SWOT Analysis: How Will Gold Move Into 2018?

The best performing precious metal for the week was palladium, off 1.44 percent for the week. Citigroup favors palladium in the short term, in response to pollution control, but says substitution risks prevent the bank from taking a more bullish view long term as the price of palladium is now higher than the price of platinum. After the Indian government eased rules on gold purchases, the country’s demand for gold jewelry and branded coins appears to be better than the last quarter, according to P. R. Somasundaram, MD for India at the World Gold Council. The ensuing wedding season is the key for quarterly demand performance, Bloomberg reports, and with a good monsoon season, stable gold prices should encourage consumers. In the month of September, Swiss gold exports doubled month-over-month to 148.4 metric tons, reports Bloomberg. In August, exports were only 72 tons, according to the Swiss Federal Customs Administration. Specifically, Swiss exports to China rose 21 percent and to Hong Kong rose 92 percent. Weaknesses
The worst performing precious metal for the week was platinum, off 2.41 percent as palladium seems to be the more crowded trade. September makes 11 months straight of China officially reporting a zero increase in the level of its gold reserves, writes Lawrie Williams. The only time in recent years that the Asian nation has published any month-by-month gold reserve accumulations was in the 16 months ahead of the yuan being accepted as an integral part of the International Monetary Fund’s (IMF) Special Drawing Rights basket of currencies, Williams continues. ‘We don’t think it coincidence that such month-by-month reporting effectively ceased once the yuan became part of the SDR, thus paving its way for acceptance as a reserve currency,’ the article reads.

This post was published at GoldSeek on 23 October 2017.

“Dear President Trump: America Is In For A Rude Awakening In January”

Dear President Trump,
Over the last couple of years I’ve been all over TV… from Fox News to CNBC, CNN and Bloomberg. I’ve been telling our fellow Americans that the financial global elite was planning to issue their own globalist currency called special drawing rights, or SDRs.
And that those elites would use this new currency to replace the U. S. dollar as the global reserve currency.
I’ve even written about this extensively in my best-selling books The Road to Ruin and The New Case for Gold.
I’m sure some people in the mainstream media thought I was out of line – but the United Nations and the International Monetary Fund (IMF) have both confirmed this plan to replace the U. S. dollar is real. I’ve made this warning many times, but it seems to be falling on deaf ears. That’s why I’m writing directly to you.
Here’s the proof that the U. S. dollar is under attack, right in front of our eyes:
The UN said we need ‘a new global reserve system… that no longer relies on the United States dollar as the single major reserve currency.’
And the IMF admitted they want to make ‘the special drawing right (SDR) the principal reserve asset in the [International Monetary System].’

This post was published at Zero Hedge on Sep 10, 2017.

The Globalist One World Currency Will Look A Lot Like Bitcoin

This week the International Monetary Fund shocked some economic analysts with an announcement that America was “no longer first in the world” as a major economic growth engine. This stinging assertion falls exactly in line with the narrative out of the latest G20 summit; that the U. S. is fading away leaving the door open for countries like Germany and China to join forces and fill the power void. I wrote about this rising relationship between these two nations as well as the ongoing controlled demolition of America’s economy in my article ‘The New World Order Will Begin With Germany And China’.
I find it interesting that the IMF is once again taking the lead on perpetuating the image of a failing U. S., just as they often push for the concept of a single global currency system to replace the dollar as the world reserve. The most common faulty counter-argument I run into when outlining the globalist agenda to supplant the dollar with the Special Drawing Rights basket system is that “the IMF is a U. S. government controlled organization that would never undermine U. S. authority.” Obviously, the people who make this argument have been thoroughly duped.
The IMF is constantly and actively undermining America’s economic position, because the IMF is NOT an American controlled organization; its loyalty is to globalism as an ideology as well as the international financiers that dominate central banking. America’s supposed “veto power” within the IMF is incidental and meaningless – it has not stopped the IMF from chasing the replacement of the the dollar structure and forming the fiscal ties that stand as the root of what they sometimes call the “global economic reset.”

This post was published at Alt-Market on Thursday, 27 July 2017.

