Rumors Surfacing About the Death of The US Dollar

As written by Sandy Franks of thewomensfinancialalliance.com

The U.S. dollar (USD) has been the world’s global reserve currency for over 70 years. It was given this elite status at the Bretton Woods Conference in 1944; otherwise known as the United Nations Monetary and Financial Conference.

At this conference 44 nations gathered together from July 1 to 22 in Bretton Woods New Hampshire. Their goal was to agree upon new rules for the post-WWII global monetary system.

The amount of debt England incurred during the war forced it to pass the global reserve currency status over to the United States

Why does having this status matter?

Being given this status allows a currency to be worth much, much more than any other country’s currency. A large part of having a global reserve currency is your currency becomes global in demand.

It is the international baseline currency for all trade. Countries are agreeing, in principle, to trade with your currency. Currently about 20 currencies peg their currencies to the dollar. Doing so, gives other countries a powerful medium of exchange.

six latest reserve currency countries

Six Latest Reserve Currency Countries

However, many countries, especially in East Asia, have stopped using the U.S. dollar for trading purposes.

Instead they are using “bilateral trade agreements” and they’re becoming popular these days. That’s prompted rumors that the U.S. dollar’s rein as “supreme currency” could soon come to an end.

Is this possible? Minneapolis Federal Reserve President Neel Kashkari said it’s possible the dollar could loose its status as the world’s reserve currency during his lifetime.

Let’s explore some of the challenges the U.S. faces in retaining this title.

Debt: Everyone knows that the U.S. has a debt problem. In fact, we’ve always had debt. In 1860, America’s debt was $65 million. The Civil War brought about a major spike in the debt. World War I and World War II also brought about major rises in the debt.

Although the amount has fluctuated, in recent years it has skyrocketed. We are now swimming in $19 trillion in national debt.

The U.S. owes almost US $3 trillion to just Japan and China alone. And regardless of whether Trump or Clinton wins the next election, the debt will only continue to grow.

Value of the Dollar: The value of the U.S. dollar has been in a downtrend for the last 31 years. The U.S. dollar index, which compares the greenback to the euro, yen, pound sterling, krona, franc, and Canadian dollar, has been trending lower since 1985.

Only over the past two years has the U.S. dollar increased in value relative to other major currencies. That’s not because the U.S. economy is doing so well; it’s that the other economies are doing worse.

Too Many Dollars: Another problem facing the U.S. dollar is that there is too much of it in circulation. The money supply started to increase in 1984; at the same time the value of the U.S. dollar started to decline against other world currencies.

To stimulate the economy following the Credit Crisis of 2008, the Federal Reserve announced three rounds of Quantitative Easing, a monetary policy that created trillions of dollars in new paper money.

Throughout history, countries that have continued printing more of their money eventually saw the value of that money collapse.

Negative Trade Balance: The U.S. has not had a positive balance of trade (exports minus imports) since 1976. That means since 1976 other countries have been exporting goods and services to us and we have been exporting our currency to them in return.

So if countries decided against the U.S. dollar as the reserve currency, what would they use instead?

Central bankers throughout the world, from Canada to Ireland, have recently suggested that they might issue a digital currency in the future.

There’s also the possibility of using the Chinese Yuan, also known as the Renminbi as the worlds’ reserve currency. Countries are trading so much Yuan that it has become the second most used currency in the world, passing the EURO in 2013.

If the USD is replaced, what happens to the U.S. economy? Without demand for the dollar, the end result would be a major currency devaluation and probably a drastic standard of living adjustment.

Could this actually happen? Anything is possible. These rumors have been around for a while but in recent years, they are getting louder and louder.


I hope the above forex currency trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and Currency Information source.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Is Small Investor Money and Capital Getting Tight?

As reported by Brian Chappatta at Bloomberg.com

The municipal-bond market is forcing high-yield borrowers to scrap their junk.

The Florida Development Finance Corp. this week postponed a $1.75 billion unrated bond sale for All Aboard Florida, a passenger railroad backed by Fortress Investment Group LLC, that underwriters have been marketing since August. A Texas agency has delayed pricing $1.4 billion of speculative debt for a methanol plant since releasing offering documents Oct. 19. And the Puerto Rico Aqueduct & Sewer Authority, struggling to access capital as the island staggers toward default, couldn’t lure buyers even with yields of 10 percent.

