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Will Next Week Be The Start Of The Crash Of The US Dollar?
The year 2015 is coming to an end and we’ve seen a lot this year. Not only did we see a much stronger dollar, the gold price also weakened despite the dire economic situation in, well, everywhere in the world, terrorist attacks and additional tensions between a NATO member and Russia. Additionally, the Federal Reserve seems to be on track to increase the interest rate before the end of this year. In fact, as you can see on the next chart, gold has now almost reached a 6 year low, but two important indicators are indicating the yellow metal might have been oversold lately.
Source: stockcharts.com
An increased interest rate theoretically means a currency would become even stronger as there would be a higher demand for the US Dollar, especially in the current near-zero interest rate environment all over the world. However, there are additional elements at play here.
From Monday on, it’s not unlikely the US Dollar will see its ratio in the Special Drawing Rights basket being reduced in favor of the Chinese Yuan. Earlier this year, China has openly demanded the IMF would include its currency in the basket considering the country’s economy now is one of the largest in the world. There were quite a few people who doubted this would effectively happen, but China has made all the necessary steps as it promised a better market transparency and has even provided an updated status of the total amount of gold on the balance sheet of the Central Bank (and whether or not that’s the true number remains open for discussion. A long discussion.).
Source: bullionstar.com
We expect the IMF to confirm on Monday the Yuan will indeed be included in the SDR basket, and this could weaken the position of the US Dollar around the world. One of the main reasons why the US Dollar gained a lot of strength lately wasn’t because of the ‘strong’ economic situation in the USA, and it wasn’t because the market was anticipating a rate hike. No, the US Dollar was appealing as a world reserve currency because it was worldwide seen as a safe currency but now the Yuan is being accepted by the IMF as part of its Special Drawing Rights basket central banks all over the world might be tempted to convert some US Dollars into Yuan as the Chinese currency will gain a lot more credibility and legitimacy overnight due to the decision of the IMF.
Source: stockcharts.com
Even the chart of the US Dollar Index shows some signs of fatigue. After the most recent run, the Relative Strength Index has almost reached an ‘overbought’ status whilst the MACD is about to make a negative crossover. These two indicators could point in the direction of a weaker US Dollar in the next few weeks.
In a previous column at Secular Investor, we already expressed our surprise about some weird trading patterns in the foreign exchange markets, and now the Yuan will probably be added to the SDR basket, we might see some more ‘weird’ swings. Is it time for a 'Dollar crash'? We wouldn't be surprised if it is.
The US Dollar might have reached the top of its strength and could see a downward correction in the next few weeks.
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I think about what I knew almost 15 years ago. 911 was to start bombing and taking over about half dozen middle east countries, and initiate the patriot act. The main reasons anyway. I knew they would keep the dollar strong and it would be the last to fall. The dollar is backed by nothing more than guns and bombs. I knew their plans were to take out the Euro BEFORE the united states. I did NOT know they had the power to go against 90% of the population and bail out the banks and start printing trillions of dollars. They fooled me good, I sure thought 2008 was gong to be worse. Altho, I do know alot of people who lost alot of money. I think they have moar plans before the global monetary reset. I think they are going to make/convince as many people as they can to go into u.s. treasuries and of course the stock market. They want every dime you have. (remember the cartoon where the bad guy turns the other guy upside down and shakes all the money out of his pockets?)
Anyway, 15 years and they are well on their way, altho they are behind on their schedule and they are getting frustrated. Syria is really pissing them off I think. The banks are insolvent and I dont know how long they can keep in business. Peer toPeer (matching lenders to borrowers) bitcoin, and other systems are popping up. its hurting the banks also. Gold will NOT go up until the global monetary reset. I dont know when that will be, but it sure seems somewhat close. I think they have to get Syria figured out first.
The dollar is backed by nothing more than guns and bombs.
A military defeat of some kind is one scenerio that would destroy confidence in the dollar.
Syria & Ukraine and now Turkey is designed to spread Russia out...thus the sanctions and more coming because they see both Russia and the American middle-class as the greatest barriers to the One World Economic System (Agenda 21); not a New World Order. NWO's have come and gone throughout human history; this is Babylon all over again on steroids.
