Most people in the USA and the world for that matter do not understand the world currency market, nor do they care. We move along with our life, bitch about the price of gas and the ever increasing price of goods and services due to inflation. Life is good and we dabble a little here and there in investments in the stock markets and occasionally glance at our 401k.
So why should I care about the foreign exchange market Forex?
The foreign exchange trading is some 60 times larger than annual world trade. A lot of money is won or lost in the foreign exchange market!
OK, so why do I care again? It’s not like I’m going to trade currencies or get involved in that crazy Forex stuff.
We have all heard one time or another that the US dollar is the reserve currency.
What does that mean, RESERVE CURRENCY?
A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency. People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they don’t need to exchange their currency to do so.
So that is why we get stuff so cheap and control the world economy by profiting on the fact that other countries have to pay an exchange rate to convert their money into dollars to buy something.
US Dollar accounts for over 62% of the trade and the Euro about 22%.
This is why we can lean on other nations and prevent money laundering throughout the world.
Well, not so fast!
Somebody has been making a concerned effort to change the scope of reserve currencies.
That’s right China.
China has been lobbying the IMF to become a reserve currency. The expected date is somewhere in October, 2015.
Yeah so what?
So consider steps already taken by China.
- China has established Yuan Exchanges World Wide
- Countries are bypassing the US Dollar by using these Yuan Exchanges like Russia. Even Canada is bypassing the US dollar which is why their currency is worth more than ours now.
- China has a massive Gold reserve.
- China’s Executive Order NCO1 – also known as the New Currency Order
OK, I get the first 2 on the list, China is bypassing the US dollar and we are losing billions a year in exchange rates, but what do I care about #3 (Gold) or #4 (NCO1)?
#3 – We all know that our currency (US Dollar) was once backed by gold and that Nixon took us off the Gold Standard. Most people don’t remember though that FDR (Franklin Roosevelt) also took us off the Gold Standard. To save a lot of time and make the story short, because I really don’t want to go into a lot of detail about the Gold Standard, you can read about it here: http://useconomy.about.com/od/monetarypolicy/p/gold_history.htm
Basically the gold reserve got so depleted, Nixon took us off the Gold Standard and the economy and everything else started to “go to hell in a hand basket“. Nixon had to freeze wages and prices to prevent an economic collapse. Hence the reason for Executive Order 11615.
Silver rose almost 700% in value during that period. If you don’t have some physical silver, the time is now to buy it while it’s still really cheap.
It is argued that we have little or no gold left. Ron Paul has questioned this issue and has repeatedly called for an audit of Fort Knox. Source: http://www.wallstreetdaily.com/2013/07/16/fort-knox-gold/
Remember old cliches like “The Golden Rule” or “He who has the Gold, makes the rules”? Well folks, if we really don’t have a substantial cache of gold, we will not be making the rules.
#4 – China’s Executive Order NCO1
China is already bypassing the US Dollar with the Yuan Exchanges. The extent of which threatens the US Dollar as the primary reserve currency. It is predicted that if the Yuan becomes the primary reserve currency (over 50%) and replaces the US Dollar, your savings, stocks and bonds will be dramatically devalued against the Yuan the new primary reserve currency because the US Dollar will no longer be needed for trade and the Petro Dollar which I have discussed before, will cease to exist.
Besides buying silver, gold and other commodities and precious metals, many individuals and banks have been buying what is called A-Shares and B-Shares.
So what are those?
A shares are shares of the Renminbi currency that are purchased and traded on the Shanghai and Shenzhen stock exchanges. This is contrast to Renminbi B shares which are owned by foreigners who cannot purchase A-shares due to Chinese government restrictions.
But in the end, the Chinese control these markets, so do you really think they will play fair even if you hedge your bet with A/B Shares? The Chinese could literally wipe out foreign investments, taking your money and pocketing a lot of your cash.
I think Obama would have his excuse to declare martial law and take your guns suspending all elections and declaring himself King.
Welcome to the age of: “The Big Fat Yuan”
Update: Well as I have mentioned folks
RE: But in the end, the Chinese control these markets, so do you really think they will play fair even if you hedge your bet with A/B Shares? The Chinese could literally wipe out foreign investments, taking your money and pocketing a lot of your cash.
Response: The Chinese devaluation of the Yuan twice from 6.0 to 6.4 Yuan for each USD by 8/12/2015 has of course had investors, especially in the A/B shares shirking. Plus the Chinese have banned large share holders from selling their shares for 6 months. What do you think the Chinese have in store for everyone in the next six months from July 2015 to Christmas? I don’t think they will give everyone the present they expect. China just made a bunch of money at the large banks that invested their future in these shares. Who do you think the big banks are going to look too, to recover their loses? That’s right. YOU!
Banks include and are also own oil companies are taking a major hit. Chances are they also own your mortgage.
IMF just announced that the Yuan is now a recognized reserve currency as of 10-23-2016 and has over taken the Euro. Euro was 22%, USA dollar 62%. So now the Yuan is over 22%? Somebody is losing the currency market and you want to bet who it is? That’s right, the USA dollar.
Expect around Feb-April area to have your retirement accounts to shrink to 20-30% of what they are worth. You ready for that?
Who is heavily invested in the oil companies and why you should care if the banks fail? This article may open up your eyes: http://www.api.org/~/media/Files/Statistics/Who-Owns-US-Oil-and-Natural-Gas-Companies-Shapiro-Pham-study.pdf