The struggle to sell the munis mirrors the slowdown in the corporate-debt market for much of the year amid signs of a weakening Chinese economy and declining commodity prices. With speculation growing that the Federal Reserve will raise interest rates for the first time in nearly a decade and Puerto Rico’s fiscal crisis escalating, the flow of money into funds that invest in the riskiest munis has slowed to $1.2 billion this year, compared with $8.8 billion in 2014, Lipper US Fund Flows data show.

“You’re not seeing a tremendous amount of money coming in and really burning a hole in people’s pockets,” said Mark Paris, who runs a $7.3 billion high-yield muni fund from New York at Invesco Ltd. He said he or a colleague visited Florida and Texas to analyze the rail and methanol offerings, though he declined to say whether he’ll buy the bonds. “Size is becoming an issue — you’re not going to have every high-yield fund in these. There are only a certain amount of bonds funds can take.”

Large junk-bond deals are rare in the $3.7 trillion municipal market, which is mostly made up of states, cities, counties and school districts at little risk of defaulting. Until Puerto Rico issued $3.5 billion of general obligations last year, the biggest speculative-grade deal was $1.2 billion.

There are only 12 open-end funds focused on high-yield munis that have more than $1 billion in assets, data compiled by Bloomberg show. Many have large stakes in investment-grade borrowers like California, which has had its credit rating raised repeatedly since the recession as its finances improved.

By contrast, All Aboard Florida’s bonds are unrated, which is an indication they’d receive a junk rating. It’s parent, Florida East Coast Industries, was ranked seven steps below investment grade by Standard & Poor’s last year. The methanol-plant bonds for OCI N.V.’s Natgasoline LLC will probably have a rank three steps below investment grade, according to David Ambler, who analyzes high-yield munis at AllianceBernstein Holding LP in New York. The Puerto Rico agency, known as Prasa, has the third-lowest mark, Caa3, from Moody’s Investors Service.

Size An Issue

“The biggest issue that’s postponing these deals is just the absolute size of each one, and they’re certainly speculative,” said Mike Petty, manager of the $1.8 billion MainStay High Yield Municipal Bond Fund. “It’ll be difficult to get that many bonds done within our space. The underwriters have been trying to get crossover interest as well.”

With Puerto Rico veering toward default, some hedge funds and distressed-debt buyers may be leery of buying more high yield munis, said Invesco’s Paris. Such investors, know as crossover buyers because they’re not limited to specific markets the way mutual funds frequently are, hold as much as a third of the island’s $70 billion of debt, according to Mikhail Foux at Barclays Plc. Puerto Rico’s bonds have slumped more than 10 percent this year.

“There’s a lack of crossover hedge fund buyers who can come in and take up the slack of what the tax-exempt buyers don’t buy, and that’s slowed down the order process,” said Paris, whose fund has gained 3.8 percent this year, beating 93 percent of its high-yield peers. “I’ve been surprised at how long people have talked about these deals.”

High-yield munis have delivered lackluster gains this year. They’ve returned 0.8 percent, about half what was seen in the broad municipal market, Barclays data show. That’s partly because of Puerto Rico, whose bonds make up at least 25 percent of the index.

Gauging Risk

The offerings that have struggled to find buyers carry more risk than typical munis.

Puerto Rico’s sewer agency, which shelved a $750 million sale, could be swept up in the commonwealth’s debt restructuring, with Governor Alejandro Garcia Padilla seeking to persuade investors to accept less than they are owed. All Aboard Florida would be the first new privately run U.S. passenger railroad in more than a century, a project whose success will hinge on travelers’ willingness to abandon their cars in favor the 235-mile (378-kilometer) train line running from Orlando to Miami. The methanol plant is an effort to break into a business dominated by foreign competitors.

All Aboard Florida spokeswoman Melissa Shuffield didn’t return phone calls seeking comment. Omar Darwazah, a spokesman for OCI, didn’t respond to a phone call and e-mail seeking comment.

With interest rates near generational lows and the Federal Reserve signaling it may end its almost seven-year policy of keeping borrowing costs close to zero, investors are rightfully slow to commit to new deals, said Jim Murphy, who manages T. Rowe Price’s $3.3 billion high-yield fund from Baltimore.

“It’s that much more important to be careful when spreads are tight and rates are low like the environment we’re in,” Murphy said. “People are being really careful and that’s refreshing.”


I hope the above forex currency trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and Currency Information source.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

One of Four Financial / Stock Market Scenarios Will Happen

Below I have listed four possible economic situations that I believe currently have a high potential of coming to reality.