The one world economic system is feudalism/fascism, in this instance globally implemented under the supervision of those who have deemed themselves to have a superior mind because g_d gave it to them. It will fail, it always does, because it goes against human nature and it can't create wealth. It takes a long time to fail and causes long drawn out misery and tragedy while it fails. In this instance, being that its to be implemented on a global scale, it will cause global misery and tragedy. The outline for its implementation is documented in the learned elders of zion and a phychopathic inclination is a requirement to be a participant in its implementation.
Want to to know what the market/dollar/gold/etc are going to do?
You have to learn the plans of the money changers. They control everything for the most part. They cant control human nature as much as the market systems tho. Human and natural nature surprises them somethimes and set back their goals and plans. What do we know? We know they want a single type weorld currency. We just dont know when, altho, look around and you will see it happeing quicker and quicker. Th yuan is part of SDR now, many countriesa are using other currencies etc. etc. We dont know how much gold the U.S. has which makes it difficult to know how much the dollar will go down when the SDR takes over. If the U>S. has little gold, and we know the U.S. has major debt so we can guess the dollar could go down 40% in purchasing power. 25% is probably about right. As far as gold? They will keep gold down as long as they need to, probably until the SDR system gets into place. Then it will go up very high. But then, they will outlaw or tax the crap out of gold. You think they want you having all that money and gold? hardly. What are ya gonna do, protest? Like ya did after inside job 911 and the patriot act? Like ya did when they bailed out the banks? NSA putting their hands down you pants? etc. etc lol hardly. You would be much better off to stick with silver.
Here is a tip...all this market stuff will make ya crazy. Here is what I do. I wake every morning and meditate for a short while. And once I say "give me this day, my daily bread", I am relaxed, calm, and good natured. I feel no frustration. I rely on something bigger and better than the money changers plans.
Coast - Nice comment. Holiday is.over. Back to the grind. Nice comment about fractional reserve banking works by Honestann. Imagine a few struggling people business people reading that for the first time? Banks can just create money from nothing? Yep. That is unlike any other business.
The simple analogy is the game of Monopoly. It winds up where the Central Banks just take from the till and buy properties on the board. You play along you get to keep a couple income producinh properties in the hope you outrace the banker (inflation).
You think they going to stick bitcoin in the SDR maybe? Maybe not bitcion per see but Blyth Masters blockchain version, the one where they control the quantity issued and the encryption codes. That way we could spend their digital money as peer to peer "cash" while they keep a taxing eye on all our income and expenditure. It all sounds so sexciting. They definately have to make it illegal for mundane sheeple to use PM's as everyday money, that would screw everthing up, as for bitcoin I don't know what the hell they going to do about that if they can't crack strong encryption. Maybe they could pray to satan for a solution.
This is one stupid fucking article, and I'd really love to know the author's "credentials". Are you not looking at the rest of the countries in that basket, especially the Euro, and tell me that's going to happen? ZeroHedge, please stop getting high schoolers to write articles for you. It's getting sad.
Chris88 :This is one stupid fucking article, and I'd really love to know the author's "credentials". Are you not looking at the rest of the countries in that basket, especially the Euro, and tell me that's going to happen? ZeroHedge, please stop getting high schoolers to write articles for you. It's getting sad.
Well Chris, look at what countries have been buying phyz gold as fast as they can get their hands on it. There's your answer.
Ww3 is bullish for the $ if your still alive
If China nukes America next week the Yuan will skyrocket in comparison with the greenback. Either way the greenback is lackluster from here on out.
Go China!
Go Russian Federation!
DEATH to America!
:)'
Yeee Haww, ride 'em cowboy.
What a load of crap. The USD is going up for all the wrong reasons. I look for the chance to load up on gold and silver.
Somewhere on the order of 80-90% of money in the world is parked somewhere. The US has the only barn big enough to store sums of that magnitude. When the barn is full, then it gets torched. Talk about a crashing dollar are overly premature.
IMO, next year and maybe 2017 will be the last chance to load up on PM at bargain prices.
What a load of crap. The USD is going up for all the wrong reasons. I look for the chance to load up on gold and silver.
InnVestuhrr...Just stand real close to the exit.
don't continue to be the fool
More "exchange YOUR worthless fiat for MY no-interest-paying declining-in-price inert metal" propaganda.
