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War Has Broken Out And Your Savings Are At Stake
The first
and most immediate item we need to note is the Bank of Japan’s (BoJ) currency
intervention.
Prior to
this, all currency interventions were generally indirect (the Fed’s QE program)
or not generally promoted (the Swiss banks numerous attempts to buy Euros and
suppress the Franc).
In contrast,
the BoJ’s move was not only sudden, it was promoted.
Japan Finance Minister Noda:
MOF Intervened In FX Markets
Japan's
government sold yen Wednesday, pushing the dollar up sharply. It was Japan's first foreign exchange
market intervention in more than six years, Finance Minister Yoshihiko Noda
said.
Noda said the ministry would take decisive
steps, including intervention if needed. He said the intervention was aimed at
curbing excessive fluctuations in the foreign exchange market.
Moreover,
Japan stated it would:
1) Intervene
more in the future if needed
2) Use
the funds from the intervention to provide liquidity to the stock markets
The move,
while hinted at previously, was a bit “out of left field” (the BoJ had not
intervened since 2004). The Japanese Yen is one of the primary carry trade
currencies to borrow in (the US Dollar being the other). So Japan’s move was
largely seen to be “pro-risk” resulting in the Nikkei spiking.
However, it
marks a major turning point in the financial crisis. Going forward, the key
issue for the financial markets will be currency interventions. Japan’s move
can, in a sense, be seen as an open declaration of war between the BoJ, the
Federal Reserve, and other Central Bankers.
Indeed, we
can’t leave the European Central Banks out of this. Indeed, the most noted
currency intervention prior came from the Swiss Nation Bank which bought Euros
by the billions in an attempt to keep the Swiss France/ Euro trade low. And
Germany and other European countries want the Euro low to boost their exports.
In plain
terms, the currency war has officially begun. Since Japan’s announcement,
numerous other countries have begun intervening in the currency markets
including Brazil, Colombia, Peru, Russia, South Korea, Serbia, Romania, and
Thailand.
In plain
terms, WWIII is already being staged in the currency markets. Predicting
exactly how this will all play out is impossible, but the clear result is that
market volatility will be increasing and we are absolutely guaranteed heading
for a Crash.
Consider
that the currency markets trade over $4 trillion in market volume per day. To put that number in
perspective, the entire world stock market is about $36 trillion in market
capitalization.
The currency markets trade this amount
every week and a half.
Moreover,
the currency markets permit greater leverage. You average currency trader can
leverage a position by 50:1 or even 100:1 at some brokerages.
Thus when
you talk about the currency markets, you are talking about the largest market
in the world also maintaining the highest leverage levels in the world. And world central banks are now openly
intervening in these markets spending hundreds of billions of dollars to
devalue their respective currencies.
This is an
absolute disaster waiting to happen. But it’s a disaster that has one clear
beneficiary: GOLD. Indeed, the precious metal has been on an absolute tear in
the last few months, rising to an all-time high in US Dollars.
However, I
wish to note that the spike in Gold was largely relative to the US Dollar.
Priced in Euros and Japanese Yen, Gold has considerable room to run before
hitting new all-time highs:
Gold priced
in Euros:
Gold priced
in Yen:
Keep your
eyes on the last two charts. A break-out to new highs would confirm that a
full-scale flight from paper money was under way. At that point it’s GAME SET
MATCH for the world’s central bankers tactics as the investing world will have
finally woken up and realized the one currency that can’t be devalued.
Good
Investing!
Graham
Summers
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you’re worried about the future of the stock market and have yet to take steps
to prepare for the Second Round of the Financial Crisis… I highly suggest you
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come.
I call it The Financial Crisis “Round Two” Survival
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What's the consensus on platinum? 30 times more rare than gold and trading only a only a couple hundred dollars more an oz. It much lower than it's posted highs right before the crash as well. Time to buy?
tnx Orly, today being a gold skeptick is very unpopular, but You are an influential gold skeptick.
A few question for ZH people regarding currencies and carry trade:
1) on what currency pair is today mostly based the carri trade? usd/jpy, aud/jpy or aud/usd?
2) what will happen in the next carry trade unwinding? What currency will surge the most? Usd, chf or jpy?
3) could the surge in usd overtake the usd debasing operated by Fed? In this case how much time could be prolonged the life of us dollar?
4) When the aud will no more be the "go to" currency in the carry trade? (I smell an impending aussie RE crash)
5) If a single country would return to gold standard what:
It would be allowed by central bankers cartel or that country would became a rogue Nation? And if it would be allowed, it's correct to state that event would set the stage for the mother of all carry trades? That country would end like Iceland?
And if so, how can we return to a gold standard?
tnx
The yen carry is today on mostly Asian/Oceanic Dollars, such as the AUDJPY, NZDJPY, etc. Anything that pays more interest than the Japanese government or banks.