5 Things We’ve Learned Since China Entered the World Money Basket

Beginning in October of last year, China’s renminbi was added to the International Monetary Fund’s currency basket known as the Special Drawing Rights, or SDR.
The IMF, founded after Bretton Woods, established the SDR to be its own international reserve asset – what many have identified as world money.
Prior to Chinese inclusion, the elite currency basket was calculated with the U. S dollar, Euro, Japanese yen and British pound sterling. While China joining the SDR may have been largely status-driven at the time, the yuan and the Chinese economy have become open to heightened concern.
Significant worries over debt, wasted investments and threats of sweeping deflation left macroeconomists seeing a Chinese financial crisis on the horizon. Financial commentators ranging from hedge fund manager Kyle Bass to economist Jim Rickards highlight that the Chinese economy is on a dangerous course.
So what does that mean for China and its inclusion with the SDR’s world money basket?
Here’s five things we’ve learned from the Chinese entrance into world money:
1. October 2017 is Crucial
This October, the 19th National Congress of the Communist Party of China will be held. Thousands of lawmakers will gather in Beijing for the Congress. The Chinese Communist Party (CCP) does hold ultimate power, but certain influencers are beginning to rise.

This post was published at Wall Street Examiner on June 26, 2017.

China’s ‘official’ gold reserves unchanged for 7th straight month — Lawrie Williams

Latest reports from the People’s Bank of China for May indicate that the World’s No. 2 economic power has kept its official gold reserve unchanged – at 59.24 million ounces (1,842.6 tonnes) – for the seventh successive month. Indeed China’s officially reported gold reserves have remained unaltered since the Chinese renminbi (or yuan) was confirmed as an integral part of the IMF’s Special Drawing Right (SDR) back in October last year. Currently the Chinese currency accounts for 10.92% of the basket of currencies which make up the SDR – the others are the US dollar 41.73%, the Euro 30.93%, the Japanese yen 8.33% and the pound sterling at 8.09%.
The IMF notes on its website that the SDR was created in 1969 as a supplementary international reserve asset, in the context of the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves – government or central bank holdings of gold and widely accepted foreign currencies – that could be used to purchase its domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets – gold and the US dollar – proved inadequate for supporting the expansion of world trade and financial flows that was taking place. Therefore it was decided to create a new international reserve asset under the auspices of the IMF.
Although the idea was to create a new reserve currency as defined by the SDR basket, the composition of which is reviewed every five years, the inclusion of a currency in the basket does lend a degree of acceptance as a potential reserve currency in its own right, which is presumably why China was so keen for the renminbi to become part of the SDR basket. To help achieve this the Chinese central bank began to announce monthly additions to its gold reserves in the interests of transparency. Prior to that it had only announced its gold reserve increases at five or six year intervals saying that this additional gold, which it then moved into its official reserve, had been held in accounts which were outside the purview of its gold reserve reporting to the IMF.

This post was published at Sharps Pixley

World Money: Five Hidden Signals From The IMF

Less than a month ago a handful of the world’s policy makers gathered in Washington at the International Monetary Fund (IMF), no surprising headlines were run – but an obscure meeting and a discreet report launched exclusive signals for the next global economic crisis.
The panel, which included five of the most elite global bankers, was held during the IMF’s spring meetings to discuss the special drawing rights (SDR) 50th anniversary. On the surface the panel was a snoozefest, but reading beyond the jargon offers critical takeaways.
The discussion revealed what global central banks are planning for a future crisis and how the IMF is orchestrating policy for financial bubbles, currency shocks and institutional failures.
Why the urgency from the financial elites?
In theApril 2017 ‘Global Financial Stability Report,’ IMF researchers targeted the U. S corporate debt market and how extreme changes in its equity market has left the global economy at risk. While the report may have been missed by major financial news outlets, it was enough to give major concern to those paying attention. The IMF research report noted:
‘The [U. S.] corporate sector has tended to favor debt financing, with $7.8 trillion in debt and other liabilities added since 2010…’
In another segment the IMF report said:
‘Corporate credit fundamentals have started to weaken, creating conditions that have historically preceded a credit cycle downturn. Asset quality – measured, for example, by the share of deals with weaker covenants – has deteriorated.’

