Reserve Currency

Tyler Durden's picture

Today's Reserve Currency Is Tomorrow's Wallpaper





Somehow, like it or not, the world turns. Today's hegemon becomes tomorrow's also-ran. Today's reserve currency becomes tomorrow's wallpaper. Today's cock o' the walk becomes tomorrow's dinner. Hey, we didn't create this system. We don't even especially like it. But that's just the way it is. Whether you already have made a fortune, or are trying to build one, you need to be very careful about what currency... or currencies...  your wealth in denominated in. From an economic point of view, the system (established by Richard Nixon in 1971) is loopy. The Chinese pretend they have good customers. Americans pretend they have good credit. And everyone pretends to get richer … based on promises to settle up sometime in the future. Instead of edging toward a reckoning, all major governments seem to want to make the situation worse.

 

 
Tyler Durden's picture

Precious Metals In 2014





As we enter 2014 mainstream economists relying on inaccurate statistics, many of which are not even relevant to a true understanding of our economic condition, seem convinced that the crises of recent years are now laid to rest. If we objectively assess the state of the labour markets in most welfare-driven economies the truth conforms to a continuing slump; and if we take a realistic view of price increases, including capital assets, price inflation may even be in double figures. The corruption of price inflation statistics in turn makes a mockery of GDP numbers, which realistically adjusted for price inflation are contracting. This gloomy conclusion should come as no surprise to thoughtful souls in any era. These conditions are the logical outcome of the corruption of currencies and the effect of unsound money... and two conclusions for 2014...

 
Reggie Middleton's picture

The Future of Money is Here: Zero Trust Digital Currency Contracts





From this point on I start demonstrating to those who can't see the benefits of smart digital money over dumb fiat currencies. Now, you can short bitcoin and hedge against volaitlity using same tools the big boys use for USD/EUR/CNY, etc.

 
Tyler Durden's picture

2013 Greatest Hits: Presenting The Most Popular Posts Of The Past Year





The fifth anniversary of Zero Hedge is just around the corner, and so, for the fifth year in a row we continue our tradition of summarizing what you, our readers, found to be the most relevant, exciting, and actionable news of the year, determined objectively by the number of page views. Those eager for a brief stroll down memory lane of prior years can do so at their leisure, by going back in time to our top articles of 2009, 2010, 2011 and 2012. For everyone else, without further ado, these are the articles that readers found to be the most popular posts of the past 365 days...

 
Tyler Durden's picture

The US Dollar Is Dumping Again...





For the second time in a week, the market is running (not walking) away from the USD. Despite all the equity market exuberance over the taper, the USD is now unchanged from the FOMC decision and in relative free-fall for the world's reserve currency - on a scale we saw during last Friday's craziness... Treasuries are modestly bid this morning, equities are flat and precious metals are lower (thogh gold is recovering as the USD sinks)...

 
Tyler Durden's picture

Twirmoil Strikes; Treasury Yields Surge To 29-Month Highs As EURUSD Insanity Ensues





TWTR collapsed ~15% off its highs (losing 1 BBRY or 2 JCPs) and FB tumbled 4%. Stocks overall broke their winning streak with a modestly red close but it was the action in the bond, commodity, and FX markets that stood out. Following copper's flash smash Tuesday, gold and even more so silver held their gains from the surge yesterday and pressed higher still today (silver's best week in 4 months). WTI crude closed at 2-month highs above $100. A massive range day in the USD driven by a EUR surge to test 1.39 (2-year high and fail) swung the world's reserve currency down 1% and back up 1% (in a mini-Bitcoin-like panic). Yield rose modestly on the day with 10Y crossing 3% early on, pulling back, then hovering there into the close for the highest close in 2.5 years. VIX was a one-way stret higher all day. All in all - a glance at these charts will make you wonder WTF...

 

 
Tyler Durden's picture

A Year Later, The Bundesbank Has Repatriated Only 37 Tons Of Gold (Of 700 Total)





Procuring physical gold seems to be a rather problematic and time-consuming process, as the Bundesbank is learning. Yesterday Buba head Jens Weidmann told Bild that gold valued at €1.1 billion has been repatriated so far. Putting a weight to this number: to date the Bundesbank has received shipments of a paltry 37 tons of gold from its existing storage place in either New York or Paris to Germany: "The gold reserves of the country will be stored in Frankfurt because it has a special storage with the corresponding equipment,” said Carl-Ludwig Thiele, a Bundesbank board member.  The repatriated amount over the course of all of 2013 represents just over 5% of the total stated target of 700 tons, and is well below the 87.5 tons that the Bundesbank would need to repatriate each year if it were to collected the 700 tons ratably ever year in the 8 year interval between 2013 and 2020.

