Reserve Currency

Hungary Issues Sovereign Bonds Denominated In Yuan: Another Nail In US Reserve Currency Status?

Hungary priced the three-year bond at a yield of 6.25%, raising 1 billion yuan ($154 million), a small size for a sovereign deal. Bankers not involved in the transaction estimate that if Hungary issued debt in U.S. dollars and swapped the proceeds into yuan, it would have paid almost 1% less in annual interest costs. The dim-sum market isn’t an appealing market right now. Issuance of offshore yuan bonds has been falling consistently since Beijing’s decision to devalue its currency by 2% in August last year—the prospect of another yuan devaluation has sapped much of the appeal of such bonds for offshore investors.

China Embraces Gold In Advance Of Post-Dollar Era

To challenge the US dollar hegemony and increase its power in the global realm of finance, China has a potent gold strategy. Whilst the State Council is preparing itself for the inevitable decay of the current international monetary system, it has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation and increased its official gold reserves in order to ensure financial stability and support the internationalisation of the renminbi.

Triffin's Paradox Revisited: Crunch-Time For The U.S. Dollar & The Global Economy

While all eyes on fixated on global stock markets as the measure of "prosperity" and "growth" (or is it hubris?), the larger force at work beneath the dovish cooing of central bankers is foreign exchange. The reality is that we're one panic away from foreign-exchange markets ripping free of central bank manipulation.

"Free" Trade, Jobs, & Income Inequality: It's Not As Easy As We Might Think

Slapping fees on imports (which by the way is illegal in treaties such as the WTO) will not solve the larger problems of reduced employment, stagnant wages and rising income inequality. To make a dent in those issues, we'll need to tackle central bank and central-state policies that have pushed finance and speculative churn to supremacy over the productive economy.

First There Was "Brown's Bottom," Now Gold Gains On "Morneau's Miscue"

Gordon Brown, back when he was the UK Chancellor of the Exchequer, distinguished himself by selling off approximately one-half of Great Britain’s gold reserves at what turned out to be a near-bottom at the end of the secular bear market in gold which lasted from 1980 to 2000-ish. However, the news that the new Canadian Finance Minister Bill Morneau has completed selling all remaining Government of Canada gold reserves may remove Brown's laughing-stock status.

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Making Sense of Cents

Forex remains to be the largest market in the world and the least understood.  Central banks have more influence on global markets than any other force.  In other words, monetary policy is the ONLY economic indicator(s) investors should be watching, because let's face it, if the Fed raised rates to 10% like they should do and called in all that QE money, stocks would collapse.

But yet Forex remains a mystery, something that someone may have mentioned or you heard about.. wait FX is a TV channel?  or graphics?  a movie?

Gold Is The Only Sound Money

The technical situation for the gold price has sharply improved, to the evident surprise of many mainstream analysts, but what are the reasons behind the turnaround, and implications for the future?

The "Terrifying Prospect" Of A Triumph Of Politics Over Economics

All of life’s odds aren’t 3:2, but that’s how you’re supposed to bet, or so they say. They are not saying that so much anymore, or saying that history rhymes, or that nothing’s new under the sun. More and more 'they's seem to be figuring out that past economic and market experiences can’t be extrapolated forward - a terrifying prospect for the social and political order.

Cheap Oil, The U.S. Dollar & The Deep State

Those expecting a major weakening in the USD to push oil higher shouldn't hold their breath awaiting this outcome. Maybe the USD will weaken 20%, but why would it do so when every other central bank is weakening its currency? Wouldn't it make much more sense to drain wealth and geopolitical leverage from oil exporters?

Bond Bears Bewildered - The Case For US Treasuries

While conventional wisdom suggests that US government bond yields have nowhere to go but up, we believe the economic fundamentals will continue to weigh on interest rates for the foreseeable future.

"Everything's Interconnected"

Everything happening today is in some ways interconnected: popularity of ‘non-establishment’ political candidates; ineffectiveness of central bank policy in lifting inflation; economic pessimism; weak capital spending (from handcuffed capitalism); and angst due to perceptions of inequality. Let us explain...