This comes from the same self-delusional mental defectives and hype profiteers who went into rages when ZIRP and QE were announced, claiming that there would be explosive hyper-inflation, trotted out the images of the Weimar republic wheelbarrows full of paper marks insufficient to buy a loaf of bread, predicted immanent collapse of the USD, treasuries, etc etc- NONE OF IT HAPPENED AS THEY PREDICTED AND INSISTED.
They keep predicting collapse NEXT YEAR, year after year after year after year ... The only people worse than the FED at forecasting the future are the gold wackos and profiteers.
Real money gold and silver is for real mens and womans. Fiat currecy is for crying whimmers.
OK then hold on to your dollars and treasuries. They will go up forever. Mountains of debt are sustainable. Continue with your confidence in the system since it will never fail.
"Mountains of debt" of NOT sustainable, BUT they are also NOT going to collapse next year, or even the year after that.
There is still very large capacity in the system for additional debt, especially since there is one critically important factor in favor of the USA vs every other regime, ie
THERE IS NO SAFER PLACE FOR GLOBAL CAPITAL TO GO TO INSTEAD OF THE USA.
If the USA were a little third-world shit-hole, it would have died long ago, and if emerging China were not even worse than the USA, then the demise of the USA might be expedited.
The demise of the USA will be V--E--R--Y L--O--N--G and S--L--O--W, NOT ABRUPT.
Life will become continuously more difficult.
Getting an education and skills training will become continuously more difficult.
Getting and keeping a good paying job will become continuously more difficult.
Earning income from investments will become continuously more risky and difficult
Keeping what you earn away from the regime will become continuously more difficult.
Cost of living will continue increasing.
And there will be no immanent collapse of the USD, USA treasuries, the USA economy or the USA regime - it will decay and rot slowly, and gold will decay and rot along with it.
All of this about pace and timing may be true, but I don't see why gold would decay and rot along with the USA. If not manipulated, gold should only rise at the same pace as everything else declines, be that fast or slow.
There is still very large capacity in the system for additional debt ... THERE IS NO SAFER PLACE FOR GLOBAL CAPITAL TO GO TO INSTEAD OF THE USA. and gold will decay and rot along with it.
What are you basing those opinions on?
I agree, and I've been saying that in ZH comments for a couple of years.
As long as the US is the safe haven, when ever there is stress in the world scared money goes to US dollar investments.
What changes that? Answer, there must be A SAFER ALTERNATIVE. The euro was supposed to be just that, but europe is a disaster. Ergo, until most of europe and japan "go greece" (collaspse) and recover, the dollar is still king.
What makes china jump the line and be next? Well, right now outsiders can't even invest in china stocks and bonds. Someday they will open that up. But it will be a long time before investors are confident enough in their legal system.
Gold is at the top of Exeter's pyramid. The most liquid asset class in existence which is nobody's liability. Eventually in a crisis, value moves up the chain of command.
The pyramid is inverted, so technically, gold is at the bottom. Just sayin'. Other than than, spot on.
Absolutely correct - capital cannot flee the USD, Treasuries and the USA markets UNLESS AND UNTIL there is a BETTER PROVEN STABLE ALTERNATIVE - there is NONE at this time, NOT EVEN CLOSE, especially China, which is a scary black box, and the EZ is FAR FAR FAR closer to dissolving than the USA is to imploding.
The USA is still the safest large market, and all the competitors that were promising are self-destructing, making the USA EVEN MORE of a go-to for capital seeking safe returns.
Based on history you are absolutely wrong. Collapses begin slowly at first and then very rapidly following an exponential line. The FED balance sheet has already gone exponintial and you will soon see the results whether you like it or not.
Yes, as I wrote, slowly for at least the next 50 to 60 years, then maybe quickly as you theorize.
Money converted into gold is losing value until then because gold needs either hyperinflation or crisis to rise in price, and the global market has ABSOLUTELY CLEARLY UNAMBIGUOUSLY signaled that there is NO hyperinflation and NO crisis within any timeframe that justifies burying money in shiny lead coffins.
It is not gold wacko's predicting the dollar colapse, it's history and wild debt spending of the looney government.
It may well happen - 50 years from now - but not next year.
