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Currency Wars Continue As IMF Concedes End To Dollar Hegemony

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Currency Wars Continue As IMF Concedes End To Dollar Hegemony

- Dollar has declined as reserve currency over past decade from 70% of global reserves to 61%

- Chinese yuan is growing in stature as international currency

- IMF deputy director calls for de-dollarization in emerging markets

- Many countries have begun de-dollarizing

- BRICS development bank – rivaling the IMF and World Bank – is now operational

Currency wars and the growing trend away from dollar dominance in international finance, particularly in emerging markets, was highlighted in an interesting CNBC article this morning entitled “Is the Dollar Losing its Clout Among EMs?

goldcore_bloomberg_chart2_9-03-15

It refers to the deliberate and stated policy of “de-dollarisation” around the world, the decline in the use of the dollar in international trade and as a reserve currency and the emergence of the new BRICS bank.

The article quotes best-selling author and Pentagon insider, Jim Rickards. Rickards says that the status of the dollar as a reserve currency is still solid despite its decline over the past decade and despite the rise of other currencies in international transactions.

“The dollar is declining as a trade currency, but it remains strong as a reserve currency. Right now, it’s around 61 percent of global reserves, versus 70 percent over a decade ago” he said.

Meanwhile, figures from the BIS and SWIFT show that the yuan is now among the top ten traded currencies in the world. While this is significant it should be seen in the context that the dollar still being used in 80% of global trade.

Chinese ambitions in this area are clear, however. China is negotiating currency settlement deals in local yuan with many of its trading partners.  Zero Hedge ran an article last week on a billboard advertisement in Bangkok from the Bank of China declaring the RMB to be “the world currency”.

“And it’s true,” they added, “the renminbi’s importance in global trade and as a reserve currency is increasing exponentially, with renminbi trading hubs popping up all over the world, from Singapore to London to Luxembourg to Frankfurt to Toronto.”

Last month the Deputy Managing Director of the IMF, Japan’s Naoyuki Shinohara, openly stated that emerging markets in Asia should begin the process of de-dollarisation “to mitigate against external shocks and constraining the central bank’s ability as lender of last resort.”

This is interesting as the IMF has historically been one of the main agents of dollar hegemony. We believe it demonstrates the level of risk now extant in the system that the IMF should be promoting a move away from the dollar, possibly towards Special Drawing Rights (SDRs).

China and Russia have negotiated currency arrangements excluding the dollar in recent years. Kazakhstan has also explicitly announced a process of de-dollarization, in an attempt to bolster the local currency, the tenge.

goldcore_bloomberg_chart1_09-03-15

Russia is in negotiations with India and Egypt to settle their trade in local currencies.

The BRICS development bank is now operational which will see countries who avail of it repaying loans probably in yuan, given that China provides over 40% of the funding. It will act as a rival to the IMF which may explain why the IMF is taking a more inclusive approach to currency reserves.

Currency wars are set to intensify and competitive currency devaluations accelerate. When that happens, gold will again become an important monetary and geo-political asset for central banks and a vital safe haven asset for investors and savers.

Updates and Award Winning Research Here

 

MARKET UPDATE

Today’s AM fix was USD 1,173.75, EUR 1,077.97 and GBP 776.86 per ounce.
Friday’s AM fix was USD 1,196.50, EUR 1,090.60 and GBP 787.85 per ounce.

Gold fell 2.7% percent or $32.30 and closed at $1,165.70 an ounce Friday, while silver slid 2.1% or $0.34 to $15.87 an ounce. Gold and silver finished down for the week -3.75% and -4.22% respectively.

Gold in Euros - 5 Days (Thomson Reuters)

Gold in Euros – 5 Days (Thomson Reuters)

Gold for immediate delivery rose and then dropped back as the U.S. dollar’s rally and Friday’s nonfarm payrolls report increased speculation that the U.S. Fed will raise interest rates sooner rather than later.

Spot gold climbed 0.5 percent to $1,173.26 an ounce in late morning trading in London. It fell nearly 2.7 percent on Friday, its biggest one day drop since Oct. 1, 2013.

