Archive - Nov 10, 2014 - Blog entry

Globally the US Dollar carry trade is believed to be north of $3 trillion (larger than the economy of France). What happens when it begins to unwind?

Meet the next piece of work...

Manipulation of markets can work effectively in the short term. However, in the long term prices will be dictated by the global supply and the global demand of 7 billion people, many in Asia who believe in gold as a store of wealth. Not to mention, sovereign central banks including the People’s Bank of China and the Russian central bank - who also believe in gold as an important monetary asset.  

What's Really Happening?

In 2013; a chain of events led to what was (at the time) the greatest stampede into gold in human history. It began with the Cyprus Steal, the West’s first “bail-in”. This led to the realization (by the Smart Money) that no paper assets were safe any longer, within any Western financial institution or market.

Just as "orange is the new black", I think that "oil producers are the new gold miners." It doesn't sound quite as good, but here's my point:

The Central Bankers bet the financial system that their theories were correct. They were wrong. Horribly wrong. And we will all pay the consequences for it. 

Which country will be next?

Swiss referendum is unlikely to be enacted into law, and if it is, there are several measures the SNB can do to limit its impact.  Expect the SNB to defend the euro floor/franc cap.