Currency

Monetary System Currency Reset

Posted by Martin Armstrong - Armstrong Economics

on Tuesday, 31 October 2017 13:58

QUESTION: G’day guys.

Thanks for a great seminar in Hong Kong!
I’m reading through your 1 world currency report and find it very interesting, going back to primary school teachings about barter systems and some funny monetary acceptances that have been in place many years ago. Like 14.5 kg copper plates as a currency only back in the 1600’s in Sweden. Or 1-ton barrels of tobacco. Very interesting and tough to carry in your wallet.The major teaching I received from the Hong Kong Seminar was to look at the currencies (something I’ve had plenty of lessons dealt over the years trying to trade) in regard to products and assets in the many different countries around the world.
My question now we are seeing bitcoins and possibly diamonds and other mediums we are not yet aware of yet replacing gold as a new vehicle to move cash or wealth into a better-performing countries assets.
With the collapse about to occur in Europe and Britain included monetary wise. Instead of buying gold in relation to USD one should buy gold against the Euro’s or Pounds when the time is right?
Or has a gold lost its lustre today and the contagion to gold may not occur to the extremes that have occurred in the past?
Will Europe money tell the story? The smart money is moving to the DOW. Will it return to gold when the people lose their confidence?
Thanks for the interesting and new way of looking at the markets Marty. I’m doing better with Socrates though still a novice.
Take care and wish I was coming to the next conference. Hope it’s a beauty.
A

ResetANSWER: Gold has lost its movability aspect as they hunt money for taxes. Twenty years ago you could hop on a plane with a briefcase of gold with no problem. From that perspective, gold has lost its international portability. This is obviously why people are turning to diamonds, rare ancient coins, and the like – movable assets. We are even witnessing real estate starting to decline now in New York City. The high-end real estate market (not the low-end) was making new highs as big money was trying to get off the grid. Realtors were reporting to us that the majority of such high-end deals were all for cash – no mortgages.

Gold would certainly be a better hedge against the Euro than the dollar in the short-term. It has outperformed the dollar because you always have to look at the currency. However, money will NEVER shift from the stock market all into gold. Everyone has their pet investment in what they feel comfortable. Gold is a retail product – not institutional. The Institutions can trade ETFs, gold stocks etc., but they will never take possession of gold.

What we are facing in truth is a currency reset. That means that ALL tangible assets rise against the currency in whatever country we are talking about. The goldbugs always hate the dollar and many of them have turned away from gold and into cryptocurrencies.

You will always have people who will prefer stocks, others gold, and others real estate. That is just the way it is. To each their own.

…also from Martin Armstrong:

Roman Republican Hoard for Sale of Victoriati

 

GCNYNF-M-Euro-10-25-2017

GCNYNF-M-10-25-2017

 

 

Greyerz – The Ultimate Panic Is About To Be Unleashed In Financial Markets

Posted by KingWorldNews

on Tuesday, 31 October 2017 13:29

King-World-News-7-Terrifying-Warnings-That-The-Greek-Disaster-Is-Now-Set-To-Catapult-The-World-Into-A-Global-Meltdown-864x400 c“We are currently standing before one of the most unique and frightening periods in history. Never have there been so many extremes in so many different areas. In the last 100 years everything seems to have grown and intensified much faster, including population, technology, inflation, debt, money printing, budget deficits, stocks, bonds, property prices. crypto currencies etc. All of these areas are now in an exponential growth phase.

The final stage of exponential growth is explosive and looks like a spike that goes straight up. A spike for a major sample like global population or the Dow never finishes with just a sideways move. Once a spike move has finished, it always results in a spike move down.”

….read more HERE

 

also from KingWorldNews:

China’s Bold Moves – The Implications For Investors Are Enormous

Bond Yields: Testing Time & The Big Macro Play Ahead

Posted by NFTRH

on Tuesday, 31 October 2017 13:20

The breakouts above resistance are now being tested in 10 & 30 year bond yields. Though it’s broken through the zone I drew, the 10yr is still regarded as testing.

tnx5

The 30yr is looking more iffy, but these are the financial markets and they are under no obligation to give us nice, clean parameters. Still, below the SMA 200 this one can be considered under threat.

tyx

The implications mean only everything going forward. These can range from inflationary to Goldilocks position deployments to “get the hell away from the punch bowl, there’s a turd in there!”

