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Our chat about the markets today shifts to currencies around the world

May 8, 2015

Doc joins us to chat about the positive moves in the market. The topic shifts quickly to the world reserve currency and if/when a currency will be back by some form of assets.

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Discussion
63 Comments
    May 08, 2015 08:34 AM

    Thanks guys!!!

    May 08, 2015 08:40 AM

    What’s next ?
    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/Reserve%20Currency%20Status.png
    China Gold fix ?
    This might be the 1st step……gold/yuan fix……step 2: de-peg yuan/dollar…..step 3:announce gold reserves…..step4: yuan inclusion in the SDR

      May 08, 2015 08:58 AM

      Thats the piramide shifting

    May 08, 2015 08:40 AM

    I would suggest that currencies are backed by the productive capacity of the country.

      bb
      May 08, 2015 08:43 AM

      I agree, Armstrong has been making that point recently.

        May 08, 2015 08:01 PM

        As do I, bb.

        But Armstrong has been saying it for quite a long time and he’s not the only one.

    May 08, 2015 08:42 AM

    AL, Cory, and Doc,
    Your pal Bob Moriarity loves Novo Resources in Australia. Have any of you, or others who read this, looked at NSRPF and formed an opinion?

    May 08, 2015 08:43 AM

    The Russians and Chinese understand better about US Constitution than US…

    May 08, 2015 08:43 AM

    The strategy is there: Gold Fix, AIIB, CIPS, Silk Road, BRICS …
    Why Obama wants to rush the TPP into Fast track ???
    http://www.reuters.com/article/2015/05/06/us-gold-china-fix-idUSKBN0NR06J20150506

    May 08, 2015 08:52 AM

    Todays NFP data has completely removed any suggestions of a June rate hike and that is what’s effecting the US equities, today, the place to be since Sept 2011 has been US equities, early this week talk was of a US equity plunge, yet not one key level had been violated!.. Doc I hope you exited your VIX position on the NFP data

    NOBODY wants a strong currency Al, look around every country is devaluing their currencies with interest rate cuts or a form of QE

    All this talk of the world no longer wanting US$, really, in the last 10 months the $ has risen 20+ cents, yup a real exit in play, when Russia recently was in trouble and the many BRIC countries while oil was plunging the US$ was their liquidity safe haven trade, not gold

      May 08, 2015 08:59 AM

      Gold is only 5% away from retesting its lows of the past 3+ years not testing a very key level on the weekly chart @ $1300

      May 08, 2015 08:32 AM

      Original; I haven’t exited my vix position yet—not with this choppy market and a couple of technicals present. I might exit it if after a couple of reactionary moves lower by the conventionals. I’ll let you know when I do exit.

        May 08, 2015 08:33 PM

        Good luck Doc with your VIX position, I didn’t add to my pm’s short miners today or crude oil short as I’ll wait to see Mondays follow up

      May 08, 2015 08:01 PM

      China’s government is far wealthier (net of debt) than the West; and in setting up the BRICS development bank (to rival the IMF); the Asian Infrastructure Investment Bank (to rival the World Bank); countless currency swap agreements with myriad nations; and its own SWIFT monetary transfer system, it clearly believes it has the ability to dominate global trade. Secondly, in my view the “SDR,” or Special Drawing Right, which is simply a basket of the West’s “leading” fiat toilet papers.

    May 08, 2015 08:01 AM

    Good discussion today guys.

    The currencies are going asset backed, completely asset backed. It depends on what country has in assets to back the countries currency. There will be a leverage component for bond trading and banking. I’m not sure what the leverage ratio is just yet, but the countries that have a larger portion of gold will be better off, or more solid.
    Oil will be one of the assets that back currencies. That why the regulations of derivative trading tightened on oil months ago causing the price to go down. As, you can’t back a currency with a falsified value if an asset.

    Good to see you guys catching up to speed ( – ;

      May 08, 2015 08:40 PM

      Charster,
      Right now, the military is USA greatest asset. I agree there SHOULD be a better way, but human nature wont let it happen. If you were king of the world we may have a shot, but with the Obama’s and Putin’s running the show, it aint gonna happen. The Saudis wants a pipeline that pass through Syria …

      Bad times are ahead.