And next year the Yellowstone super volcano may erupt destroying the entire USA
And next year the San Andreas fault could have a massive slide that destroys most of the western part of California
And next year a comet or asteroid may impact the earth and destroy ALL life
yada yada yada
InnV - Your missing something. Manufacturing. The US was the powerhouse after WW2. That is now China. But they arent ready for prime time just yet. This looks a lot like 1932 and the transition of GCR from Britain to US . But there seems to be some promises made and broken which I can only sense the outline of like playing connect the dots. If I remmber my history the US had a massive restructure in 1955-56. Very sharp recession in 56 but just going memory could be off a year.
While such a restructure will do doubt happen again the US doesnt have all the marbles this time around. While I do see a lot of self recognition of issues, implementation is another story. The economy is going to finish rolling over. I view gold as a long term buy and hold, a decade at that. There is money to be made in business and I see that in small business that survived the turmoil. Still, that is easier said than done as my mentor is discovering when trying to acquire such.
The world is better off without a currency peg but implementation takes time, people generally go with the devil they know.
I'll bet you anything you want that the same thing was said in 1928.
Your one finger pointing at 'gold whackos' for predicting this or that into the following year, has your remaining (4) fingers pointing right back at YOU. Simply observe your last (3) posts for the content. How in the Bloody Hell can YOU 'predict' any better, the fate of the $USD - years in advance no less, than a whacko gold bug predicting hyperinflation 1 or 2 years into the future...? Shit dude, at least think a couple of steps ahead before making yourself look the fool.
I can very safely forecast that there is no hyperinflation coming for years because there is NO transmission path for hyperinflation - the excess money that the FED has created is walled off from the economy behind the loan departments of the banks that hold the reserves - the money has to be LOANED out, not given out freely, AND there is a HUGE oversupply capacity of commodities, materials, manufactured consumer goods, etc.
IF the FED was distributing newly created money directly to people who would go spend it, then there definitely would be a huge surge in inflation, as there was during the Weimar republic when the created Marks were actually distributed directly into the European economy.
What we will experience is economic debt bubbles that burst periodically, ie sub-prime auto loans, student loans, oil & gas industry loans, etc - BUT NOT treasury debt. There is far too great a need for holding treasuries and far too many buyers, including central banks, commercial banks, retail banks, insurance companies, pension funds, etc, etc, etc.
I can very safely forecast that there is no hyperinflation coming for years because there is NO transmission path for hyperinflation What we will experience is economic debt bubbles that burst periodically, ie sub-prime auto loans, student loans, oil & gas industry loans, etc BUT NOT treasury debt. There is far too great a need for holding treasuries and far too many buyers
So what happens if those buying US dollars decide to go with the yuan instead? Why is there far too great a need to buy ZIRP, bullshit treasuries from a bankrupt country? What makes US dollars so much more intrinsically valuable than Chinese Yuan?
Because:
1. China does not have the capital market infrastructure necessary to depose the USD.
2. China is EVEN MORE "bankrupt", ie overloaded with debt than the USA.
3. China is opaque and heavily directly manipulated internally, as all the recent interventions by the Chinese regime in the Chinese markets and banking sytem in the very recent past have revealed, so big players in the financial world are NOT going to risk their capital in China's corrupt unknown system vs the USA's corrupt known system.
4. Chinese regime imposes capital controls on a whim, which guarantees that big players in the financial world are NOT going to risk getting their capital locked up in China's weather-vane driven capital tarpit.
Are you Martin Armstrong?
EVERYTHING you're writing about is a quasi-stable equilibrium and you left out that the FED is still not getting the inflation they want to see. So, a direct helicopter drop to the economy is the NEXT step.
Further, as banking becomes more precarious with more and more bad debt, the banks wiil have to loan out their reserves faster and faster to keep payments and interest cash flow up.
Finally, when treasury notes go NIRP, the game does change.
I haven't even brought up the high likelihood of hot war among superpowers and it's effect at nudging these quasi-stable eqiilibriums.
Look, much of your reasoning is pretty compelling, but you think it's bulletproof and it sure isn't.
There's an old book that a lot of people used to read that talks about nations falling "in a day". Don't think it can't happen.
Yes, I agree that my analysis and predictions are based upon current actual conditions.
