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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
PS. If
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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The major risk to gold is political not economic. Once someone starts to lose the curreny battle the move to rely on the poolice powers of the state is only a matter of time and just like they have done twice in the past they will outlaw your investment in bullion. Don't forget goldies don't own 42 Senators. Currency based bankers do.
Aha, the answer IS 42!!
LOL. perfect reply.
I've got my towel. You?
To a hammer, every problem looks like a nail.
Graham, some of us don't need your subscription if you want to post, do it, but stop pitching your letter, jesus!
In all fairness, if he composes the report, we really shouldn't complain about it, especially if it's a good article. We all should be grateful we can read reports like these for free. 15 years ago, you'd have to pay good money for this information.
Think of it as a commercial on your favorite program, or the ads that appear on your favorite website (like ZH). You get content but a guy's gotta eat. You don't buy Pampers or use the latest cancer-inducing modern drug, so just skip over the promotional part.
I just figure its "blogspam".
Sure. I don't judge a media program by its advertisers. Look at some of the ads that have appeared at the ZH banner -- along with the link to CONTRIBUTE.
Donate To Zero Hedge
ditto - i think the average ZH reader would appreciate a simple link to your page (for your trouble), but anything labeled 'special free report' ... isn't special, and won't turn out to be anything more than a pitch for your average performing investment newsletter.
even if i'm wrong... i'm still right, because you've bundled yourself with the rest of the average performing newsletter hacks with your average insulting marketing language/tone.
give us more credit and you'll probably get more yourself.
BTW, phoenix, thanks for your contribution to ZH, and i mean that, just trade the closing spew for a simple link/acknowledgment to your homesite brilliance. you work will speak for itself.
Gee, I'm buying gold -- does that mean I'm ahead of the curve?
Yes.
Said the same thing 8 years ago... and 5 years ago... and 24 months ago and 3 months ago... Spot physical delivery of gold at $1307. Just like 8 years ago or 2 months ago, looks like a good time to be buying physical gold to stay ahead of the currency devaluation warfare of central banksters.
Bought gold in the 1980s. 1990s. 2000s. Last Monday.
About 85% of the gold I bought was at or near "record high prices."
When I come back from vacation, I will buy more!
Nice talk on King world news...
Guy was telling "gold is a sign for freedom and self action- it is the best form of voting against crazy money printing that you have today"
Couldn't agree more
US banks,rating agencies start covert war against europe [ I donno how anyone can not see this,ignoring US UK debt while targetting few small nations, to distract peoples' attention]
Japan goes for unilateral "debauchery"
half of the world is pegged to toilet paper.
what is your move???
"And I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property -- until their children wake-up homeless on the continent their fathers conquered... The democracy will cease to exist when you take away from those who are willing to work and give to those who would not." -- Thomas Jefferson wrote on May 28, 1816