        May 08, 2015 08:34 PM

        Gabriel,
        It is happening and underway now.

    May 08, 2015 08:34 AM

    there will be lot-o-chop in these here markets for two more weeks. I think Doc’s VIX position is a good one.

    May 08, 2015 08:41 AM

    AGREE WITH BIG AL……….. The Boot

    May 08, 2015 08:43 AM

    NEXT WEEK……….Greece has a big payment due…..CYA

    May 08, 2015 08:12 PM

    Good sensible comments Cory. I am in your camp today. What is different today is that we are all aware of how currencies failed in the past. That is quite different from times gone by where the global hosts of the reserve currency lived only by the economic cycle without the ability to reflect knowledgeably on the history of a currencies importance.

    So it just might be different this time where technologies, programs and cycles play a role that even mortals can understand and appreciate. This is not Spain or Portugal of hundreds of years ago.

    We now have the benefit of clearly understanding the mistakes they made and so we should be in a good position to avert the damaging consequences they suffered.

      May 08, 2015 08:39 PM

      Bird; are you parroting the “this time is different”—-I guess I’ve been around too long to think so. Man has seen advances in everything over centuries except for one thing—morality. Every generation thought they were smarter then the previous generation until they were hit up on their head by a 2X4. History of course doesn’t repeat but it sure rhymes. We may believe we understand the mistakes of the past however, that’s very difficult since the variables are so many and people will argue years later what were the causal elements of the great depression. Let’s look at 2 big causes of the great depression ——the federal reserve expanding credit in the 20s without controls and Europe with the Versailles treaty, rearmament and other post WWI issues. Bernanke, simplistically, thought he had it all figured out and threw money at our problem after the recession of 2007-8. Eerily, we have 2 components today that are correlates with the problems before the great depression; expanding credit fostered by every central bank in the world and Europe becoming unglued. We’ll see in the future if “this time is different”.

        May 08, 2015 08:07 PM

        “Vanity of vanities and all is vanity. There is nothing new under the sun.” (paraphrased)

        May 08, 2015 08:28 PM

        Good answer Richard. You got me there. Maybe its not different this time.

        But I want you to look at my reasoning from another angle. We live in a time when we have the ability to collate and compile all the knowledge of every prior civilizations and political system.

        It is something that has never been possible in all human history.

        Does that not give us an advantage over the past that never existed before?

          May 08, 2015 08:38 PM

          Bird, I must admit you have good reasons for your optimism—the only issue I struggle with is man’s basic selfishness and self absorption—even if given facts that point them in the right direction, human beings will often make decisions not in their ultimate best interest since instant self gratification is foremost on their minds. I guess all I have to do is go back to statements by my father when he said I would often cut my nose off to spite my face or shoot myself in my foot.

            May 08, 2015 08:56 PM

            Good discussion Birdman and Doc.

            May 08, 2015 08:58 PM

            I sure agree with that Doc. Human nature seems consistent with or without our technological supports. In may actually just empower us towards even more destructive pursuits. We can only know for certain once the smoke has cleared whether we learned and adjusted to the changes and whether we gained a benefit.

            Who knows, maybe it will be the country that takes the mantle of the next world reserve currency that will get all the advantages such that they retain effective control of the global monetary machinery for centuries rather than the usual 80 to 110 years.

            In our own case we may have already squandered our last best chance at promoting Western dominance indefinitely.

          May 08, 2015 08:47 PM
            May 08, 2015 08:50 PM

            A slow train wreck BUY BUY BUY GOLD !

    May 08, 2015 08:18 PM

    S&P reached resistance around 2115 so I could some profits on HPQ & Intel before they vanish as I could see a small move lower before we go up higher.

      May 08, 2015 08:18 PM

      Should say took.

    May 08, 2015 08:30 PM

    The PM markets were actually BORING today.
    It feels like the markets are getting ready for a LONG summer vacation.

    May 08, 2015 08:40 PM

    what happened to matthew..?

      May 08, 2015 08:08 PM

      check under……….wocsom morf knarF

        May 08, 2015 08:56 PM

        yep….that rascal.