On Friday, the yellow metal reached its lowest price since December 1st, at $1,163.45 per ounce just after the U.S. nonfarm payrolls were released. The U.S unemployment rate reached its lowest level since 2008.

Asian premiums on the SGE have climbed to between $5 and $6 this morning up from $4 to $5 in the prior session.

Silver for immediate delivery fell to its lowest in 8 weeks at $15.69 an ounce in earlier trade before trading up 0.1 percent at $15.92. Palladium was up 0.5 percent at $819.75 an ounce, while platinum fell to $1,145.95 an ounce reaching its lowest price since July 2009.

HOW TO STORE GOLD BULLION – 7 KEY MUST HAVES

 

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Tue, 03/10/2015 - 17:15 | 5875124 buddybear
buddybear's picture

The US Dollar has a way to go. The Dollar will not go away until a forgien army gaines control of The US. A war anywhere else in the world makes the Dollar a safe haven to everyone else.

Tue, 03/10/2015 - 16:20 | 5874873 TNTARG
TNTARG's picture

Err

Tue, 03/10/2015 - 15:21 | 5874540 lasvegaspersona
lasvegaspersona's picture

It is really only the saving of currency that matters. The use of currency as a medium of exchange is relatively trivial in the way it is valued. If the world decides that gold is a better store of value it is over for not only the dollar but all currencies.

Countries use the currency kept in mattresses and bank accounts as a way to print more without causing inflation. In a fiat system the currency has no intrinsic value. If savers can be tricked into storing up paper as a store of value the countries can print much more that they should just to lubricate trade.

The future will likely see the medium of exchange become less important than it is now. If people find a better store of value (and say save in gold) the it won't matter if Bitcoin or rubles are used for the medium of exchange.

If free floating currencies are the norm we might finally get a system thaty allows trade to happen in a sensible way. The idea of cheap oil at the same time as peak oil is onne of the consequences of our current monetary system (though insanity in other ways will likely persist as long as we are humans).

Tue, 03/10/2015 - 13:38 | 5873993 eyesofpelosi
eyesofpelosi's picture

I think Goldcore was trying to convince me to buy PMs...not sure, I better reread this crap to be absolutely certain.

Tue, 03/10/2015 - 13:55 | 5874087 I Drink Your Mi...
I Drink Your Milkshake's picture

While you're at it, do a bong load to enhance your comprehension.

Tue, 03/10/2015 - 14:13 | 5874184 eyesofpelosi
eyesofpelosi's picture

Woa, NOOOOOOOOOW I get it![cough]

Tue, 03/10/2015 - 13:15 | 5873859 joego1
joego1's picture

Anything you can hold in your hand will be good as good. You can find fools gold on your computer.

Tue, 03/10/2015 - 13:12 | 5873836 Lmo Mutton
Lmo Mutton's picture

Oh!  Oh!  Oh!  Pick me!  Pick me!  I know how to push buttons!  Can I push the button?

Tue, 03/10/2015 - 13:11 | 5873828 sidiji
sidiji's picture

US been printing all out for 8 years qe1 qe2 qe3...usd at all time new high, just shows no one gives a shit, and US can continue printing as much as it wants, usd will still be No.1!

Tue, 03/10/2015 - 13:10 | 5873823 Atticus Finch
Atticus Finch's picture

"HOW TO STORE GOLD BULLION – 7 KEY MUST HAVES

I cannot believe that Goldcore is promoting two vaults supported by LBMA. This gold will be confiscated in the blink of an eye.

Tue, 03/10/2015 - 13:14 | 5873851 joego1
joego1's picture

Mine's safe in Davy Jones Locker.

Tue, 03/10/2015 - 11:54 | 5873448 GRDguy
GRDguy's picture

Apple thinks gold is so worthless that it's selling a $549 I-watch that has about two ounces of gold in its frame for around $10,000.  That's about $4500+ per ounce. What's the current value, about $1160. Boy, certain Apple customers are really dumb.

