Like yesterday when the big story was the jump in the USD ahead of Yellen’s (rather hawkish) speech, so today the greenback’s levitation has continued, this time propelled by today’s unveiling of Trump’s tax plan.

On the eve of its unveiling, Trump said lawmakers should expect a “very, very powerful document” that would cut taxes “tremendously” for the middle class. If passed, the plan would be Trump’s first significant legislative win since taking office in January. ”The idea that Trump could be reaching across the aisle, talking about tax cuts to middle and low income households, if it comes to pass, we are talking a pretty material fiscal boost to the U.S. economy. This sort of easy fiscal policy is why the markets are reacting the way they have,” said Mark Dowding, co-head of investment grade at BlueBay Asset Management.

….continue reading HERE

…also:

Premier Warns “Quebec Is Attacked, Quebec Will Resist” As US Slaps Massive Tariff On Bombardier Jets

The risk to the precious metals market is that the dollar may have formed an intermediate cycle bottom and the euro an intermediate cycle top. The euro is up against a major resistance level which is unlikely to be broken on its first try. This video explains why it is risky to press the long trade in precious metals at this time.

https://blog.smartmoneytrackerpremium.com/

Tokyo (Sept 22)  The dollar buckled against the yen on Friday as tensions simmered on the Korean peninsula, though the sharp divergence between U.S. and Japanese monetary policy kept the greenback on track for a winning week against the yen.

North Korea said on Friday it might test a hydrogen bomb over the Pacific Ocean after U.S. President Donald Trump said he would destroy the country if it threatened the United States or its allies. Adding to investors’ risk-aversion was S&P Global Ratings’ downgrade to China’s sovereign credit rating. On Friday, the ratings agency said the country’s attempts to reduce risks from its rapid buildup in debt are not working as quickly as expected and credit growth is still too fast. The dollar dropped as much as 0.8 percent to 111.65 yen , before recovering to trade down around half a percent on the day at 111.96 yen in early London trade.

The yen tends to benefit during times of crisis due to Japan’s net creditor nation status, and the expectation that Japanese investors would repatriate assets.

“Many are questioning whether that can remain the case in the presence of a risk event that is local to Japan,” wrote RBC Capital Markets analysts in a note to clients.

“We find near-perfect symmetry in the way the yen responds to Asia-specific shocks and shocks from elsewhere, suggesting it can (remain a safe haven),” they added.

For the week, the dollar was still up more than 1 percent against the yen, having scaled a two-month peak of 112.725 after the U.S. Federal Reserve signalled that it was still on track to raise interest rates by the end of the year, and after the Bank of Japan maintained its bond-buying pledge.

The dollar index, which tracks the U.S. unit against a basket of six major rivals, fell 0.3 percent to 92.024 , but it was still slightly higher on the week and was well above its more than 2-1/2 year trough of 91.011 marked on Sept. 8.

It surged to its strongest in 15 days on Wednesday, but has since slipped around 1 percent.

“If traders were hoping for a strong U.S. dollar rebound in the wake of this week’s Fed meeting, the initial response was certainly encouraging (but) beyond that the response has been underwhelming,” said CMC Markets analyst Michael Hewson.

“Even if the Federal Reserve were able to deliver on a December rate rise, there is so much uncertainty about what the FOMC (Federal Open Market Committee) will look like in six months’ time…that any projections for three further rate rises in 2018 have to be treated with a huge amount of caution.”

The euro climbed half a percent to $1.1992 and was also up 0.1 percent for the week, with traders not seeing Sunday’s German elections as a risk. Chancellor Angela Merkel is widely expected to win a fourth term in power.

Reuters

JP Morgan CEO Jamie Dimon calls Bitcoin a fraud.

Bitcoins have captured the imagination of everyone. Even people who have never invested in stock markets have started talking about the crypto currency. Bitcoins are the talk of the town right from college students to diamond brokers to housewives.

If the whole world is talking about Bitcoins then how can CEO of a top notch investment bank miss it? Bitcoins crashed recently after JP Morgan Chase CEO Jamie Dimon called it a fraud.

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed,” Dimon warned. Apart from this China also announced that it will shut down all the Bitcoin exchanges in the country.

This double whammy pushed Bitcoins from a high of 4,950$ on 2 September to a low of 2,950$ on 15 September. That’s a drop of 40% in a fortnight. Bitcoin has bounced back smartly from the lows but it’s nowhere close to the prior highs.

