Inflation, deflation, gold and currencies

[biffbifford]

Very interesting!

US Dollar as the Sole, Global Reserve Currency to End!

Of considerably more importance is the impact on global foreign exchanges and the role of the U.S. dollar as the world's sole global reserve currency. For more than two years now Gold, Silver Forecaster have been predicting that the day would come when Chinese exporters/importers would offer and bid prices for goods in the Chinese Yuan. Well it has arrived, albeit confined to Asian trade at the moment.

As of now, $350 billion in global trade will disappear, replaced by Yuan/Yen trade. Where will these dollars go? Over time they will be sold off and head home through a falling exchange rate. That's why we'll see the Yuan appreciate, but only initially, as the Chinese ensure that demand is met by foreign sales of Yuan for non-U.S. currencies.

As time passes the process of the internationalization of the Yuan will primarily be at the expense of the dollar. At some point in this process, the rise of the Yuan and the fall of the dollar from its throne will become visible on foreign exchanges and in the financial picture inside the U.S.A. and Europe. At best, we'll see the Yuan join the world's current leading currencies in global trade, but rising in the future to potentially the prime global, reserve currency at worst.

But this process could take more than five years or less if the Chinese government pushes it hard.

The consequential pressures on the global currency system, which presently is dependent on the U.S. dollar for its credibility, will undermine the entire global monetary system. When control of the monetary system was entirely in the hands of the developed world, both sides of the Atlantic, gold could be side-lined. But with this new Chinese empire, the new currency bloc has divergent interests from the developed world.

The developed world is seeing the beginning of its loss of control over gold!

Asia, as well as emerging nations worldwide, have seen the importance of gold in their reserves and continue to press for an increase in their holdings - almost preparing for the day when global cooperation is reduced by trade wars, protectionism and the like. The spectre of a world split into two financial and trading parts is now in front of us. While this is still in the future, it's a visible probability. In such a financial climate, consistent with its history, gold being independent of national obligations and links must return to the system in one form or another. But how?

http://www.marketoracle.co.uk/Article32339.html

[vincecate]

The two deflationist bloggers that I follow are John and Mish. I have often wondered which would be the first to see that hyperinflation is coming. In Mish's blog today he said:

Should populist Ellen Brown get her way, I would have to rethink my US hyperinflation position. Sadly, Brown is another one of those who understands various problems with the Fed, but proposes a solution that is worse, putting state politicians in charge of printing presses.

Such economically insane ideas are much further along in Japan.

http://globaleconomicanalysis.blogspot. ... ogram.html

So my guess is that Mish will switch to the hyperinflation side before John does.

[vincecate]

Higgie, silver is back above $34. It looks to me like if it gets over $36 it will probably go much higher. What do you think?

http://www.silverseek.com/quotes/yearsilver.php

[Higgenbotham]

Higgie, silver is back above $34. It looks to me like if it gets over $36 it will probably go much higher. What do you think?

http://www.silverseek.com/quotes/yearsilver.php

Not sure, but I wouldn't discourage you like I did last Spring. Two things I will say for sure. First I think gold and silver are once again in a position to outperform stocks. For the past few months, the Dow/Gold ratio has risen and I think that little blip is over. Whether that means gold and silver go up in the first half of this year already, I don't know. Second I plan to buy my silver back but haven't yet. Not sure when or for what price.

[richard5za]

Second I plan to buy my silver back but haven't yet. Not sure when or for what price.

Hi guys,
Yes I agree that Silver is showing a buy signal. Here is a weekely chart from stockcharts.com. What price to buy back? Watch the chart is the way I will decide when to sell.
Regards
Richard

Silver.jpg (99.04 KiB) Viewed 4213 times

[richard5za]

Interesting Elliot Wave projection of gold to $ 31 672 per ounce before the crash brings ruin to gold holders. Source: Nick Laird at Sharelynx

goldwave.png (234.76 KiB) Viewed 4177 times

[vincecate]

Interesting Elliot Wave projection of gold to $ 31 672 per ounce before the crash brings ruin to gold holders.

If gold gets to $31,672/oz then I expect we are in hyperinflation and the value of the dollar will go to zero. In this case the price of gold will never crash.

[richard5za]

Looking at the charts, looks like Silver is in for a very nice run. How far is much too early to tell but looks like it might break up through $ 50. Lets see. Having broken through its resistance level I reckon that gold will test its previous peak. Metals are running.

[richard5za]

The idea that silver and gold markets are selling off because Bernanke is holding off QE3 is really 'off beam'. More likely that too many people are holding shorts and a large bear raid knocked metals hoping to salvage a financial mess. I have today seen reports that 225 million ounces of paper silver were dumped on Comex in 30 minutes!! Comex only has about 35 million deliverable ounces of silver!!
What all this does say to me is that daily trading is too dangerous for a non full time, non professional like me, and I will only take medium and long term positions. Here I am seeing strong buy signals for gold and silver.
Richard

[vincecate]

The idea that silver and gold markets are selling off because Bernanke is holding off QE3 is really 'off beam'. More likely that too many people are holding shorts and a large bear raid knocked metals hoping to salvage a financial mess. I have today seen reports that 225 million ounces of paper silver were dumped on Comex in 30 minutes!! Comex only has about 35 million deliverable ounces of silver!!
What all this does say to me is that daily trading is too dangerous for a non full time, non professional like me, and I will only take medium and long term positions. Here I am seeing strong buy signals for gold and silver.
Richard

Before this Bernanke talk there had been several in a row where each time he opened his mouth silver shot up. So it looks to me like I was not the only one expecting him to say, "we will print more money" and cause silver to go up again. The truth is he will print more money. The only way to hold interest rates down near 0% is for the Fed to buy up all kinds of bonds with new money, and Bernanke has promised to keep interest rates down near 0% till the end of 2014. This is QE3, going on already, but as quietly as possible. Eventually inflation will hit bad enough that government stats can not make it look like it is near 2%.

There was some previous hyperinflation (I think a French one) where they had a first issue of currency (like QE1) and that helped some, so later they had a second issue (like QE2), which helped less, then they issued more currency to fund the government but they did it quietly. Later when it was understood that they were still printing like crazy, just not talking about it, people fled the currency. I expect the same thing this time.

John has talked about "1, 2, 3, infinity" and I think that is how quantitative easing works.