1) Inflation kicks in hard and fast.
Inflation must grow to support current and future growth of the Dow Jones Industrial Index prices.

I’m thinking the Feds are trying hard to pull this one off by printing dollars and are counting on this to help solve the debt problem. The FED hopes that printing dollars will also help jumpstart the world economy and help the USA maintain a strong financial currency position. It’s an all or nothing approach.

OR

2) Sharp Stock Market Correction Coming.
No inflation means no support for inflated stock prices.

This theory works against everything the Federal Reserve is counting on. It will mean that the Fed has failed to accomplish their above goal.

OR

3) Major expansion of world economic growth.
Expansion of economic markets world wide will help support the elevated prices of the mostly international stocks in the DOW Jones Industrial Index. Cost of hard goods goes up with some off setting efficiency plays.

An orderly world order must be maintained for this scenario to play out. As of today world order is going in the opposite direction.

OR

4) International conflict syndrome.
This is when essentials inflate and stocks drop fast and hard. Conflicts disrupt the sensitive trade routes around the globe.

This is a world war three type scenario and if US policy doesn’t change fast this can become reality quickly.

More likely than not (three out of four indicate inflation) I’m thinking inflation is coming and your trading and retirement plans should account for inflation.


I hope the above forex currency trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and Currency Information source.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Is Now the Time to Buy Gold and Silver

Today gold is trading at about 1,330 U.S. Dollars.

My information and charts indicate that Gold has a target low of 1050 U.S. Dollars with a low range from $950.00 to $1,180.00.

My information and charts indicate that Silver has a target low of 17.80 U.S. Dollars with a low range from $16.00 to $19.00.

Here is a link to my last opinion on gold.

I hope the above forex currency trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and Currency Information source.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Key Facts about Leverage in Forex Trading

Leverage is a term that many Forex brokers use in order to attract new accounts. A high leverage ratio is quoted to many unsuspecting potential Forex traders who believe that a broker that offers the highest leverage will be the most reliable. This is not the case. There are many things that should be considered by the trader before he starts to trade Forex.
Here are the main things a trader must know:
– Leverage is a loan that is offered to a Forex trader by his forex broker so that higher value trades can be placed in the market place. This loan is offered in the form of a ratio and is based on the trading account that has been chosen, the amount of money that you choose to invest and the specific country that you are operating in. (Some countries mandate specific leverage limitations).
– The levels of leverage offered in Forex trading are far higher than the margins that are offered in the equity markets. This is because currency prices do not fluctuate as much as stock prices in a day and the change is about 1 percent at an average.
– Leverage can be obtained from the Forex brokers after opening a margin account with the broker. This allows for a Forex trade that is much larger and can produce larger profits.
– When a trade moves in the expected direction, the amount taken from the broker is returned to him once the trade is closed. On the other hand, if the trade ends in a loss, the trader may encounter higher levels of loss due to the leverage that has been used.
– Leverage is an option that Forex traders should use judiciously in order to ensure that they do not end up losing their life savings.. The size of the Forex market is so large that a small mistake can sometimes lead to huge losses.
– When deciding on the amount of leverage to use, risk tolerance should be kept in mind. This is the amount of money that you can lose without risking your lifestyle and family requirements.
– Last but not the least; leverage should be used as a tool to ensure higher levels of liquidity and not as a loan at all times. You should be extremely sure of the trade that you are making if you do avavail of leverage beyond your financial situation.
All in all, leverage is a great tool that every Forex trader has at his or her disposal. The trader must know how to use it correctly.

I hope the above currency trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Gold May Become a Tier One Asset

I received an email regarding gold officially being accepted as a tier 1 banking asset as of January 1st 2013.

Information indicates that the global banking regulatory group that meets in the small mountain town of Basel, Switzerland is responsible for setting global banking standards. They decide things like which assets qualify as Tier 1 assets, how much loan loss reserves banks need to hold, and how much leverage banks can take on.

Basel Committee on Banking Supervision

Officially known as the Basel Committee on Banking Supervision, it’s only met three times in the last 20 years. The first meeting was in 1988. The second meeting, Basel II, in 2004, was a disaster. The Basel banking geniuses allowed mortgage-backed securities to be considered a Tier 1 asset. (A Tier 1 rating means that the asset is considered a cash equivalent.) Of course, after the housing crash and ensuing Great Recession, we know that mortgage-backed securities are nowhere near as good as cash.