The price action for the last month or so has been too hot to handle for many. It’s exciting to see the price double or triple quickly. But it’s worse when it falls forty percent in a fortnight.

.…continue reading HERE

For what seems like decades, other countries have been tiptoeing away from their dependence on the US dollar. China, Russia, and India have cut deals in which they agree to accept each others’ currencies for bi-lateral trade while Europe, obviously, designed the euro to be a reserve asset and international medium of exchange. 

These were challenges to the dollar’s dominance, but they weren’t mortal threats. 

What’s happening lately, however, is a lot more serious. It even has an ominous-sounding name: de-dollarization. Here’s an excerpt from a much longer article by “strategic risk consultant” F. William Engdahl:

Gold, Oil and De-Dollarization? Russia and China’s Extensive Gold Reserves, China Yuan Oil Market

(Global Research) – China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it.

So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt—Treasury securities—with the bulk of their surplus trade dollars. Washington and Wall Street could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

Viable Alternative Emerges
Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

For several years both the Russian Federation and the Peoples’ Republic of China have been buying huge volumes of gold, largely to add to their central bank currency reserves which otherwise are typically in dollars or euro currencies. Until recently it was not clear quite why.

For several years it’s been known in gold markets that the largest buyers of physical gold were the central banks of China and of Russia. What was not so clear was how deep a strategy they had beyond simply creating trust in the currencies amid increasing economic sanctions and bellicose words of trade war out of Washington.

Now it’s clear why.

China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.

Currently, in addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and most recently India and Pakistan. This is a population of well over 3 billion people, some 42% of the entire world population, coming together in a coherent, planned, peaceful economic and political cooperation.

Gold-Backed Silk Road
It’s clear that the economic diplomacy of China, as of Russia and her Eurasian Economic Union group of countries, is very much about realization of advanced high-speed rail, ports, energy infrastructure weaving together a vast new market that, within less than a decade at present pace, will overshadow any economic potentials in the debt-bloated economically stagnant OECD countries of the EU and North America.

What until now was vitally needed, but not clear, was a strategy to get the nations of Eurasia free from the dollar and from their vulnerability to further US Treasury sanctions and financial warfare based on their dollar dependence. This is now about to happen.

At the September 5 annual BRICS Summit in Xiamen, China, Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated,

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To my knowledge he has never been so explicit about currencies. Put this in context of the latest financial architecture unveiled by Beijing, and it becomes clear the world is about to enjoy new degrees of economic freedom.

China Yuan Oil Futures
According to a report in the Japan Nikkei Asian Review, China is about to launch a crude oil futures contract denominated in Chinese yuan that will be convertible into gold. This, when coupled with other moves over the past two years by China to become a viable alternative to London and New York to Shanghai, becomes really interesting.

China is the world’s largest importer of oil, the vast majority of it still paid in US dollars. If the new Yuan oil futures contract gains wide acceptance, it could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. That would challenge the two Wall Street-dominated oil benchmark contracts in North Sea Brent and West Texas Intermediate oil futures that until now has given Wall Street huge hidden advantages.

That would be one more huge manipulation lever eliminated by China and its oil partners, including very specially Russia. Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia.

In April 2016 China made a major move to become the new center for gold exchange and the world center of gold trade, physical gold. China today is the world’s largest gold producer, far ahead of fellow BRICS member South Africa, with Russia number two.

Now to add the new oil futures contract traded in China in Yuan with the gold backing will lead to a dramatic shift by key OPEC members, even in the Middle East, to prefer gold-backed Yuan for their oil over inflated US dollars that carry a geopolitical risk as Qatar experienced following the Trump visit to Riyadh some months ago. Notably, Russian state oil giant, Rosneft just announced that Chinese state oil company, CEFC China Energy Company Ltd. Just bought a 14% share of Rosneft from Qatar. It’s all beginning to fit together into a very coherent strategy.

Meanwhile, in Latin America: 

De-Dollarization Spikes – Venezuela Stops Accepting Dollars For Oil Payments

(Zero Hedge) – Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal. 

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

This first step towards one or more gold-backed Eurasian currencies certainly looks like a viable and — for a lot of big players out there — welcome addition to the global money stock. 

Venezuela, meanwhile illustrates the growing perception of US weakness. It used to be that a small country refusing to take dollars could expect regime change in short order. Now, maybe not so much.

Combine the above with the emergence of bitcoin and its kin as the preferred monetary asset of techies and libertarians, and the monetary world suddenly looks downright multi-polar.