KTFA:

Pdids: » September 2nd, 2015, 7:04 pm 

Once I wrote earlier today : (See post here:  http://www.dinarrecaps.com/our-blog/tidbits-from-ktfa-members-wednesday-afternoon1  )

I decided to go downtown to meet for lunch with two of my close friends who are very active in the Chicago Financial Community who are considered by their peers to be 2 of the most respected Bond Traders around who just happen to also be very large Iraqi Dinar Investors as well.

While I shared with them the 2 articles that I posted of Walkingsticks (See Link above)  they were already well aware of them .

In fact one of them will be at the upcoming meetings in London. They were also almost identical in their opinions of their theories of what needs to take place. Please allow me to share with the family.
….

Without a doubt, they both said that the United States and London are the 2 leading Bond Market Places in the World.

In addition, Citigroup, Deutche Bank and JP Morgan are without a doubt the 3 leading underwriters of the World. Neither of these 2 Countries or 3 Banks are going to be blindsided by a Country such as Iraq.

Iraq in neither smarter than them nor better than negotiating. If they are playing games, the World Powers and the Banks will see right through them and end the meetings on the spot and that will be the end of Iraq’s chance of EVER entering the World Financial Community.

In addition, after doing some more research on their computers in front of me for more technical information that one can imagine, the names listed representing Iraq on this trip are at the pinnacle of its own financial community. They would not be sending the best if not without orders to get a deal done.
In their professional opinion after being involved in Bond Offerings 100 times more valuable than Iraq’s , one does not make this long of a trip to the 2 leading World Powers with the 3 Leading World Banks IF NOT INTENDING TO MAKE A DEAL to issue debt THAT WILL BE AN OFFERING EXTERNALLY IN THE GLOBAL FINANCIAL MARKETS.

Iraq is not here for a lot of talk and no action. They are hopefully here to sell Bonds , signed sealed and delivered in the Global World Markets.

To do so, requires a rate and one considerably higher than is presently at 1186.

No Country and No Corporate Entity in their opinion are going to buy these Bonds on a promise from a country such as Iraq or any country for that matter with a Program Rate.

It will require a RATE INCREASE FIRST .

Naturally this is only the opinion of 2 close friends who have over 50 years of experience in the World Global Bond Markets and are Dinar Investors and who have been involved in not Billions ….but Trillions of Bond Investments over their long careers.

Thank you for allowing me to share.

DinarUpdates.com Round Table Chat (mid-day) 9-02-15
 Welcome to dinarupdates.com for Round Table with BGG!!

WELCOME TO ROUNDTABLE AT DINARUPDATES.COM 

BGG: OK – rcookie, what do you think is the big news of the day??

Rcookie: Abadi denies claim to “the dissolution of parliament and the announcement of the emergency government.” 18:45 02/09/2015 Denied the Information Office of the Prime Minister Haider al-Abadi, on Wednesday, demanding the Prime Minister to dissolve parliament and form an emergency government, 

and as pointed out can not be done without the consent of the President of the Republic, 