This post was published at Zero Hedge on May 18, 2017.

State Department memo explains U.S. policy to drive gold out of the financial system

A long memorandum written in March 1974 by a U.S. State Department official for Secretary of State Henry Kissinger and copied to future Federal Reserve Chairman Paul Volcker, then the Treasury Department’s undersecretary for monetary affairs, describes the desire of the United States and its options to prevent European countries from increasing the use of gold in the international financial system.
The memo, titled “Gold and the Monetary System: Potential U.S.-E.C. Conflict,” was recently discovered in the State Department archive by GoldMoney Vice President John Butler and brought to GATA’s attention this week by GoldMoney research chief Alasdair Macleod. It emphasizes the longstanding U.S. government policy of subverting gold as a reserve currency in favor of the Special Drawing Rights issued by the International Monetary Fund, an agency then and now largely controlled by the United States.
The memo’s author, Sidney Weintraub, deputy assistant secretary of state for international finance and development, wrote:
“To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market.”
“An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders or by other agreement.”

This post was published at GATA

China and India step up to the gold demand plate — Lawrie Williams

As always appears to be the case, statistics on gold demand can be contradictory which is perhaps why gold’s fundamentals are so difficult to tie down. Take the World Gold Council (WGC)’s latest Gold Demand Trends report which suggests global gold demand fell by 18% (228 tonnes) during Q1, compared with the admittedly very high (record) figures achieved in Q1 2016. But within the report there do appear to have been some major anomalies.
Firstly, the slump in assessed demand was largely for two reasons – sharply reduced gold ETF inflows and a fall in Central Bank gold reserve increases. But, it should be noted, that gold inflows into the ETFs did remain positive over the quarter and the Central Bank figures were skewed by China’s non reporting of any gold reserve changes since its currency was accepted as part of the IMF’s Special Drawing Rights (SDR) in October last year. In Q1 2016, China had announced additions of 35.2 tonnes to its official reserves – some 15% of the fall in assessed gold demand during the latest quarter. If one takes China out of the equation other Central Bank gold additions came to a positive 7.4 tonnes – and on its reserve reporting track record China’s zero reserve addition figure has to be considered suspect.
Coming back to Central Bank shortfalls, can we believe the China figures at all? One should recall that up until July 2015 China only reported any reserve increases at five of six year intervals maintaining the pretence that it was not adding to its reserves monthly, as it obviously was. But, in the immediate run up to the IMF decision to re-jig its SDR make-up to include the yuan, the Asian nation began announcing monthly reserve increases. Once the yuan officially became a part of the SDR, China has reported zero gold reserve increases. Can this just be coincidence?
China is known to favour building its gold reserve as an important facet of securing its place in the global trade picture and its whole gold reserve adding policy has always been shrouded in secrecy. Some China-watching analysts will argue that, in fact, its real gold reserve is far higher than the officially stated figure of 1,842.6 tonnes. After all it has been the world’s largest gold producer for some years now.

This post was published at Sharps Pixley

Rickards: We Are Positioned for Systemic Crisis

Jim Rickards joined Keith McCullough on HedgeyeTV to discuss the economy, his book Death of the Dollar and the systemic crisis risk in the market. Jim Rickards candidate interview on HedgeyeTV is truly a no-punches held back session of economic focus and uncovers what to expect in the future for finance.
When Keith McCullough jumped into the question and answer segment, he began by asking about Rickards recent conversation with former Treasury Secretary Timothy Geithner. Rickards explained, ‘My question to him was, if there was an economic crisis tomorrow – what would the policy response be? Would the government simply go up to eight or twelve trillion on the balance sheets for the Federal Reserve? Would they turn to the International Monetary Fund and the special drawing rights (SDR)? The IMF has a clean balance sheet, they’re leveraged three to one and could print a couple trillion SDR’s. They could just flood the market with those. Geithner surprised me and said neither. That really surprised me coming from someone that worked at the IMF and is one of the few people that truly understands the SDR system.’