It’ll depend on the nature of this test and what comes after it. Oh and it’s also FOMC week and all the media hype that comes with it.

also from NFTRH:

THE BIG MACRO PLAY AHEAD

Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+chart and trade ideas; or the free eLetter for an introduction to our work.

Oct 31, 2017

  1. I’ve suggested that investors may need to look beyond the head and shoulders top formations that recently appeared on bullion and many precious metal stocks. 
  2. Please  click here now. Double-click to enlarge this daily gold chart. Intermediate uptrends often consist of three legs. In 2017, gold has had two legs up. 
  3. The next US jobs report is scheduled for release on Friday. Will it be the catalyst that launches a third leg higher for gold? I’m not sure, but I am sure of what’s important for gold, which is that it is generally very well supported here, both technically and fundamentally.
  4. The bottom line: Gold held in ETFs is quite steady. China’s economy has softened, but only modestly. That light softness is almost certainly related to the government’s action taken to reduce pollution.
  5. Chinese mine production has fallen as excessively polluting operations have been shut down. That’s adding support to the gold price.
  6. In India, the economic growth has slowed more noticeably than in China, and that does have an effect on gold demand. This growth slowdown has been mitigated by a rise in the rupee against the dollar, which lowers the cost of gold for Indians.
  7. Along with commercial traders on the LBMA and the COMEX (aka “the banksters”), Indian buyers are the most eager buyers when the gold price drops.
  8. On that note, please  click here now. The US Treasury wants India’s central bank to reduce its purchases of US dollars.
  9. As India recovers from the disastrous demonetization program that pounded the nation’s GDP growth, the dollar could enter the “meat and potatoes” zone in a major bear market against the rupee. 
  10. That would put gold on sale in a major way for Indians, and demand could surge.
  11. Please  click here now. The dollar looks like a train wreck against the rupee on this one year chart, and that happened with the Indian central bank buying the dollar aggressively!
  12. What happens if US government pressure works, and the Indian central bank pares back its dollar buying? 
  13. For the likely answer, please  click here now. This seven year chart shows how strong the dollar was against the rupee from 2011 – 2016.    
  14. The dollar has now started what is likely to be a multi-decade bear market against the rupee. This should add significantly to the (already relentless) growth in Indian citizen demand for gold.
  15. In America, most analysts predict there will be only a few rate hikes in the 2018 – 2019 time frame. In contrast, the US central bank predicts seven. Goldman Sachs’ top economist predicts nine.
  16. I predict there will be six. Regardless of what the exact number turns out to be, if its six or more, American M2 money velocity should begin a major bull cycle. Of the three main money velocity measurements used by the Fed, M2V tends to correlate best with the action of gold stocks versus bullion. A major bull cycle in M2V would blast gold stocks higher in a bull cycle with intensity that has not been seen since the 1970s.
  17. The St. Louis Fed has stated that the US inflation rate would have reached 33% as a result of QE, if money velocity had not collapsed. A more relentless pattern of rate hikes and accelerated QT will almost certainly create a surge in M2 velocity. 
  18. I think most of the world will be stunned by what happens with inflation over the next 24 months. That’s because the QE “money ball” that is only inflationary potential energy becomes kinetic energy as it is flushed out of government and central banks and into the fractional reserve banking system.
  19. Trump’s tax cuts against a background of rising government debt should ice that inflationary cake in a very big way.
  20. Please  click here now. GOAU-AMEX/ARCA is a relatively new gold stocks ETF. 
  21. I like the fact that about 60% of the holdings are in Canada, which is arguably the best mining jurisdiction in the world, and certainly one of them. I’m a buyer on every 50 cents price decline until the price rises to $20. I would urge all gold stock enthusiasts to check out the main holdings in this ETF carefully, and eagerly! 
  22. Please  click here now. Double-click to enlarge this key GDX chart. GDX is bouncing from an important triangle apex point. It’s unknown whether the bounce will fail in the neckline area of the head and shoulders top pattern.
  23. What is known is that investors need to be focused on a major worldwide transition from QE, low rates, and deflation… to QT, higher rates, and inflation.
  24. Bullion has outshined the miners for twenty years, and now it’s becoming time for the miners to lead, and lead for a very long period of inflationary time!

