange rate has proved relatively impervious to this deep uncertainty. The British economy is strongest, yet sterling is the weakest of the four majors .. Despite American wishful thinking, gold remains at the center of the financial system. It is central partly because China’s ensures it is, and it is also China’s ultimate money for commodity and trade purposes .. China most likely has enough gold to fully compensate for her reserve losses from the destruction of the dollar and the other fiat currencies on her reserve book. She is deliberately selling down her dollar exposure anyway, while she can. Lest we forget, communist economists in China were taught that capitalism destroys itself. For them, there is no clearer proof than the performance of the U.S. economy and the dollar, and they do not intend to get caught up in its demise. Understand this, and you understand all. While the monetary role of gold in the future has yet to be determined by China, and it will be China or the markets that make the decision, for the moment it can be regarded as the ultimate insurance against global currency failure."
- Alasdair Macleod
LINK HERE to the essay

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