This post was published at Wall Street Examiner on April 24, 2017.

China Q1 gold demand 7.7% Up On 2016 — Lawrie Williams

While the detailed Shanghai Gold Exchange (SGE) Monthly Report figures on its website still seem stuck on the February figures (released on March 7), trawling elsewhere through the site suggests that the March withdrawals figure actually came through at 192.25 tonnes and totalling up the reported year to date figures show that Q1 withdrawals totalled 555.9 tonnes – some 7.7% up on the 2016 Q1 figure, although still 11% behind that for the record 2015 calendar year.
While China’s gold demand as expressed by SGE withdrawals may be up on that of a year ago, it is early days yet for 2017 and it should be recalled that Chinese gold demand was probably at its lowest for four years in 2016, and way below that of the record 2015 year. There are, however, also a number of other factors out there – not least a potential for economic conflict – or even, but probably unlikely, military conflict – between China and the USA over a number of flashpoints such as trade equality, North Korea and the South China Sea any of which could affect gold demand positively.
Whether SGE gold withdrawals should be equated to the real gold flows into China remains a contentious point. As we have pointed out here beforehand the withdrawals data as reported appears to offer a far closer correlation to the sum of Chinese gold imports plus domestic gold production and an estimate of scrap recycling than some of the estimates of demand produced by independent specialist consultancies. In part this divergence of estimates tends to relate to how Chinese demand is calculated, with the consultancies tending to dismiss gold going into the financial and banking sectors. None of the figures take into account anything that may, or may not, be being absorbed by the government for the nation’s gold reserves. Officially these have not increased for the past five months, but doubts are being raised again as to whether China is again hiding gold reserve additions in separate accounts now that the nation has achieved its aim of having the Yuan (Renminbi) incorporated as an integral part of the IMF’s Special Drawing Rights.

This post was published at Sharps Pixley

The Real Dangers Behind The Syrian Crisis Are Economic

Back in 2010/2011 when I was still writing under the pen-name Giordano Bruno, I warned extensively about the dangers of any destabilization in the nation of Syria, long before the real troubles began. In an article titled Migration Of The Black Swans, I pointed out that due to Syria’s unique set of alliances and economic relationships the country was a ‘keystone’ for disruption in the Middle East and that a ‘revolution’ (or civil war) was imminent. Syria, I warned, represented the first domino in a chain of dominoes that could lead to widespread regional warfare and draw in major powers like the U. S. and Russia.
That said, my position has always been that the next ‘world war’ would not be a nuclear war, but primarily an economic war. Meaning, I believed and still believe it is far more useful for establishment elites to use the East as a foil to bring down certain parts of the West with economic weapons, such as the dumping of the U. S. dollar. The chaos this would cause in global markets and the panic that would ensue among the general public would provide perfect cover for the introduction of what the globalists call the ‘great financial reset.’ The term ‘reset’ is essentially code for the total centralization of all fiscal and monetary management of the world’s economies under one institution, most likely the IMF. This would culminate in the destruction of the dollar’s world reserve status, its replacement being the IMF’s Special Drawing Rights basket currency system.
Eventually, the SDR basket system would act as a stepping stone towards a single global currency system, and its final form and function would probably be entirely digital. This would give the globalists TOTAL push-button control over even the smallest aspects of normal trade. The amount of power they would gain from a single centralized digital currency system would be endless.

This post was published at Alt-Market on Wednesday, 12 April 2017.