So in 2010, the committee met again to fix their past mistakes. It was at this meeting — known as Basel III — that the biggest news for gold in 40 years emerged.

Basel III will fundamentally change the way gold is valued by the financial markets.

The Basel Committee on Banking Supervision ruled that gold could be included as a Tier 1 asset. In other words, Basel III rules make gold just as good as cash or Treasury bonds.

Before Basel III, banks had to hold around 6% of the value of outstanding loans as collateral for those loans. Most of that 6% was comprised of what’s called Tier 1 assets: cash and company stock. (Treasury bonds count as cash.) After Basel III, banks are required to hold approximately 12% of Tier 1 capital. But the big news is that gold will now be considered a Tier 1 asset.

Prior to Basel III, a bank could only count 50% of gold’s market value as collateral. As of January 1, 2013, gold’s value will double as a banking asset.

Rumors have the European Union will adopt Basel III rules in January 2013. So will Russia and Japan. China, India, and even Pakistan are on board. Australia, New Zealand, Brazil, and South Africa, too.

ONE POINT is that gold that banks hold will double in qualifying asset value automatically. The banks will need to do nothing and gain 100% increase in their qualifying banking gold assets. This seems to be great for foreign banks, who many have been accumulating gold over the last several years and bad for most USA banks who mostly have not been accumulating gold.

SECOND POINT Will banks need or want to start buying more gold now or have they already made their major purchases of gold in anticipation of the effective date of January 1st 2013. Most likely, yes, (I would guess most if not all) major gold buying banks have long ago heard of this new Basel III gold reclassification asset upgrade rule to a tier 1 asset.

THIRD POINT The big question is, has the new Basel III banking rules requirement of 2010 named above been figured in to the price of gold? In my opinion most of the gold buying by banks has been completed in anticipation of the 2013 effective date.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Many of the world’s most used currencies have dropped in value!

For much of the past few years, the world’s largest economies have experienced a fair amount of uncertainty and turmoil. Many of the world’s most used currencies have dropped in value, entire economic systems have demonstrated considerable instability, and as a result people have begun to look for alternative ways of maintaining and increasing wealth through various investment opportunities. This is where practices such as forex trading – essentially, purchasing other world currencies with your own in the hope of eventually selling back for greater value – often come in. However, it is also a reason that many people look to invest in precious metals such as gold.

Gold investment is something of a foreign concept to many people – even experienced investors – but in reality it is actually quite simple. While gold is not like a typical stock or investment opportunity, in that it is not tied to a particular company or industry, investing in the metal is quite simple. You only need to find a reliable gold investment website such as Bullionvault, where you can purchase essentially any amount of physical gold bullion you like. You can then store your gold safely at a secure location, to be kept, withdrawn, or sold whenever you choose. The whole process is incredibly easy and makes gold investment one of the most accessible financial dealings you can make.

The main reasons for gold investment, as mentioned, are somewhat similar to most forex trades. Essentially, the idea is that gold has a universal price, and does not change in value as a result of any one economic system or currency. Because of this, gold is generally not prone to sudden drops or rises in value, meaning that many people see it as a somewhat stable financial resource. For this reason, a common reason to invest in gold is that one’s currency value is depreciating. For example, if you typically use the U.S. dollar, and the value of the dollar is projected to drop, you may want to purchase gold to protect the value of your wealth, rather than leaving that value in currency. Not only can you avoid the drop in dollar value this way, but you may see your wealth increase as other investors buying gold drive up the price of the resource slightly.

Looking ahead to the remainder of 2012, however, there are some doubts as to whether gold investment is particularly strategic. The U.S. economy is showing significant signs of strengthening in the near future, and the outlook for the dollar is considerably stronger than in recent months or years. Meanwhile, with the euro struggling, many European forex traders are turning to the dollar, rather than gold, which means the gold outlook is not as strong as many predicted a few months ago. All of these factors are important to consider when investing.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Binary Option Trading; what is a Currency Asset?

