Last week, I got an opportunity to read a lot more and focus on many news issues that usually do not get press or air time in the United States.
The first of the events that nearly had me fall of my chair was actually the close of the week before Thanksgiving. The People's Bank of China announced on Nov. 20 that it is no longer finding it beneficial to add any foreign currency reserves to its holdings. In simple words, it will not be buying U.S. dollars in spades anymore.
This, coming from the country with the world's largest surplus and the most prolific buyer of U.S. debt, should have had the U.S. dollar taken to the woodshed. Yet we had no reaction whatsoever in the markets. And yes, CNBC and other such financial stewards of the American economy did not cover this news.
In order to make the Chinese renminbi the world's global currency, China has been strategically, but deliberately, pushing the U.S. dollar into a corner. I have often spoken to you about the growing number of bilateral currency agreements that China has entered into. Now with this reduction of purchasing currency, they are expanding the trading band of 1 to 2 percent per day in which they will allow renminbi to fluctuate. This is yet another baby step toward a freely traded currency.
The above maneuvers are a great segway into the next news that broke Sunday night. The Chinese renminbi has now become the second most traded currency in the world. It has now surpassed the euro.
Can you imagine a currency that is often labeled as highly manipulated being the second most traded currency? What will happen when it free floats?
The U.S. government and Federal Reserve are running about panicked these days. The issue is that they know the days of the U.S. dollar being the reserve currency are over. So they are throwing anything they can to stop this rising tide. They are chasing Bitcoins.
The Commodities Futures Trading Commission (CFTC) has received dozens of complaints that the gold and silver markets are manipulated. They decided not to investigate this. Instead they are working on regulating or shutting down Bitcoins, a virtual currency that cannot be manipulated by laws and artificial controls.
This has my conspiracy senses tingling. Just for a moment humor the thought that if the government is manipulating the commodities markets all of this could make sense. The CFTC would not investigate and try and crush any challenger to the U.S. dollar. Gold and silver are prime suspects to be tampered with.
The secret that the Fed is using to manipulate the gold and silver markets is simple. They are "leasing" out gold and silver whereby they create artificial circulation of the commodities, allowing layers and layers of derivatives and paper trades to be created. As a result, the paper markets for gold and silver have shot to the moon. And then they artificially control that paper market to drive the prices down. That's how they are doing it.
The unfortunate truth is China knows this game and is planning to challenge this strategy and stop it for good. As soon as they manage to break through, we will see gold and silver soar and the U.S. dollar crash. I have been diligently buying physical gold and silver in a disciplined manner through the collapse and will continue to do so.
It is time you did as well. Live long and diversify!
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