Dollar And Yen Fall - Moody’s Warns Of Japan Downgrade & UN Warns of Risk Of “Collapse” Of Dollar

Tyler Durden's picture

From Gold Core

Dollar And Yen Fall - Moody’s Warns Of Japan Downgrade & UN Warns of Risk Of “Collapse” Of Dollar

Gold has fallen against the euro and most currencies but is 0.2% higher in U.S. dollars and nearly 1% higher in yen terms as the American and Japanese currencies have come under selling pressure. Gold remains near record nominal highs in all major currencies which shows that markets are concerned about inflation and concerns about the future of major currencies.

The euro climbed to a three-week high versus the dollar on speculation Germany and other European nations may pledge more funds to bankrupt Greece and favourable German economic data. This is more a reflection of dollar weakness rather than any great confidence in the euro. The euro at €1,068/oz remains under pressure versus gold and is less than 2% from record nominal highs at €1,088/oz.

While the focus, has of late, been on the increasingly ‘unsingle’ single currency, news overnight shows how there are also substantial risks posed to the yen. Moody’s have warned that they may have to downgrade Japan and have warned of a “tipping point” which may lead to a government funding crisis for heavily indebted Japan.

Moody’s caveat that the risk is long term in nature is likely underestimating the risk which is at least medium term and may even be short term given the deepening economic crisis in Japan today and the sovereign debt risks seen in the Eurozone and in the U.S.

Gold in Euros – May (Tick)

The United Nations warned on Wednesday of a possible crisis of confidence in, and even a "collapse" of, the U.S. dollar if its value against other currencies continued to decline. The UN’s mid-year review of the world economy did not get covered widely.

The UN economic division said that a crisis of confidence in the dollar, stemming from the falling value of foreign dollar holdings, would imperil the global financial system. This trend, it said, had recently been driven in part by interest rate differentials between the U.S. and other major economies (see table above) and growing concern about the sustainability of the U.S. public debt, half of which is held by foreigners including the Chinese government.

Gold in US Dollars – May (Tick)

A reminder, if ever one was needed, of the importance of having a diversification into gold and silver bullion.

Cost averaging remains a sensible strategy for those concerned that there may be further short term weakness in bullion markets.

On the 100th anniversary of the launch of the Titanic, governments internationally appear to be engaged in an exercise of “rearranging the deckchairs” prior to the ship sinking.

In the same way that there was a popular perception that the Titanic was “unsinkable” so today the real risk posed to the euro, dollar, yen, pound and other fiat currencies is largely unacknowledged.

Gold in British Pounds – May (Tick)

There is a real sense of both desperation and denial about the debt crisis and indeed the global nature of the debt crisis.

Many insolvent western governments continue to simply “kick the can down the road”. This may buy time but ultimately the misguided solution of creating more public debt to cure a private debt crisis will be seen as a blunder and will likely lead to even greater financial and economic challenges.

Geopolitical Risk in the Middle East

Geopolitical risk in the Middle East and North Africa remain high and will support gold.

Risks include sectarian tensions between oil rich Saudi Arabia and Iran and instability in strategically important Yemen where a combination of pro democracy protesters and Islamic militants clash with an unpopular, corrupt and undemocratic government.


Sell in May?

It was a brutal month for silver investors with silver down by 19.5% in dollar terms. Gold fared much better and is only down 1.6% in dollar terms and 0.36% in sterling terms. Gold was actually higher in euro terms rising by 1.07% and this and the charts above are hardly indicative of a bubble rather of a further period of correction and consolidation.

We have long warned regarding the short term volatility of silver and hence danger of attempting to trade or time the silver market.

If ever there was a market to “buy and hold” it is the silver bullion market. Those who continue to buy silver bullion coins and bars and store in safe depositories will be rewarded in the coming years.

Absolutely nothing has changed regarding the fundamentals of the silver market and this sell off was due to the massive concentrated shorts being involved in a short squeeze, unprecedented margin increases and increasing investment and industrial demand for silver.