In the world of binary option trading there are four major classes of assets. Stock, Commodities, Indices and Currencies. There is a small number of major currencies and a much larger number of minor currencies. In binary option trading, the worth of a currency is calculated by pairing it with another currency, and seeing what the trade value is. Here is an example of a binary option currency trade: A trader notices eleven o’clock AM that the EUR/USA is at 1.2410 .He believes that it will rise to 1.2473 at 12 o’clock PM. His next step would be to purchase a call option, and set his expiry time to one hour. If his prediction turns out to be correct, it results in payoff. There are many different currency pairs to choose from when purchasing an option. Some of the different currency pairs offered by Forex as a stock option are:

EUR/USD

EUR/GDP

EUR/JPY

EUR/CAD

EUR/CHF

USD/RUB

USD/CZK

USD/JPY

As with any asset in binary option trading, many factors can determine the outcome of a currency option. It is a good idea to get a basic understanding of Forex charts. There is usually a different chart for each currency pair. With a little practice, you’ll become a pro at evaluating Forex chart patterns and correlations. It is very important to set your expiry time correctly. You may also want to get an understanding of what abbreviations are used for the name and currency of each country. With this and a great risk management plan, you’ll have everything you need to be on your way to consistent payouts in no time. It is a good idea to start slow until you gain experience, and then build up from there.

The above information is opinion based except where noted. Always contact a licensed professional for information on the above subject or BEFORE applying or practicing the above information.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

What is the Difference Between Investing and Speculating ?

Benjamin Graham defined speculation in his classic book, The Intelligent Investor, as primarily “anticipating and profiting from market fluctuations.”
He defined investing as “acquiring and holding suitable securities at suitable prices.” When it comes to investing, valuation always matters.

The FaceBook IPO has been a good example of “The Difference Between Investing and Speculating”

Speculating

Consider a volatile junior gold mining company that has an equal chance over the near term of skyrocketing from a new gold mine discovery or going bankrupt. With no news from the company, investors would tend to shy away from such a risky trade, but some speculators may believe that the junior gold mining company is going to strike gold and may buy its stock on a hunch. Speculators look for a high return on a spec investment.
Many speculative investors will buy several companies in a growth field and hope that one or two pay off big in order to cover the losses of the companies that fail to produce a profit.

Investing

Consider a large stable multinational company. The company may pay a consistent dividend that increases annually, and its business risk is low. An investor may choose to invest in this company over the long-term to make a pre-determined satisfactory return on his or her capital while taking on relatively low risk. Additionally, the investor may add several similar companies across different industries to his or her portfolio to diversify and further lower their risk.

I hope the above trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

FaceBook Value and Speculation or Investment ?

I’m not one to usually comment on an individual stock but so many have asked about FaceBook that I feel compelled to contribute my view.

1) Is FaceBook Growing? The only figures I’ve heard for months is the 900 million users number. Therefore there has been very little, if any, increase in month over month FaceBook users.
This is a red flag!

2) What is a FaceBook User? Based on current information a FaceBook user is someone who has a FaceBook account. Let’s keep in mind that it is almost impossible to close a FaceBook account. Therefore; out of the 900 million users 200 million are basically non-functioning accounts.
NEW TOTAL 700 million users.

3) Let us also figure that one person can and usually does have more than one account. Therefore; out of the 700 million users 200 (account holders) million users have two accounts.
NEW TOTAL 500 million users.

4) Now lets look at what reality can define as an active user. An active user can be defined as signing into their FaceBook account more than once per week. Therefore; out of the 500 million users or account holders there are 200 million users who do not sign into their FaceBook account more than once a week. Now we are down to 300 million active users.
NEW TOTAL 300 million users.

5) What FaceBook wants you to believe;
900 million users dived into 100 billion dollar stock offering equals about 1,111 dollars per user.

6) Now let us use the 300 million ACTIVE FaceBook users;
300 million users into 100 billion dollar stock offering equals about 3,333 dollars per user.

You can see how the actual price paid per active user triples from $1,111 to $3,333.

Let us also consider the fact that the major owner and CEO of the company never really wanted to let his GROWING company go public. Then one day he woke up and said “I want to go public”. No he did not. He and his consultants and board members said “our growth has stalled and now is the the time to go public”.

What FaceBook did was offer to the public the next two to three years of POTENTIAL growth.
In other words purchasers of FaceBook shares just paid what the company may be worth in 2015. That is a three year wait and see investment at future par value.

Therefore one might believe that a current investment in FaceBook is speculation and not an investment.

Does FaceBook have the potential to monetize and become a major player? My view is that it is surely possible but the road ahead has several major turns (generating a profit) and unpredictable storms (competition) in it’s path.

This link added on 5-25-12 “5 signs Facebook hates its shareholders”

This link added on 6-13-12 What Facebook Stock Is Worth?

I hope the above trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.