China may have suspended gold reserve reporting — Lawrie Williams

The Chinese central bank, the People’s Bank of China (PBoC), has reported yet another month of zero additions to its gold reserves for March this year – the fifth month in a row of official zero purchases, leaving Russia as comfortably the largest official purchaser of gold. In our opinion the Chinese position – it had supposedly been reporting monthly additions to its gold reserves from July 2015 – could well be more smoke and mirrors. It has a track record of only announcing gold reserve increases at five or six year intervals until it started publishing its monthly additions 20 months ago. Interestingly the zero monthly reports have only come about since the Chinese yuan (reminbi) was accepted as a constituent of the IMF’s Special Drawing Rights (SDR) in October. Could it be that the country has again reverted to its old secretive system of non-reporting of gold reserve increases until it feels it is politically expedient to do so – and even then no-one could be sure that the officially reported figures were in any way a true picture of the nation’s total gold holdings.
Officially Chinese central bank gold holdings as reported to the IMF total 1,842.6 tonnes. A number of observers reckon they may well be two or three times that number, or even more, and will only be made known when they exceed the US reported holding of 8,133.5 tonnes. Supposedly the US figure represents 74% of the nation’s foreign exchange reserves, whereas the Chinese figure is only around 2% of its forex reserves. The theory is that China sees gold’s role in the new world order, as the yuan gets to compete with the dollar as a global reserve currency, as being particularly important and thus needs to build its gold reserves accordingly.
In the second half of 2015, China reported additions to its gold reserves totalling 89.9 tonnes and in the first ten months of 2016 an additional 75.3 tonnes, although the reported monthly additions had been falling back quite sharply from January. But as the world’s largest gold miner, with an estimated output last year of a little over 460 tonnes according to Metals Focus, the central bank could easily have purchased over 400 tonnes without impacting on its liquid currency and bond holdings. Given its past practices of hiding its gold holding additions in separate non-reported accounts, small wonder doubts are being cast on its latest figures. Indeed even its monthly-reported figures from July 2015 are seen as suspect too.

This post was published at Sharps Pixley

Rickards: The Next Crisis Is Coming, and a New World Government May Come With It

Global authorities are already planning for the next major crisis and, depending on its severity, are likely to respond with bail-ins, confiscations of wealth, and a new global currency backed by the IMF, says Jim Rickards in his new book, The Road to Ruin: The Global Elite’s Secret Plan for the Next Financial Crisis.
In a recent 40-minute interview with Financial Sense Newshour, Rickards explained many of the key ideas presented in The Road to Ruin including his thoughts on when the next crisis may hit.
The IMF Will Step In
The next crisis will be the third since 1998, Rickards noted. In 1998, Wall Street bailed out a hedge fund. In 2008, central banks were forced to bail out Wall Street.
‘In 2018, if not sooner, who’s going to bail out the central banks?’ he said.
Enter the International Monetary Fund.
The IMF is only levered 3-to-1, he said, while the Federal Reserve is levered 103-to-1. The IMF can print money, known as Special Drawing Rights, and that’s what Rickards expects will happen in the next major downturn.

This post was published at FinancialSense on 11/17/2016.

World Suffers From Trump Shell Shock – Here’s What Will Happen Next

I’ve been saying this for a long time, and I’ll say it again here – in life there are only two kinds of people: those who know and those who don’t. Some might claim there is a third option: those who don’t want to know. In any case, if you want to be able to foresee geopolitical and social trends, you have to be one of the people who know.
Above all else, in order to know you must be willing to step outside of the confusion and theater of the circus and look at developments from above. If you are biased and retain too many sacred cows you will never understand how the world works. You will be too busy trying to reinforce your own fantasies to see anything else.
Beyond this, you must also understand that political and social developments are not random; they are either reactions to deliberate policies of special interests or they are driven by policies of special interests. Therefore, these developments are predictable and can be calculated (to a point).
I usually refer to these ‘special interests’ as global elites, or globalists, because that is how they often refer to themselves. The point is, most of the events you see in the political world are engineered events designed to elicit a specific psychological response from you and the people around you. You are not a human being to these people; you are either an asset to be molded or an obstacle to be disposed of. This is how our world works. Period. And until we fully understand this and accept it, things will never change.
So, to be clear, if you understand the minds of globalists and understand what they want, you can understand the basic direction of the future.
It is this philosophy which has allowed me to consistently and accurately predict geopolitical and economic events that very few other people have been able to predict. For example, I correctly predicted the Federal Reserve taper of QE, I predicted the inclusion of China in the IMF’s Special Drawing Rights years in advance, I predicted the exact timing of the first Fed rate hike, I predicted the success of the Brexit referendum when most of the world and the liberty movement said it was never going to happen, I predicted that the Saudi 9/11 bill would pass, that Barack Obama would veto it and that congress would override his veto, I predicted that Hillary Clinton would be the Democratic candidate and that Donald Trump would be the Republican candidate for president of the U. S. and, for the past five months, I have been predicting that Donald Trump would win the 2016 election.
People can either attribute these series of successful predictions to pure ‘luck,’ or they can consider the possibility that I know what I am talking about. I’ll leave that to them.
The real issue, though, is not that my predictions were correct. What is more important is WHY they were correct. To begin with, I am often correct because it is a fact that globalists influence events. Globalists are human (at least partially); thus, they are predictable, making events predictable. If you can see from the perspective of a globalist, you will know what they want and what they are likely to do to get it.