Thanks! 

Cheers
st

Oct 31, 2017
Stewart Thomson  
Graceland Updates
website: www.gracelandupdates.com

Victor Adair: The Sept 8 Key Turn Date

Posted by Victor Adair - Live From The Trading Desk

on Monday, 30 October 2017 19:49

The US Dollar rally: accelerated this week. I’ve been short other currencies against the USD since early September and took partial profits this week even thought I think the USD rally has more to go. Double click chart for larger version

va8

 

Larger Chart

Diverging monetary policy: between the USA and other countries has been a key FX driver. On the September 8 Key Turn Date the 10 year treasury yield was at its lowest level since Trump’s election…but since then it has rallied to 5 month highs. Real yields have also been rising. The 2 year Treasury yield is at a 9 year high. Part of the reason for rising American interest rates (and a rising USD) is that traders are positioning for a more hawkish Fed. US Financial conditions are the easiest in 20 years…paving the way for the Fed to keep tightening.

Fed Chair: Fed Governor Powell is the front runner to replace Yellen but Trump might surprise markets and nominate both a Chair and Vice-Chair (Powell and Taylor?)

 Tax cuts: Stock markets, interest rates and the USD have been rising in anticipation of Trump’s tax reform plans.

Euro: EURUSD hit a 2 ½ year high at 1.2150 on September 8 and has fallen about 5% since then as a result of 1) diverging monetary policy (ECB maintains accommodative policies while the Fed tightens,)  2) Political concerns (where Catalonia goes others are likely to follow) and, 3) unwinding of huge speculative long EURUSD positions.

CAD: Hit a 2 ¼ year high at 83 cents on Sept 8 (after the second Bank of Canada interest rate increase on Sept 6) and has fallen about 5 ½ cents since then as a result of 1) diverging monetary policy (markets anticipate that BOC will “pull back” after having gone “too far too fast” while the Fed continues to tighten, 2) Political/economic concerns (Trump may scrap NAFTA, Canadian economy softening after interest rate increases and huge CAD rally) and 3) unwinding of long speculative CADUSD positions which had reached multiyear highs by early September…and then got even bigger as CAD fell!

 

Larger Chart

USD universally strong:   USD has been rising against nearly all currencies and gold since that very important Sept 8 date: the USDX is up ~4.5%, AUD is down ~6%, NZD is down ~6%, MEX is down ~7%, YEN is down ~5%, and gold is down ~$100 or 7%.

Stock markets: American markets keep making new highs (with any dip seen as a buying opportunity.) Tax reform has a number of “positives” for American companies including repatriation of overseas money…which could be used for share buy backs. It’s interesting to watch the TSE march steadily higher since Sept 8 as the CAD has fallen…to see that the German DAX has rallied sharply to New All Time Highs this week as the Euro fell…similar to how the British stock market rallied last year when the pound fell following the Brexit vote.

WTI: the front month contract traded to $54 this week, its best in 8 months, up $12 (28%) from the June lows. It’s interesting to see crude oil rally while the USD is rallying as market psychology embraces the bullish WTI narratives (Saudi “we will do whatever it takes”) while ignoring the bearish ones! I have traded WTI mostly from the short side the past 3 years but have been basically aside the past couple of months.

 

Larger Chart

China congress: the congress is over, Xi has consolidated his power. Two weeks ago I suggested that there was probably a lot of “managing” of the news before and during the congress to avoid any embarrassment and I wondered what could “bust loose” once the congress was over. Maybe the 10 cent decline in copper Friday after hitting a 3 year high last week is one of those “bust loose” things. I think China is the world leader in the volume of copper traded.  

How to understand currency trading: I’ve been trading currencies for 40 years and one of my favorite chestnuts is that currency trends run WAY further than seems to make any sense, and then turn on a dime and go the other way.  I think the Sept 8 Key Turn Date was one of those “turn on a dime” dates.

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