I also agree, as I wrote in my post, that if the FED or Congress did start to distribute money in large amounts directly to individuals to spend immediately, then that would increase the money supply and velocity and there would be an increase in the inflation that the FED has been looking for - but they are not even close to implementing any of those direct monetary fuel injection programs yet.
If non-performing loans do increase substantially, then there are many ways for banks, Congress and the FED to manage that problem without necessitating a surge in money supply and velocity and FED's inflation gauge, eg consolidating NPLs in a bad bank where they are written down and sold off to distressed-debt private capital investors, hedge funds, etc, which is not good for gold.
If the FED does implement NIRP, as in many countries in Europe, there still will not be a surge in money supply, velocity and FED's inflation gauge, as in Europe, where in spite of NIRP there is still deflation, which is bad for gold.
The only things that are going to result in a surge in the demand and price of gold are:
1. Hyperinflation - world is clearly going in the opposite direction
2. Economic and financial crisis, maybe war involving USA, Russia, China, or civil war in Saudi Arabia, or many other things that we could speculate are possible, BUT none of these is showing any signs of inevitability at this time.
This just is not the time for gold. If the world plunges, then it would be, but the world is not plunging, only messy, as it has always been and always will be.
Prices in all currencies fall during times of falling demand for goods and services. Both gold and the dollar are money. They will both command more goods during periods of price deflation.
Safe haven flows may be smiling on the dollar more strongly than gold right now as dollars rise in value faster than gold, but once such flows peter out and the dollar and gold are each independently measured against goods and services, gold will be immune from the money supply inflation effects the dollar has to suffer on an ongoing basis as the fed prints. So on a relative basis, gold should outperform the dollar during economic contraction.
The helicopter drop has been happening FOR DECADES.
The US gov spends up to a trillion more than it receives in taxes. Most of that is debt purchased by the fed. When it is spent, this is helicopter drop money.
If they stop doing that, probably 20 million "fake" jobs are lost immediately. The US "goes Greece".
But the regime is NOT going to stop the tsunami of entitlement programs. In fact, the regime has been expanding existing entitlement programs AND adding new entitlement programs, eg obamacare. After the hillary witch gets into the White House and the socialist coercive collectivists take over Congress again, there will be a whole new tsunami of entitlement programs. The Treasury will continue to sell debt, the global market and the FED will continue to buy that debt, and there will still not be a surge in inflation or the demand and price of gold.
The USA still has ENORMOUS capacity to add additional debt, and many more schemes, tricks and financial engineering gimmicks to keep that additional debt from crashing the system. The USA is a very long way from crashing, unless there is a major destabilizing event, eg major terrorist attacks that cause big financial market selloffs and big decline in the economy.
I understand your point. I am frustrated too with the endless drum beating and the sky is falling articles. If you predict rain in the desert, long enough, it will rain. So, I chose to read and listen to ZH as one scource of information and many times, dis-information. You can chose to believe what ever you want. Someday, one of us will be right.
So confusing one economist says USD going to 120 this gold salesman says it has topped and going lower. My dollar in the real world seems to buy a lot less and my gols sure is worth alot less. I really dont get this game thats being played but I do know down here in the middle of it all this SUCKS
Patience grasshopper, your masters will sort it out for you. And if you remain obedient and alive after their great transition is acheived they will tell you what to do and where to pay your audited dues.
Saying it sucks means to me that you are impatient. Do you have a comfortable life or not? If so sit back and relax or if not go out and be a martyr for justice. Just remember that Asians are patiently waiting for you to give up your stack in frustration so they can hold on to it for generations.
@ Bossman
I think you just described perfectly, what "devaluation" feels like. Where are the exits to this runaway train?
no
Michael Pento has a better explanation for dollar strength vs gold weakness. When Draghi prints money (or talks about it) the USD rises relative to the Euro and algos automatically dump gold since that's the program for a perceived dollar rise even though gold has nothing to do with USD vs Euro relative strength in the basket of IMF currencies.
By the way the SDR is valued at $1.36 USD. Check this job posting with wages in SDR and FJD.
http://www.ppa.org.fj/wp-content/uploads/2015/09/070915PIFS-Advert-Senio...
You wanna know why the dollaris high? Jim Willie has been predicting it and telling why for a couple years now. One of his many spot on predictions. Just go to his website and listen to any recent interview.