This post was published at Alt-Market on 16 November 2016.

China Moves Forward with Its De-Dollarization Strategy

The world monetary order is changing. Slowly but steadily, global trade and currency markets are becoming less dollar-centric. Formerly marginal currencies such as the Chinese yuan now stand to become serious competitors to U. S. dollar dominance.
Could gold also begin to emerge as a leading currency in world trade? Over time, it certainly could. But the more immediate implications for gold’s monetary role center on its increasing accumulation by central banks such as China’s.
As of October 1st, the Chinese yuan has entered the International Monetary Fund’s Special Drawing Right (SDR) basket of top-tier currencies. It now shares SDR status with the U. S. dollar, euro, British pound, and Japanese yen.
Before the yuan officially becomes an SDR currency, the World Bank intends to sell $2.8 billion in SDR bonds in Chinese markets. The rollout of SDR bonds in China began August 31st. According to Reuters, China’s promotion of SDR bonds ‘is part of a wider push in China to… boost demand for Chinese yuan and diminish reliance on the U. S. dollar in global reserves.’
King Dollar won’t be dethroned overnight. But the place of prominence the U. S. dollar enjoys as the world’s reserve currency will indeed diminish over time.

This post was published at Ludwig von Mises Institute on 10/21/2016.

Standard Chartered Becomes First Commercial Issuer Of SDR Bonds In China

On August 31, in what was dubbed a “historic event”, the World Bank became the first issuer of bonds denominated in SDR and settled in yuan when it sold 500 million SDR units worth of bonds in China. Then, overnight, in yet another historic event, Standard Chartered Bank (Hong Kong) said on Friday that it has obtained approval from the People’s Bank of China to be the first commercial issuer of bonds denominated in Special Drawing Rights (SDRs) in China’s interbank bond market.
According to Reuters the size of the issuance programme is 100 million SDRs – approximately 925 million yuan, or $139 million – and the bonds will be settled in yuan.
A successful offering would mark the first ever time a commercial issuer has issued securities have been issued in the synthetic reserve currency in 35 years.

This post was published at Zero Hedge on Oct 14, 2016.

What the Heck’s Going on with the New Global Reserve Currency, the Chinese Yuan?

A ‘structural change’: capital flight in yuan.
The Chinese yuan fell to 6.722 to the US dollar currently, the weakest since September 2010. It’s down 3.3% so far this year. OK, a squiggle compared to the wholesale drubbing the UK pound has been taking since the Brexit vote, but there’s a difference: the yuan gets managed with an iron fist.
Some folks interpret this to mean that the People’s Bank of China has been weakening the yuan to gain some trade advantages and revive the export boom and kick economic growth back into gear. But evidence is piling up that the PBOC instead has been trying to slow down the yuan’s descent.
And this happened just days after the yuan joined the IMF’s special drawing rights (SDR) basket of reserve currencies, a huge milestone for the Chinese government that has been laboring on the internationalization of the yuan for years, mostly in tiny baby steps.
But the yuan is up against the mega-problems in China’s debt plagued economy, and it’s pressured down by enormous and, it turns out, not officially disclosed capital outflows.
‘If that trend persists, expect further yuan weakness versus the greenback,’ wrote Krishen Rangasamy, Senior Economist Economics and Strategy at the National Bank of Canada.

