The Dollar – King Rat Of Failing Currencies

BY Alasdair Macleod – Re-Blogged From Gold Eagle

The explanation for the sudden halt in global economic growth is found in the coincidence of peak credit combining with trade protectionism. The history of economic downturns points to a rerun of the 1929-32 period, but with fiat currencies substituted for a gold standard. Government finances are in far worse shape today, and markets have yet to appreciate the consequences of just a moderate contraction in global trade. Between new issues and liquidation by foreigners, domestic buyers will need to absorb $2 trillion of US Treasuries in the coming year, so QE is bound to return with a vengeance, the last hurrah for fiat currencies. However, China and Russia have the means to escape this fate, assuming they have the gumption to do so.

Introduction

It may be too early to say the world is entering a significant economic downturn, but even ardent bulls must admit to it as an increasing possibility. Financial analysts, both bovine and ursine, face a complex matrix of factors when judging the future effect of any downturn on currencies, and of the prospects for the dollar in particular.

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Powell’s Testimony & The ECB Meeting?

By Arkadiusz Sieroń – Re-Blogged From Gold Eagle

Powell’s testimony before the Congress is behind us. The ECB meeting is ahead of us. Will Draghi support the gold prices after recent declines?

Gold Falls Below $1,300

Gold bulls might be disappointed. The upward trend apparently ended. As one can see in the chart below, gold fell below $1,300 on Friday.

Chart 1: Gold prices from March 1 to March 4, 2019

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If You Could Design A Perfect World For Gold…

By John Rubino – Re-Blogged From Dollar Collapse

Are you sick of your gold just sitting there when it was supposed to have long since made you rich? Have you been fantasizing about a world in which your gold really does make you rich?

If so you’re in good – or at least numerous – company.

So let’s sketch out such a world.

Start by envisioning an America in which a handful of oligopolies have captured banking, media, healthcare and several other important industries, while a tiny group of super-rich neo-aristocrats control as much wealth as the 200 million least-rich citizens.

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EU Recession Imminent – Euro Disunion As Brexit, Italy And End Of QE Loom

By John Mauldin – Re-Blogged From Gold Eagle

Someone asked recently how many times I had “crossed the pond” to Europe. I really don’t know. Certainly dozens of times. It’s been several times a year for as long as I remember.

That makes me an extremely unusual American. Most of us never visit Europe, except maybe for a rare dream vacation. And that’s okay because our own country is wonderful and has a lifetime of sights to see. But it does affect our perspective on the world.


Graphic: European Central Bank

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Rome vs Brussels

By Arkadiusz Sieron – Re-Blogged From Gold Eagle

Only one digit has changed. But it may have profound consequences, sending the country closer to junk status. Meanwhile, Rome and Brussels clash over budget plan. Will that duel benefit or harm the yellow metal?

Only One Notch Above Being Junk

Italian drama continues. On Friday, Moody’s, one of the most significant rating agencies in the world, downgraded the Italian credit rating from Baa2 to Baa3. It means that Italy’s local and foreign-currency bonds are now only one notch above junk territory. The move was not surprising, as well as the reasons behind this decision:

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Bond Bubble Conundrum

By Michael Pento – Re-Blogged From Silver Phoenix

Wall Street shills are in near perfect agreement that the bond market is not in a bubble. And, even if there are a few on the fringes who will admit that one does exist, they claim it will burst harmlessly because the Fed is merely gradually letting the air out from inside. However, the fact that we are in a bond bubble is beyond a doubt—and given the magnitude of the yield distortions that exist today, the effects of its unwinding will be epoch.

Due to the risks associated with inflation and solvency concerns, it should be a prima facie case that sovereign bond yields should never venture anywhere near zero percent—and in some cases, shockingly, below zero percent. Even if a nation were to have an annual budget surplus with no inflation, it should still provide investors with a real, after-tax return on government debt. But in the context of today’s inflation-seeking and debt-disabled governments, negative nominal interest rates are equivalent to investment heresy.

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Inflation Target Regrets

By Michael Pento – Re-Blogged From Silver Phoenix

Beginning this fall, and continuing throughout 2019, the stock market’s performance should be vastly different from what has occurred during the prior few years. Indeed, the huge reconciliation of stock prices is arriving now.

The primary reason behind this is the watershed change in global central banks’ monetary policies. For years central banks had been keeping rates near 0%, or below, and at the same time printing over a hundred billion dollars’ worth of fiat currencies each and every month to purchase bonds and stocks. That is all changing now. According to Capital Economics, fourteen major global central banks are either in the process right now, or have indicated that they be will next year, in the process of raising interest rates. At the same time, QE on a global net basis will plunge from $180 billion per month at its peak during 2017, to $0 by December…and will then go negative in 2019.

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