 
GoldCore's picture

Bloomberg: How to Keep Banks From Rigging Gold Prices





Allegations that banks are manipulating gold prices lower continue to gain credence and Bloomberg have published an article by Rosa Abrantes-Metz entitled ‘How to Keep Banks From Rigging Gold Prices’

 
Tyler Durden's picture

Guest Post: 8 Ways The Taper Is Going To Affect You And Your Family





The unelected central planners at the Federal Reserve have decided that the time has come to slightly taper the amount of quantitative easing that it has been doing.  When this news came out, it sent shockwaves through financial markets all over the planet.  But the truth is that not that much has really changed.  The Federal Reserve will still be recklessly creating gigantic mountains of new money out of thin air and massively intervening in the financial marketplace.  It will just be slightly less than before.  However, this very well could represent a very important psychological turning point for investors.  It is a signal that "the party is starting to end" and that the great bull market of the past four years is drawing to a close.  So what is all of this going to mean for average Americans?  The following are 8 ways that "the taper" is going to affect you and your family...

 
Tyler Durden's picture

US Treasury's Financial Crimes Enforcement Network "Reaching Out" To Bitcoin Businesses





Recently some of the more naive, not to mention top-ticking, financial commentators assumed that just because US regulators had not snapped shut a trap surrounding Bitcoin and other digital currencies yet, that this state of blissful cohabitation would continue indefinitely. Unfortunately, as we warned back in March during the initial leg higher in BTC following the Cyprus deposit confiscations, the well-known "honeypot" strategy was meant to draw out as many digital currency fans and participants as possible - who after all were warned by none other than the ECB that the current regime will never adopt a parallel, and quite threatening monetary unit - only to see the regulatory and enforcement fist of the nation that (still) hosts the reserve currency slowly but surely start to clench around the binary currency. Because, finally, after testing the ground long enough, the fist is starting to not only close but squeeze tight. And as Reuters reports, it is the U.S. Treasury Department's anti money-laundering unit that is now warning businesses linked to Bitcoin that they "may have to comply with federal law and regulation as money transmitters, a Treasury spokesman said."

 
Tyler Durden's picture

Yet Another Massive Nail In The Dollar's Coffin





Two years ago, the CME announced USD/CNH futures trading enabling speculation (and hedging or risk transfer) of offshore Chinese Renminbi and the writing on the wall of the dollar's demise grew clearer. On the other side of the world this week, a couple of gentlemen that few people have ever heard of signed an agreement that has massive consequences for the global financial system. It was a Memorandum of Understanding signed by representatives of the Singapore Exchange and Hong Kong Exchange. Their aim – to combine their forces in rolling out more financial products denominated in Chinese renminbi. This is huge...

 
Tyler Durden's picture

Guest Post: China's Shadow Currency





China’s economy is straining to keep up a semblance of its former growth rate. The surest sign is the way a shadow market in bank paper has evolved to substitute the commodity that China is increasingly running short of: cash. Bankers are passing around their own ersatz currency, stimulating trade with what, in effect, are off-the-books loans. As in the wildcat currency era of the United States, the antebellum period before America had a national currency, this paper trades at a discount from province to province. It is increasingly used for speculative purposes, is potentially inflationary, and is hard to regulate. The People’s Bank of China (PBOC) has been unable or unwilling to crack down, lest it provoke a serious slowdown. But when the world’s second largest economy must resort to passing around IOUs, the financial community should take note.

 
Phoenix Capital Research's picture

Gold's Intrinsic Value Vs the US Dollar





Many investors argue that Gold has no intrinsic value. I disagree with this assessment as it does not consider the nature of the financial system.

 
 
Tyler Durden's picture

700 Years of Government Bond Yields





With the world almost in total agreement that rates can only go up, that the 30-year bull market in rates is over and a return to "normal" rates is timely, perhaps a glance at the following chart of 700 years of government bond yields will enlighten a little as to where the anomalies and what the "normal" is. All too often investors are caught up in their cognitive dissonance-driving recency bias when a bigger picture may just help those who always proclaim to invest for the long-term.

 
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