This post was published at Wolf Street by Wolf Richter ‘ October 11, 2016.

Op-Ed: Yuan Internationalization Will Lead to Growth for Bitcoin

On October 1 of this year, the IMF added the Chinese Yuan (CNY) to the Special Drawing Rights basket of currencies. Only Big Boy currencies are included, and now China is part of the club: USD, GBP, JPY, EUR and now CNY make up the basket.
The IMF could not ignore the currency of the world’s second largest economy. In order to be considered, China pledged to speed up the internationalization of the CNY. That meant gradually opening up its capital account, and gradually allowing the market to determine the value of the CNY.
China isn’t one to follow diktats of foreign countries to the letter, but Beijing recognizes that the Yuan’s addition to this symbolic basket is one step further toward legitimizing their economy and the methods by which they manage it.

This post was published at Bitcoin Magazine on Oct 07, 2016.

The Federal Reserve Note “Dollar” Is Indeed Dying, but Not Next Week

Some say the U. S. dollar may die 5 days hence. The Chinese renminbi will kill it. Much is being made of plans by the International Monetary Fund (IMF) to add the renminbi to its basket of strategic reserve currencies called Special Drawing Rights (SDR). The IMF will make the change on October 1. While the implications for the Federal Reserve Note, currently the U. S. dollar, as the world’s primary reserve currency may be profound over time and the importance of this even should not be overlooked, the impact is unlikely to happen overnight.
The composition of the SDR may change on October 1, but few people understand what the SDR is. Even fewer actually have any experience trading it. For the many who wonder what an SDR is, here is a brief description from the IMF;
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. As of March 2016, 204.1 billion SDRs (equivalent to about $285 billion) had been created and allocated to members. SDRs can be exchanged for freely usable currencies. The value of the SDR is currently based on a basket of four major currencies: the U. S. dollar, euro, the Japanese yen, and pound sterling. The basket will be expanded to include the Chinese renminbi (RMB) as the fifth currency, effective October 1, 2016.
The IMF actually decided to make October 1st’s changes to the SDR one year ago. Some expected that decision would represent the death knell for the dollar. But when the announcement came, the currency markets hardly noticed.
Mass psychology – or relative confidence – is what ultimately determines whether or not a dollar holds value. Not much will happen October 1st if not many people care.

This post was published at GoldSeek on 27 September 2016.

Is China trying to stabilize the gold price? — Lawrie Williams

It has been noticeable in the past few trading days that the overnight gold price benchmarks set on the Shanghai Gold Exchange (SGE) have been tending to set the metal price higher than the New York close. This has resulted in a stronger opening in Europe, with the price being gradually brought down in London and New York throughout the day, leaving gold little changed overall. But is this a sign that the Chinese are beginning to play the gold card to try at least to stabilize the price, and if so could they then start to push it up as and when it suits them?
The SGE is a division of the People’s Bank of China (PBoC) – the Chinese central bank- which is not an autonomous unit like some western central banks purportedly are, but part of the Chinese government’s machine, so it is not unreasonable to suggest that there may be a degree of influence being exerted on the SGE gold price benchmark levels, as is the nature of Chinese government tactics in many areas. China is the world’s largest gold producer with an annual output of around 450 tonnes and the fifth largest national holder of gold in its reserves, although many analysts and China-followers believe its total gold holdings are far higher than the levels it reports to the IMF on a monthly basis. It also has been successfully encouraging many of its citizens to buy gold as an investment for some years now. Thus the gold price is important to China both in terms of its national economy, the overall value of its gold and foreign currency reserves and in keeping its middle (spending) classes happy – and consuming – as it seeks to transform its economy from being export-driven to being domestic consumption-driven.
With the Chinese yuan set to become an integral part of the IMF’s Special Drawing Right (SDR) in just three weeks’ time, China is becoming increasingly involved in the internationalization of its currency in global trade and as a possible reserve unit. It thus feels that a strong gold holding and value would enhance its position in achieving this goal.

This post was published at Sharps Pixley