That, however, is the old paradigm...so 2011. No, the new way to think about the yen carry is going to have to be from the inside out. Japan has many new demographic problems that it has to correct. Namely, the populace aren't buying enough government bonds to support government function. First of all, they can't because the birth-rate in Japan is one of the lowest in the world and second, global diversification by Japanese international corporations have broadened the investing horizon for many savers there today.
In other words, in order for the Japanese government to raise funds, they will have to raise taxes (very popular in Osaka right now...) and raise interest rates on their government issues to attract more investors. It will be the turn-around that the government has been waiting for for nearly thirty years. But, that will turn the tables on the yen carry.
The USD carry may be the phenomenon of the decade to 2020.
In answer to your other query:
There is no way a single nation can go back to the gold standard. There's just not enough gold in the world to support even a small nation using gold as a basis for its currency.
Get out of gold. It is just another hyped-up risk asset, not "insurance" against some apocolyptic fantasy future.
Orly, you are either a complete idiot or else an utterly disingenuous liar. That feeble and laughable "not enough gold" argument has been discredited and demolished so many thousands of times, you have just lost all credibility here in trying to raise its rotting corpse once again. One thought for you: amount of gold is irrrelevant; all that fundamentally matters is at what price (or value, if you prefer) is the new gold standard going to be re-established?
Thank you for that vacuous and historically ignorant diatribe, Mr. Nadler. Your dance with the strawmen is now over.
Orly, you are full of shit.
Chart: AUD/USD Spot
As does this.
http://99ercharts.blogspot.com/2010/10/audusd-spot.html
Chart: ES
Looks rather toppy here...
http://99ercharts.blogspot.com/2010/10/es.html
Chart: USD Futures
Your government at work. What if it took foreigners "to save the day"? To save my shirt. And yours.
http://99ercharts.blogspot.com/2010/10/usd-futures.html
Chart: JPY Futures
Imagine a dive bomber...
http://99ercharts.blogspot.com/2010/10/yen.html
With leverage and synthetics we are winding up for some potential uglyness.
No need for regulation here, central banks have it all under control, move on.
Funny how the $ is debasing relative to gold and the € is not. Can you say austerity? EU governments are going ahead with fiscal tightening despite short term pain, riots and strikes. US has a bunch of pussy politicians. Don't worry kids, there are no issues, tea anyone?
May I be franc with you?
Generally ok, but pushing the "free newsletter which always turns out to be not so free. As a manager of a currency fund, it should be noted one factual error on the post : "Moreover, the currency markets permit greater leverage. You average currency trader can leverage a position by 50:1 or even 100:1 at some brokerages. Thus when you talk about the currency markets, you are talking about the largest market in the world also maintaining the highest leverage levels in the world..."
As a manager of a currency fund I can tell you that the leverage levels mentioned above are only available at the retail forex arena, which essentially amounts to a credit from the broker so we can trade notional amounts. CB's on the other hand deal in the real amounts, with 1:1 leverage, ie. when BoJ bought 20 Bl USD to de-valued the JPY, they actually plunked down the money.
All in all, bit of doom and gloom (which sells stuff)
WhoooHooo finally talked wife into buying some gold, thanks to this article, and a few weeks prodding...what's the best way for a n00b to go about buying about $3000 worth of PM? Will probably yelp a local coin dealer...any other advice? Hope we aren't too late.
First make sure you have a safe, secure place to store it. Not a safe deposit box! And don't tell anyone you have it. Otherwise consider Perth Mint certificates or PHYS
I have to agree with Windemup on this one. It's NOT WW111.
A central bankers BEST friend is another central banker! It's a global circle jerk of debasement. The trick is to not get any in your eye/ stings!
Robert, it sounds like you are speaking from experience. Was it your own that got into your eyes and stung, or perhaps somebody else's? Not that there's anything wrong with that.
They are running scared and need to position themselves for the future.
"This article brought to you compliments of Goldline."
Currency or stock market crash will lead to WWIII ??? I thought wars were the result of idiological, religious clashes, empire declines or expansion, denial of raw materials or territorial disputes. If this is a new paradigm brought on by a failed global economy then should we expect the rest of the world to invade the US, the bastion of capitalism and inventor of credit bubbles ? Or is this the imperitive of selling newsletters?
I read a small book called something like The history of money and banking back in the 1820's or so. Back then they outlawed the use of anything but the paper they were pushing back then at the pain of death. Or back then to be cast into the wilderness which was the same. Not saying that gold is stupid to have but beware the gov.
