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Mix-Ansicht- Sinclair: Der Dollar als Reservewährung stirbt vor unseren Augen - kingsolomon, 06.05.2003, 21:03
Sinclair: Der Dollar als Reservewährung stirbt vor unseren Augen
-->achje, fast melodramatisch, dieser Ausdruck, aber wo er Recht hat, hat er Recht
conference
General Editorial
May 06, 2003
My way or the highway
Secretary Powell was asked recently by a reporter whether there should be consequences for countries that didn't support the U.S. decision to wage war against Iraq. The answer was a definitive, short and totally clear, YES!
Already, Bush has cancelled the proposed visit to the United States by Prime Minister Chretien of Canada, a French Canadian whose decision not to participate in the war was probably based more on domestic issues than anything else. The liberal party in the French speaking province of Quebec was neck and neck with their separatist rivals (who opposed the war) and the liberals might have lost the recent provincial election had Chretien not made that decision.
In any event, it's worth remembering that Canada participated in the first Gulf War, the war in Yugoslavia (where its air force flew 10% of the sorties into Yugoslavia) and in Afghanistan where it's currently sending another 2000 troops. Canadians always like to remind their American cousins that they helped Britain fight off the Germans from 1914-18 (losing 60,000 troops in the process), well over three years before the US became commited to the war. They were also Britain's lifeline from 1939-41 when the attack on Pearl Harbor forced America to renounce its isolationist policies.
Market rumors are that Canadian grain (which the U.S. recently slapped duties on) will not be shipped to their normal clients in Iraq but rather only US grain. Regardless of their past history, those that failed to support the US position on Iraq will be ignored while those that stood by the US will be rewarded.
Sounds reasonable to me but everything has a price! Chile's request for trade agreements has been blocked as have Russia's economic goals while the Prime Minister of Australia was feted yesterday at George Bush's ranch. Still sounds reasonable to me.
Nonetheless, the price of turning major nations of the world into vassals in a deficit environment spells the demise of globalism in my view and its attendant currency, the US dollar. This is the"beginning of the end" of the Universal Dollar Reserve Standard. It is also the beginning of the resurgence of gold from a commodity form for 22 years to a currency for many years to come.
Gold functions when the dollar fails because all currencies are forever growing in the amount of currency outstanding. Therefore no paper currency, be it the public relations phenomena of the Euro (bag of financially troubled countries hiding behind a no country currency) or the new tiger on the block, the Mexican Peso, that is a sound store house of value. Even the Canadian dollar is coming on strong and may reach par with the US in the not-too-distant future as I've said in the past. In time, as always, investors will wake up to this fact.
For those that study market history, the takeover attempt of Erie Railroad in the days of the great speculators, Fisk and Gould, is akin to buying a currency as a long-term investment. As the shares of Erie Railroad were under accumulation by those seeking to obtain a control position, the company simply printed more shares and filled the demand. The outstanding number of shares of Erie Railroad grew faster than the increasing demand which was attempting to gain a control position, making control impossible for the usurpers.
The Euro as I told you months ago had a $1.20 to $1.23 price objective on it. In the Euro range of 1.16 to 1.19, demand will shift from the Euro to gold. Gold is money and if the Gold Council had realized that, rather than trying to sell jewelry in a recession it might not be facing its own financial squeeze.
Now the combination of the Iraq war and the return of gold to its currency form has begun as the end of the Universal Dollar Reserve Standard becomes evident. Rest assured that central banks will be selling dollars and at first simply retaining their gold positions. However, as in the late 70s these almost religious sellers of gold, the central banks will turn into buyers.
Here's an excerpt from an article that appeared in the Financial Times that I'd like you to review and which I will comment on later.
Peso Soars After $32m Sale of Dollars
By John Authers & Sara silver in Mexico City
Financial Times
The Mexican Peso gained strongly against the dollar yesterday, completing a two month period in which is has appreciated by more than 10 percent against the US currency. This jump was in part investors reaction to the $32m sale of dollars by Mexico's central bank. This sale marks the first tranche of an eventual $2.1 billion that will be sold over the next three months - a bid to limit bloated foreign reserves, which surpassed $50 billion for the first time this year.
Jim Sinclair's Comment:
Dollars as a"Central Bank Reserve Asset" because of their future depreciation potential and recent decline are clearly a"Non Performing Asset" because the depreciation of the dollar is now four times the dollar yield.
The"Universal Dollar Reserve Standard" is dying in front of your eyes and that in itself increases pressure on the dollar. It is a terrible market comment that Mexico is being kind to the Exchange Stabilization Fund by not selling the USD$2.1 billion all at once. But the announcement of its intention to sell also hurts the dollar.
You should be able to sell that amount in sixty seconds not a few months. The Humpty Dumpty Dollar fell off the wall of four Head & Shoulder necklines and"All the Kings Men" cannot put it back together again. Therefore,"All the Kings Men" plus the Gold Cartel of Common Interest cannot take gold apart either. Fights as they may, in time, $400 will be behind the gold price, not in front of it
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