This demand is particularly strong in China and Asia and among a minority but increasingly vocal and influential band of silver advocates who believe that silver is money and will help protect people from developing problems in the western and global financial and monetary system.


PRECIOUS-Gold near 4-week high; Greek crisis on focus

Gold futures gain as dollar weakens

Normal Rains Could Drive India Gold Demand

U.N. sees risk of crisis of confidence in dollar

Mark O'Byrne on RTE's One O'Clock News (16 minute; 31 seconds)


Despite Preemptive Gold Margin Hike In Shanghai, Gold Is Poised To Close May Near Record On Sovereign Risk Worries

Richard Russell - Subscribers Should Buy Silver Once Again

Chinese USD Diversification Continues: First Euro Bonds, Now JGBs

Argentina’s Economic Collapse

How gold could reach $13,644 an ounce and silver $853

Economic Green Shoots, Exit Strategy, No QE3 Money Printing 

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equity_momo's picture

Thems fighting words.

A.W.E.S.O.M.-O 4000's picture

"... pledge more funds to bankrupt Greece."


Is "bankrupt" being used as a verb here?

French Frog's picture

when even the UN warns you of a $ collapse, methink it's getting close to get long the buck for a while

blindfaith's picture

look at the 'essay' source, the author.  The view is to push gold higher and benefit, whether justified or not.  The article is not without an interest in personal gain, rather than objectively analysing all the possible events that can turn events and this essay on it's ear.

PeaBird's picture


Have you been paying attention to what's just gone on over the past 3 weeks, when it couldn't even stay above 76.50 on the USDX for 1 day, and with everything going for it, including the hit on silver & wti crude, the rest of the commods, the usual mass press focus on the goings on across 'the pond' ie. europe & the many stories on the 'inflationary pressures' in china & asia?

Heck, there was even another Jim Chanos call on 'not being bearish enough on China'. And no, I'm not a China bull, they just happen to have more savings than the other bankrupts, which is better than being in the red.

I really pity you for falling for this.

No, I think the UN is just 'fishing' for people like you. You should buy the dollar now against every currency cross, sell the metals, sell crude (both brent & wti) and sell the commods and put your money in a US CD and earn your 0.25% now. Put your money where your mouth is.

You will probably make a killing.

Unfortunately, it may be your own. Good luck.

equity_momo's picture

 And no, I'm not a China bull, they just happen to have more savings than the other bankrupts, which is better than being in the red.


It all depends what those "savings" are stored as. They still have relatively little gold.  I see their fiscal position as worse than that of the US. Its incredible that so many in finance preach how China is such a great economy. I'd rather put my chips with a fiscally suicidal US than a fiscally suicidal China. That said , id rather not put my chips with any sovereign govn anywhere.

French Frog's picture

Hey Peabird, no need to be over dramatic!

I trade €/$, i don't invest in either currency for the long term and my interest is generally 'short-term' (from a few hours to a few days), so I don't have any worry that the UN might be 'fishing' for me lol. I put my money where my mouth is as I trade for a living and have done so for many years: it just happens that my money is 'flexible' and will favour the € one day and the $ the next.

There are some good technical reasons to possibly favour $ strength at the moment (inability to close above 1.4448 on a daily basis being one of them....for the record i am short €/$ at 1.4432 - the market's at 1.4439 as i type). All the chatter about the $ soon-to-be-terminal demise is just noise to me but recently there has been an increase in those calls and that can more often than not be a sign that the market will turn the other way, albeit temporarely (the contrarian view but also a reminder that the markets generaly tend to inflict the most pain on the most people, as the herd is almost invariably either wrong, or too late to spot the shift).

Rest assured, if I make a killing it won't be my own: there are certain things in the trading world called "(guaranteed) stop-losses" that ensure that should I be on the wrong side of any trade, it will not have financially disastrous consequences for me (in fact, i view losing trades are just the cost of being able to do business: you win some, you lose some and you just get on to the next one). Somehow this seems to be lost on a section of the non-trading ZH community who tend to believe that any financial position taken can only result in either millions to be made or a total loss.