"Our Founding Fathers thoroughly understood currency debasement and how it usually leads to the destruction of civilization. The Coinage Act of 1792 provided the death sentence for anyone convicted of debasing U.S. coins."
http://www.buildfreedom.com/tl/rape2.shtml
Also,
"If one wants to cut back government, one has to destroy the conditions that favor its centralization and, ultimately, its very existence. The main conclusion to be drawn from the foregoing is that the origins of modern political unifications are to be found in bankrupt regimes. Therefore, two intermediate goals on the road toward a free society are most important. The first one is to abollish fractional-reserve banking and central banks. The second one is to outlaw public debts. Once these two steps are accomplished, both the intensification and the extensification of government will become more difficult, and the maintenance of liberty will become easier."
-- Jörg Guido Hülsmann," POLITICAL UNIFICATION: A GENERALIZED PROGRESSION THEOREM" - https://www.mises.org/journals/jls/13_1/13_1_4.pdf
The central banksters are not at war. They are on the same side. We are the opponents. It's a big washing machine wash and rinse cycle where each country takes a turn at hosing their own populace and the banksters clean things up a little.
can't get enough gold these days. what about silver and platinum? where is the best place to store it?
http://covert2.wordpress.com
In the hollowed out baseboard, lining the closet under the bathroom sink.
In the wall of an open, stone-walled well, with a protruding rock over the hole/shelf where you stick the bullion ( a classic hiding place)
Behind loose bricks in the fireplace, in the ductwork where you can't reach up and touch it,
In a field, deep, with lots of .22 cal shell casings all over the surface.
Know that sophisticated metal detectors can read through walls, dialing out circuit boxes, etc. Do not "put and take", ie frequently visit your hiding spot. You should have many hiding locations if you think that is the future, so you are diversified.
For large quantities, arrange storage in a swiss vault and pay whatever it costs. update you passport and leave when things stink (more than now) and visit your deposit box. Failing this, have lots of cheap 14K gold wedding bands so you don' have to make change for $10,000 gold pieces. Gold is insurance against limited chaos. Lead is insurance against total chaos.
Start reading a lot more than you have been and google your questions through an anonymous web site browser. Get smart quick.
where is the best place to store it?
Under a .45
"where is the best place to store it?"
Everywhere.
As the old farmer saying goes, ya got ta plant enough for the bugs ;-)
My gold is never far from my Tommy Gun...
With me.
Honest. I promise.
I will even sign a piece of paper to that effect.
You can't possibly go wrong.
And only a "Radical Paranoid Extremist" would doubt me.
As I stated above: I've had my gold cast into fittings for my yacht.
Nobody will even notice it.
Problem with putting it in walls or out in the field is 'metal detectors'. Hiding it in full view never draws attention. Zinc coated bars that are used to fight electrolysis is another way - or painted coat hangers on every door.
ughh, carnations, how gauche.
Il est effectivement sur la droite.
Quelle esprit tu as, mon amis!
.
Fatuous hypothesis to say that we're in WWIII. We seem to be depreciating the currency of speech as well as that of money to make such a claim.
You noticed the wholesale current degradation of the language as well, did you?
When we have the ignorant confusing "issues" with "problems", and "could care less" with "could NOT care less", and finding the latest inner-city ghetto trash slang to be "cool", well, what can you expect?
Well holy mackeel I sho nuff don unnerstanz what you am postulatin Mr. Interlocutor
"These white boys is gettin' obstreperous."
- Cooley High
double post: why doesn't webmeister stop us before we commit this atrocity???
I's regusted!!
i dunno Escape,
i am beginning to believe the 'Main Street' casualties are considered acceptable losses for the 'real' battle, economic, between us (west) and the BRICs on the world stage.
unless the 'Main Street' losses are a Cloward & Piven-esque attempt to break the current system so it can be rebuilt 'better'.
if it's neither of those agendas, we're 'friggin doomed' (ala mogambo), as these folks can't be *that* stupid in real life, can they?
Jeeeezus, why don't we do away with the formalities and just have contributor's posts on here (except Leo's) just say....."BUY GOLD"
Don't forget Robotrader.
My bad
OK, I'll say it:
Buy Gold Babiez!
Just heard that some people use inocent looking PVC pipe plumbing D=1.25" for gold maples. A one footer will hold 111 coins and by extension a nine footer will hold about 1,000 coins.
Can you imaging $1.38MM in a rod? (That is with todays price)
I've had my gold cast into fittings for my yacht.
I was thinking about that also - a cast for cleats - just don't put any pressure on it or the soft metal will bend. But a great way of getting in and out of countries without drawing the attention of customs officers. You could also dig out a portion of the lead in the keel, fill in with gold, pour lead over the top.
PMs and boats.
It's like drugs and guns. "You got to keep them separated!"
if they outlaw gold then they GUARENTEE gold's value as a powerful black market emerges
+1
"Check out the big brain on Samseau!"