In an article by Dave Hodges of the Common Sense Show, he states that the BRIC nations are strategizing under the correct premise that they are dependent on currencies which had no future.
The BRICS are fully aware that elite international bankers have already transferred much of their wealth into hard assets like gold and have abandoned fiat currencies. The BRICS also understand that the international banking cartel is taking steps to collapse the petrodollar as a medium of exchange. In response, BRICS nations are running to gold although their fate is already sealed. BRICS debt outweighs ability to acquire gold as an offset due to credit swap derivatives debt responsibility already assumed by these central banks.
According to a recent article by the Gold Council, Central banks have purchased 477 tonnes in 2014, up a massive 17% from already shocking 2013 numbers of 409 tonnes. This is only eclipsed by the 544 tonnes bought by central banks in 2012.
Let’s look at the relationship between Gold and the Dollar.
The US dollar as it is currently trading around 94.34. Silver is 16.80, and gold is 1221.30. Since July, the dollar has soared nineteen percent. Most news headlines regarding gold are terribly bullish and the US Dollar seems to be in high demand. The US dollar has lost less buying power recently than any other currency in the world. What we see here is that for the first time in four decades the price of gold has not weakened as the dollar strengthens. Gold’s rally after the 1200 level coincides with that of the dollar. This is what we haven’t seen in forty years.
Since we see much more pro-dollar / anti-gold sentiment than usual, this may be signalling a paradigm shift in the dollar/gold relationship. This possible pivot point indicates a potentially massive bottom in gold as a currency and a major top in the US dollar as a currency. Dollar versus Euro is at an eleven year high. US stock markets are near all-time highs and gold is in a deep (35% or so since 2011) correction, most likely manipulated by massive central bank buying, and the price of gold in other currencies scrapes new highs.
Remember also that in 2010 the dollar was dumped in favor of gold until the yellow metal bounced over 1900. Then it reversed. In 2009 market sentiment was anti-stock with pundits forecasting a 5-6000 Dow. Another missed opportunity. Now we see Fed policy maintaining virtually zero-percent interest rates so connected institutions can borrow money for free with which to speculate.
Likewise with mortgages and real estate in 2007 and 2006 with 100-110% mortgages causing the inevitable price bubble and resultant yet-unresolved recession of 2008.
Obviously a good resolution is unlikely with current debt levels.
This “race to the bottom” to debase currency is the sole reason the US dollar rises relative to other currency. Ladies and gentlemen, this is the definition a currency war. I believe this is a perfect setup. The sentiment of the dollar is at record levels and gold sentiment is at a long term low.
The central banks believe that printing money will solve the problem; you don’t create wealth by printing worthless pieces of paper.
The worldwide printing of money will lead to hyperinflation of an exponential nature. It will not solve the problem because the debt will also go up exponentially…a hyperinflationary spiral followed by a deflationary collapse.
Gold has been held back by the central banks, by manipulation, by futures markets, and by the paper market, so I think when gold accelerates…it could go up far more than by 50% in late 2015.