Tue, 03/10/2015 - 12:08 | 5873481 Chat_noir
Chat_noir's picture

and when they switch to the new model, they'll be selling those at 500$ an ounce.

Tue, 03/10/2015 - 13:40 | 5874008 I Drink Your Mi...
I Drink Your Milkshake's picture

That was the elephant in the room yesterday at the Yerba Buena Center.

Not to mention the fact this thing's mostly useless w/o your functioning iPhone in close proximity with a decent cel signal.

The Swiss watch industry is squawking about this being disruptive to their exports. How soon they forgot about the Newton!

Dick Tracy at least had a stand-alone communication device on his wrist.

Tue, 03/10/2015 - 10:54 | 5873245 silverer
silverer's picture

I think the writings on the wall of what we'll be calling it.  As far as our domestic currency, it will go from the 'greenback' to the 'brokeback'.

Tue, 03/10/2015 - 10:47 | 5873211 Consuelo
Consuelo's picture

Just keep an eye on U.S. foreign policy and its (quite predictable) results.   Those actions are your guidepost to nearly everything now.

Tue, 03/10/2015 - 08:58 | 5872761 Bossman1967
Bossman1967's picture

By the time the price of gold being worth any part of the bullshit fiat system will not even matter. You ar accumulating the gold for what you will gt in the future so if its today at 170 or goes t 2,000 or 700 the only difference is how much you are stacking so to me unless your selling athe lower the better. And if your selling now why did you buy it? For m not an investment for a fiat dollar amount but for whatever it will get me when the current fiat is worth no mor than my toilet paper.

Thu, 03/12/2015 - 07:59 | 5880836 GuusjA
GuusjA's picture

Het gerucht in hotel GradjA gaat dat D66 niet alleen een minister op het departement van 'waarheidsvinding en verzoening' wil leveren, maar ook het ministerie van 'Onderwijs, Cultuur en Wetenschap' wil verlossen van het onbenul van Jet Bussemaker.

 

http://www.rijksoverheid.nl/regering/bewindspersonen/jet-bussemaker/webl...

 

Het hoger onderwijs kan nóg beter, wanneer leerlingen al op de basisschool worden besmet met de inzichten van de 'Logica van de 1'. Met een @basisinkomen kunnen we ervoor zorgen dat studenten nóg meer uit hun studie kunnen halen. Door 2 dagen in de week iteratief te waarheiddelen met het MKB kan meteen de opgedane theoretische kennis worden getoetst aan de praktijk. Heel wat slimmer dan het 'leenstelsel' wat nu door psychosegelovige Eerste Kamerleden is goedgekeurd. 

 

http://www.nrc.nl/nieuws/2015/03/12/kinderombudsman-kritisch-over-effect...

 

De kinderrechten staan in veel Europese landen onder druk, omdat nog steeds niet wordt ingezet op het systeem 'Leven en Laten Leven'. Het geklaag van kinderombudsman Marc Dullaert kan dus ineens uit de wereld zijn met de invoering van het DAB-systeem, maar dit ziet de MACHT nog steeds niet zitten.

 

http://nos.nl/artikel/2024272-shell-topman-van-beurden-incasseert-24-2-m...

 

Misschien is het slim om aan Shell-topman Van Beurden te vragen waar de volgende Bunga-Bunga-Feestje van @DTL zal plaatsvinden. Op zo'n feestje wordt je namelijk slimmer dan na het aanhoren van de 'hoorcollectes' in de Tweede Kamer. 

 

Tue, 03/10/2015 - 09:26 | 5872862 Chat_noir
Chat_noir's picture

you might die with all the devalued gold you can buy not spending your $$$ for other useful things. simple

people who sell SHORT gold by hitting the bids are making a lot of toilet paper $$$ as you say and they'll be able to buy those nice new golden apple I-watch...more useful than your coins and bars...

Tue, 03/10/2015 - 09:30 | 5872884 unplugged
unplugged's picture

not for much longer - the criminals days are numbered

Tue, 03/10/2015 - 08:26 | 5872670 Chat_noir
Chat_noir's picture

Thats why Gold is crashing.