Take care


Urban Redneck's picture


The US dollar's hegemony over world finance has been marked for death.

It is the common cause of the States of the former USSR, China, the rest of the BRICS and G20, the GCC, the emerging and undeveloped economies, and axis of evil and the EU.  The only differences among the dollar's adversaries lie in the motivations and scheduling of the execution. 

Who is dollars's ally?  What can the utterly laughable Barry & Timmy provide, besides comic relief?  If the US can't successfully subdue camel jockeys in Baghdad or cavemen in Bagram and Tora Bora, then they are not up to the battle that lies ahead.

Politics makes strange bedfellows.

The politics of ending dollar hegemony unite both poor and rich, developed and developing States, and Zero Hedge Contributors and the Oligarchy they despise.



HellFish's picture

Why would this web site be concerned with what the UN has to say about anything?  Those idiots couldn't find thier own ass with both hands and a flashlight.

aus_punter's picture

exactly, UN, EU, IMF, ECB, EFSF.... the deceit and mis information that these unelected bureaucrats espouse on a daily basis has made the markets a truly fucking sad and unrewarding place to be. 

blindfaith's picture

simply because they exist, is why.  There is no shortage of worthless information and disinformation. 

So how is it that ZH can print treasury holdings that clearly show the FED holding near 80% of Treasuries now, and the UN not know it?  Or is the UN using last years info to spin it's own spew.

PeaBird's picture


fucking funny camtoes....err...sorry, camoes

Bob's picture

Could be the equivalent of a Tunisian street vendor in the land of Dancing With The Stars.

I'd damn near pay people to attend for a reprise this coming weekend.

eddiebe's picture

Amazing! Pretty obvious who the terrorists are here.

MrFriskles's picture

Wait so... what? And for so long I thought the UN was just the left hand to the USA's right. Ahhhhh split brain syndrome!

Bob's picture

"Concern about the sustainability of US debt"?! 

Kabuki Theater of the absurd.  Must. sustain. suspension. of. disbelief. in. the. race. to. the. bottom. 

baby_BLYTHE's picture

Futures up triple digits! You cannot make this s*** up.

UGrev's picture

...looks like some "one" can, eh?

baby_BLYTHE's picture

When does POMO officially end?

PeaBird's picture

never? until it ends perhaps?

s0lspot's picture

Why would the USD fail? Who would profit of the ensuing chaos?

No one. Not the Russians (communists), not the Arabs (terrorists) and even less the Chinese (invaders).

Don't worry they'll just change the laws when appropriate.

slaughterer's picture

EOM window dressing helped by the German humiliation of bailing out a spendthrift Athens a second time.  Turn the ES hyper-bots on "super-bull 11"!

mayhem_korner's picture

Looks like the Aussie's are the only one's holding down a real interest rate.  I'm eyeing me a kangaroo ranch.

SHRAGS's picture

But our real estate market is just starting to crack...

The Heart's picture

In Japan 80% of the people do not trust the govt information and how they are handling this disaster. The majority are not happy at all as the cover up continues.

“The poll conducted by Fuji Television Network also found that nearly 85 percent of respondents said the utility that operates the stricken Fukushima Dai-ichi nuclear plant is dealing with the crisis poorly."

So does anyone have a guess as to what a poll in the US would say?

5% Think radiation is good for you.
5% Think there is no problem in Japan.
20% Know nothing.
70% Don’t care

People must get really jiggity and start inundating the US govt and those other places that were doing the animations with questions of why they are covering up the truth and WHY THEY ARE DOING NOTHING TO PROTECT THE PEOPLE OF AMERICA and other countries. People should demand the truth from them.

Please start writing, calling, and e-mailing those agencies that are supposed to protect the people. Same with your congress critters and senate toads. Call them, fax them, write letters, and email them all. Make as much noise as you can. Demand the truth. It is downright CRIMINAL for this COVER-UP to continue. This is a disaster that is far beyond comparison to anything else and it is getting worse every day.

Also, how many of you signed this petition and passed it on: