Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Cleanest Dirty Shirt

Currencies / Fiat Currency Jul 31, 2014 - 09:55 PM GMT

By: Dr_Jeff_Lewis

Currencies All modern currencies are fiat. The numeraire of the moment floats in a cesspool of policy designed for management and intervention.

Money and value become hollowed out concepts.

The eventual return to a sound relationship between human productivity and the value of money will be unloved, to say the least.


In the geopolitical front now we are witnessing countries move away from the U.S. Dollar, like Russia (and China more recently).

But we are seeing an aggressive attempt to maintain its influence - often appearing to dovetail with other geopolitical motives.

Case in point:

The recent lawsuit against France's Bank BNP Paribas. BNP’s recent $8.9 billion fine by U.S. regulators came out of nowhere, in spite of BNP not breaking French or European law.

The charge was that the dollar was used to hide proceeds from dealings with Sudan and Iran - both countries under U.S. sanction.

The U.S. "simply" applied domestic legislation to an overseas dollar situation.

As much as this may be tied into terrorism, it a flexing of dollar reserve muscle that is relatively benign, but a flexing nonetheless.

The fine was among the largest imposed on a foreign entity – and, notably, one that did not break any of its own domestic or European laws.

The dollar's demise is a discussion at the heart of precious metals investment.

Change is coming and the dollar fundamentals don't look good.

With a demographically-challenged workforce and immeasurable debt (including unfunded current future obligations in the region of $200 trillion) it is all but inevitable that the value of the U.S. dollar will decline.

At the same time, alternatives to the dollar will emerge. Not all necessarily good ones or commodities-backed.

One-quarter of China's trade is now settled in renminbi, compared with less than 1% as recently as 2009.

While we may be a ways from a renminbi reserve, the option of using it as a settlement currency - excluding the U.S. Dollar - could certainly hold appeal for governments who suffer from dollar-sponsored aggression.

Indeed, in an interview following the BNP case, the Governor of Banque de France stated:

"In any other walk of life, one would expect there to be a degree of diversification; it is ironic that not only does the U.S. enjoy a unique status as the global currency of (enforced) choice, but it is at odds with the economic health underpinning that status."

Contradiction abounds. Increasing numbers of investors (both private and institutional, (as well as some foreign governments purchasing Treasuries) are aware of the dollar's feeble economic underpinnings.  Yet they are drawn to them because of a lack of alternatives.

The only thing good about old age is that it doesn't last very long.

Is this a sign of things to come?

Will all of this lead to any price fluctuation in gold and silver if major countries really did start to refuse the U.S. Dollar?

Ultimately, these Bric- sovereigns are doing the same as any prudent investor.

They are diversifying. Attempting to reduce dollar exposure.

They can't do it too fast or they will miss the opportunity.

Speaking of monetary metals...

Fundamentally, you have to reverse engineer the price you see from the value represented.

But on the margin, price is derived at on precious metals futures market - predominately the COMEX.

And as long as a small group of entities hold many more selling positions relative to a diverse group of long or buying positions, the price is artificial - up or down within this range.

It is one of the few markets - by virtue of what commodity markets evolved to be from the beginning - where you can see the dichotomy.

And it should concern investors from other markets. Very much.

But the majority (even those within the industry itself (are willfully blind to it because all they see is conspiracy, and therefore they cannot take it seriously.

However, the more you recognize this one extreme imbalance -- the easier it is to see these imbalances, bubbles, potential shocks, etc. - everywhere.

Of course it all points back to the largest bubble of all, the financial system, which is a cancerous outgrowth of a monetary experiment gone badly - just as they always (without exception) do…

Eventually we will see the end to the dollar and fall back to commodity currencies, however painful or inconvenient.

The danger is that an organizing body or government will once again decide to what the value should be.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2014 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 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

6 Critical Money Making Rules