Goldcore is an idiot. He's been pushing everybody to buy. from 1900$, 1800$, etc...and again >1300$ earlier this year

Gold will go down and down and down as long as the FED will be raising rates. in the process, Gold may crash to 700$. or not. but the market won't turn around before the market decides the FED is over with raising rates...

Tue, 03/10/2015 - 12:41 | 5873639 savagegoose
savagegoose's picture

Yeah USD index being at 98.6 makes much more sense than a high gold price. how many americans even have enough save for 1 oz of gold?

 

Tue, 03/10/2015 - 11:19 | 5873311 divingengineer
divingengineer's picture

Gold has been trading sideways at about the all-in cost of production.  Any large moves to the downside will put supply pressure on the equation.  It may go to $700/Ozt, but good luck finding any phyzz to buy in any LCS or website.  Paper gold could do anything, $50/Ozt, $10,000/Ozt, its not real so it is not constrained by anything but Wall St's imagination.  Actual retail gold coins/bars are another story and with enough supply side pressure the price link will break. We saw a price break in November between paper and phyzz that manifested itself in the form of much, much larger premiums over spot.  So, from a long term investment perspective, I see physical gold as a worthwhile investment with much lower risk than, say, Treasury paper (from an inflation perspective) or NASDAQ shares.  

Nothing is guaranteed to hold its value, nothing.  Gold has, however, been a good bet for the mid/long term investor for a long, LONG time .  And if its such a pill, a barbarous relic, why is every CB in the world and most of the Eastern Hemisphere clamoring to lay their hands on every last ounce they can get? 

Tue, 03/10/2015 - 09:29 | 5872872 unplugged
unplugged's picture

its only going to matter how many ounces you have and nothing else

there will be no fed reserve (debt) note to measure it against - it will join the fiat ash heap

Tue, 03/10/2015 - 10:50 | 5873229 silverer
silverer's picture

Agreed, and I would not bet against the law of supply and demand.  Gold markets are manipulated, and can be manipulated only as long as the dollar lasts and is perceived to have value.  Lets face it: dollars are paper.  And if the dollar becomes useless, and hyperinflation hits, and you have bags and bags of them, what will you trade them for?  I've looked for books and articles written by Germans who held gold instead of marks, explaining how by holding gold in the Weimar Republic they lost everything, but I'm not having much luck.  I'm also trying find similar works from Zimbabwe.  They were printing 100,000,000,000 dollar notes when they gave it up.  But what most don't realize is that at one time the Zimbabwe dollar was worth about $1.38 US.  So if anyone out there has any info on books about people making fortunes holding paper currency instead of gold or other hard assets during hyperinflation, please post.

Tue, 03/10/2015 - 09:43 | 5872940 Chat_noir
Chat_noir's picture

yep if you wait price to be at 800$ instead of buying at 1600$ and above like Mr GoldCore said, you can buy twice as much...

those who did listen to him are suckers.

Tue, 03/10/2015 - 10:47 | 5873214 agent default
agent default's picture

Look at gold in Euro and you will see it is up.  When and not if the USD starts to be marginalized the same thing will happen in USD terms only much more violently.  I hope you have your gold, whenever you intend to buy it out of the system and undocumented, because they will come after it.

Tue, 03/10/2015 - 12:07 | 5873475 Chat_noir
Chat_noir's picture

thats a silly comment. look at USD its up against EUR. you don't need to buy gold to get rid of EUR. and buying USD vs EUR takes a click and a bid offer of 1 pip...

gold sucks...

Tue, 03/10/2015 - 14:07 | 5874156 angel_of_joy
angel_of_joy's picture

If you don't like it, don't buy it ! Why the anger ?

Tue, 03/10/2015 - 07:30 | 5872565 lakecity55
lakecity55's picture

The "reset" will have to include a Benchmark- gold. Probably thru the trade window as JW has been predicting.

Tue, 03/10/2015 - 08:28 | 5872679 prefan4200
prefan4200's picture

I don't know, gold would be a good choice, but I expect some bastardized basket of fiat will be the new benchmark - let's call it the Dolleuruble.

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