From The Reserve To A Reserve

When power is abused over time it gets replaced.

I’m beginning to get busy touring again but because of its urgency I wanted to get this short post out before calling it a night. Those reading my posts for any length of time know I’ve been mentioning how I felt the swing from the dollar being the reserve might go down. Turns out I might have been correct in my thinking. Over the past couple of days China has announced they will be releasing a Petro Yuan as early as the beginning of 2018.

For me this in and of itself represents no big deal. Nations have to initially purchase oil in dollars but from that point forward are free to trade or sell it in any currency desired. An easy to understand example would be a gas station. The nation purchased the product in dollars but is selling it in whatever currency is dominate in their region. So in essence you can sell oil in any currency and soon as the deal closes convert it back into Dollars if desired.

The advantage for the US are two fold. First it forces nations to deal in dollars and second the US cashes in on the spread. Much the same as the US does when all wirings have to use S.W.I.F.T. To transfer funds. They capture the profits on the spread in exchanging currencies. When dealing in Trillions a small percentage adds up to a lot.

It’s getting hotter in the currency war. No question the wealth is on a journey from west to east. The hunt for taxes will only get worse.

What is a big deal, a really big deal is this Petro Yuan is backed by PHYSICAL GOLD!!! This petro Yuan can be converted and taken as physical gold at any time the holder chooses. THIS MY FRIENDS IS HUGE!!! The proposed petro Yuan has the blessings of Russia, Africa, India and it seems that any other nation being approached likes the option. Why wouldn’t they? The US has had an unfair advantage since replacing the Sterling as the world’s reserve post WW2. Adding to that by their own greed have abused that privilege ever since.

Nations are tired of the West’s unfair advantage and when you start adding up the numbers already it’s totaling near 2/3 of the world’s population. That’s another big deal. We’re not talking about some two bit developing nation. Look into it a bit deeper and you’ll ascertain China’s done its homework on this.

It’s taken over a decade in the creation, in the stock piling of the yellow metal before releasing this information. China didn’t rush in mirroring the same mistakes of Iraq’s Hussein or Libya’s Gaddafi both which represent small marginally powered oppositions at best. China’s been stockpiling gold while offloading their over valued US dollars in the same process. You may want to benefit by mirroring this same strategy yourself.

So when mentioning the term SDR (special drawing rights) bond in several prior posts which is a basket of currencies is in fact where this seems to be heading. While so many readers got hung up on replacing the dollar as the reserve I firmly stated “ain’t gonna happen” as there’s nothing currently out there that can take its place, in fact there still isn’t.

The dollar is transferring from THE reserve currency to A reserve currency. While this may be bad for US citizens who don’t understand the advantages of shorting or holding other currencies it is good for the rest of the world. One of several in the SDR basket of reserve currencies. Just a matter of time before the dollar will represent part of a basket, but will no longer be the basket. This Petro Yuan backed by physical gold is in my opinion a total game changer. You Choose. Trading oil in physical gold backed currency or trading oil with Uncle Sam’s promise. A promise that totes along with it a 20 Trillion dollar debt attached.

When you abuse power sooner or later other nations will devise systems that will bypass. The same holds true when it comes to S.W.I.F.T. Soon enough both China and Russia will be introducing alternate choices for wiring funds. In fact they’re already being tested domestically. This is what I term as a paradigm shift. When you rest on your laurels as all past great nations have done change is inevitable. Rome, ancient China, Greece Egypt all serve as past examples. The only one who’s recovered is China and it’s taken them almost 3000 years to accomplish.

It’s well known that both China and Russia have been bypassing the dollar when trading oil. This has been going on for a long time now. It’s the physical gold backing of this latest bypass of the dollar that’s got my vote. We’re transferring from a single reserve currency status to a multi reserve status, but what does that mean for the value of the dollar?

Well since the US dollar is the most overvalued dollar in the world while it still clings onto its artificial value those holding their wealth in dollars might consider reallocating some of them into tangibles. Tangibles that are in other nations, invest while they’re artificially inflated purchase against other currencies.

For those who are cash lovers I’d consider selling a reasonable portion in exchange for H.K dollars. Why? The H.K dollar is pegged to the US dollar with one MAJOR difference. The Wests hosts a 20 Trillion dollar debt and H.K has a surplus. That’s right a surplus no debt. When the west dollar dives H.K just breaks the peg. You tell me which will hold its value better? I’d recommend all reading this post watch the videos below. This is a clear shot across the bow of a ship that’s surly going down. Until next time.

 

 

Be sure to stay tuned for second part. Max has a one on one with Michael Pento. I interviewed with him about a year ago.

 

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