          May 08, 2015 08:21 PM

          Hey guys, gold was unable to take back the 50 day sma or rising fork support today…
          http://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=1&mn=0&dy=0&id=p58251446779&a=406396269

          However…

            May 08, 2015 08:23 PM

            …silver managed to close above both the 50 day sma and the 55 day ema. And if one metal is going to outperform the other, you want it to be silver.
            http://stockcharts.com/h-sc/ui?s=%24SILVER&p=D&yr=1&mn=3&dy=19&id=p51357220592&a=407254625

            May 08, 2015 08:44 PM
            May 08, 2015 08:53 PM
            May 08, 2015 08:58 PM

            I agree that Silver is doing better than gold WMK, and it is a higher volatility commodity because it surges higher, but corrects lower in percentage terms than Gold…..like Scrappy Doo versus Scooby Doo.

            Also, Silver put it in its top a few months before Gold, so it is natural that it would bottom first and then start outperforming on the basing and moves up.

            Gold has been grinding sideways in a range for a while now and just won’t make up its mind one way or the other. This makes me a little concerned that the path of least resistance may be down, because I’m not seeing what is going to drive gold higher at present. Maybe I’m overlooking something though.

            May 08, 2015 08:02 PM

            There is that large pennant or flag or wedge formation in Silver on that chart you posted WMK, and so the energy is really building for a breakout up/down, but the question is which way will it break out?

          May 08, 2015 08:24 PM

          I CAN’t OPPEN ! ERRORRR 4444 YOU NOW

            May 08, 2015 08:35 PM

            Sorry Franky, I tested them and they opened for me. Maybe you’re on a list… 😉

            May 08, 2015 08:24 PM

            maybe you should change your name to Belgian Waffle……. 🙂 (that is , if you are on the list)

    May 08, 2015 08:43 PM

    Doc- catherine austin fits has an excellent interview on usawatchdog.com.. and speaks to the lack of morality today… take a listen please.

      May 08, 2015 08:00 PM

      Agatha; thanks for the info. It’s a toxin that ultimately affects decision making in every profession and institution. And we all know what happens to once great nations when over time they believe their own hubris and place their wants at the base of all their decision making.

      May 08, 2015 08:25 PM

      DITTO Agatha…….great interview

    May 08, 2015 08:13 PM

    GREECE ! STAYS IN THE EURO ! NO WW3 AND ENGLAND WILL GO EU ! NIGEL FARAGE RESIGNS ! THE NEW WORLD ORDER WINS ! https://www.youtube.com/watch?v=O2z37tt2wSs

    May 08, 2015 08:08 PM

    Futures seemed to crash after the markets closed.

      May 08, 2015 08:18 PM

      UK; the technicals seem to say to expect more volatility next week and then usually favors a move down.

        May 08, 2015 08:23 PM

        Thanks Doc.

    May 08, 2015 08:21 PM

    Keep your eye on the COT commercial positions. Gold showed about 11,000 decrease in short contracts for last week with an increase of about 2,000 contracts in long positions. As mentioned I continue to believe that we move sideways to down into the end of May. If that’s the case, you could see more positives in the gold COT report after the next two weeks. That might set us up for a nice June rally.

    May 08, 2015 08:48 PM

    To All,

    If you think the debt system can last much longer and money printing in fiat will continue to exist for many years ?? Much less, even months longer??

    Ain’t gonna happen! ( it’s done.. )

    May 09, 2015 09:20 AM

    Armstrong said it’s the trust on the backer of the fiat, be US govt + American productivity behind USD.

    China is building trust on its Yuan… to be backed by Chinese productivity (need creativity + authenticity) + trust on Chinese Govt (much much more to do at least on ownership guarantee). That’s for the match… now for the raise… it’s GOLD.

    I dont study econ but I personally believe the chinese needs shock and awe with GOLD to accelerate confidence in Yuan.

    AIIB -> some small Yuan denominated lending -> Gold reserve announcement and it must exceed that of US (US gold reserver can only be the same or much lower) by a lot or at least by a proportional percentage of share of expected future world trade -> more trust then more RMB denominated lending + reserving + deep Yuan debt system -> the dead of the USD the same way as Pound.

    By Armstrong’s definition, gold is one of the factors of Yuan confidence not the confidence.

    Hell… with this… it may take til 2020… who knows.