he stressed that the constitutional institutions is the sponsor of the reform and the Constitution is authorized to make any change beyond the pale. 
~~~

Some of the social media (Facebook) deliberated sending the prime minister, a book for the presidency of the parliament calling for the Council to resolve and the formation of an emergency government.

BGG: Interesting…

Rcookie: “The first is to apply for one-third of the members of parliament to resolve the Council, and not canceled, to be voted on by an absolute majority.

“He said government spokesman, that “the approval of the dissolution of Parliament requiring the President of the Republic during the 60 day call for the election of a new parliament,”

 pointing out that “the second mechanism includes a request from the Prime Minister and approved by the President of the Republic, and send it to parliament for a vote.”

The three presidencies, expressed, on Tuesday (the first of September the current 2015), support for the reforms that achieve the interests of the Iraqi people, and praised the military operations carried out in different parts of the country,

while stressed the need for the completion of the National Guard and the Federal Court and national reconciliation laws, It showed that the economic and financial sides of the priorities of the executive and legislative bodies that are to focus on reforms in the file.

http://translate.googleusercontent.com/translate_c?depth=2&hl=en&prev=search&rurl=transla te.google.com&sandbox=0&sl=ar&u=http://www.faceiraq.com/inews.php%3Fid%3D4148789&usg=ALkJrhgpuHhzUWEuIWX-Omr-JiQpt6XY6g  Broken / Bad Link

https://translate.google.com/translate?depth=2&hl=en&prev=search&sandbox=0&sl=ar&u=http://www.faceiraq.com/inews.php%3Fid%3D4148789

BGG: good stuff – Abadi is responding to these recent comments about him “declaring martial law” without actually declaring it…

BGG: I don’t think this is what he wants… though it is not impossible he might have to resort to as much in the face of the “deep rooted” corruption.

Rcookie: 1.needs President Masum consent2.operate within the “Constitutional Framework, Institutions,Mechanisims”Dissolve parliament 2 ways Constitutionally:1st.. 1/3 Parliament to dissolve council ( basically vote to Fireyourself) and voted on by absolute majority!Followed by President calling for “New Vote” in 60 days!!2nd.. Request from PM..approved by President…then sent to Parliament for vote

BGG: further, this article ends up pointing out what I think are the next two steps…

BGG: National Guard Law… and the Fed Court Law.

BGG: they are going to get these militias under the control of Baghdad and get a Fed Court Law put in place… the Fed Court Law will balance the court and eliminate Medhat al-Mahmoud (I’m not sure he isn’t already in violation of existing law – too old)… finally…

BGG; the reason is simple – they have to wrest control of these PMU militias from Maliki and his associates and they need to deal with Mahmoud if whatever they do with Maliki is going to “stick”…

BGG: It would appear Mahmoud is MUCH dirtier than we have imagined. It appears there is no doubt in Abadi’s mind what he is up to…

BGG: further, as I commented earlier…

BGG: It is surprising Mahmoud is putting up such a fight… I thought he “resigned” a while back and his peers “urged him” to stay … that all looks to have been “political theatrics” at this point (or in Redneck lingo – PURE BS!!) …

BGG: and as in an earlier tweet (today)…

BGG: BGG ~ I made note of Mahmoud “politic-ing” the other day – this appears to be what he was after… strange for a judge…

BGG : However, Ameri may be supporting Mahmoud – but the Badr politicians (the political wing of Ameri’s group) are distancing themselves from this “boots on the ground” support of Mahmoud…

BGG: as evidenced by this piece…

BGG: Deputy for Badr bloc denies the issuance of any assessment of them the work of al-Mahmoud positively or negatively

BGG: Follow-up – and babysit – MP for the Badr parliamentary bloc Razak al-Haidari, Wednesday, to discuss and evaluate the performance of the judiciary will be in accordance with legal tracks and not through the media, denying the issuance of any evaluation of the mass on the work of the judiciary Chairman Medhat al-Mahmoud positively or negatively.

BGG: Here’s another headline…
BGG: The most important of the judiciary, headed by Mahmoud crimes!!

BGG: Ouch!!!
BGG: This could be (partially) why…

BGG says(12:25 PM): the SLC is turning on the Maliki clan…
BGG: (the Badr politicos are backing away)…

BGG: The issuance of an arrest warrant cousin Nuri al-Maliki in the provincial council in Karbala Criminal Court issued Karbala, Wednesday, an arrest warrant for a member of the provincial council for the rule of law Hani Hamid Jassim al-Maliki, on charges of abusing his position to obtain funds illegally. The accused is one of the cousins, Vice President of the Republic article Nuri al-Maliki

BGG: appears corruption is the “family business”…
BGG: (thanks to firefly for that)…

BGG: The rats are lining up on one side – Abadi on the other, I think Mahmoud will be crushed before this is over…

Rcookie: They’re gonna have a new “Maliki Wing” to the prison!

BGG: Sistani has great influence with the PMU’s also. I don’t think Ameri (or Mahmoud) will win this fight.

BGG: The political corruption MUST END – the WB/IMF is INSISTENT – and these jokers just can’t manage to leave the trough. They (Allawi – Maliki – Mutlaq and others) are clearly showing themselves as defending their corrupt way of life.

BGG: a while back we had a real political insider tell us “you won’t beleive all the places Maliki’s support comes from…” it appears there was “broad bi-partisan support” for him based on HUGE corruption on both sides of the aisle…

BGG: Allawi (known for the rampant corruption during his earlier regime (before Malik) – Najafi (who knows??), Mutlaq (very curious how “against” these reforms he is..) – all Sunnis…

BGG: the poltical insider was reportedly one of Maliki’s “bag men” – so he would know who was “on the take”…

BGG: Now, unlike before – when no one could figure out who the “bad actors” were – they have come out in the open to defend their crooked positions.

Could it be Abadi just “smoked them out” into the open… so people could get a good look at them… or just good fortune??

BGG: OK – sorry for my rant…

quicktolegit96: when are they meeting on Nat. Guard and Federal?

BGG: Sounds like – soon…
BGG: which is legit.   BGG: this is REAL.

jtank: truth always wins

wilson6060: How can they get the laws passed with M’s goons in parliment?

BGG: I don’t think he has the support (or votes) to be the “obstructionist” he has in the past…

wilson6060: WhooPow!!! TYVM

BGG: especially with SLC being the ones who ordered Maliki’s cousin arrested – that is a BIG MOVE (change of direction)…

Pablo: Any idea how they can get these goons out since there seems to be so many?

BGG: the main two can happen quick – the whole scope may take more time…

BGG: but the ones that concern you (in order), Mahmoud, Maliki, Alak…

paul-o: Thanks, BGG, you’ve several times commented about the IMF (or was it the World Bank?) giving Iraq until October 1 to get the necessary laws passed (for an RV?).

Is the emphasis solely on the Anti-Money Laundering law (AML) or what other laws as well? And, if Iraq doesn’t pass those laws by October 1st and they are sent back “to the stone age” monetarily, what does that mean exactly? Can’t they just stay at 1166 if they don’t get those laws passed?

BGG: They have threatened to “black list” their currency.
BGG: and everything that goes with that.
BGG: I doubt bonds (or anything else) sell until this is resolved.

paul-o: Their currency was already not tradeable, how is it worse if it’s blacklisted?

BGG: and I do think Abadi will work with Parliament to get this solved. He is OBVIOUSLY serious about dealing with their corrupt issues.

BGG: and whatever it means – they made an impression on Abadi.

Rcookie: According to information from parliamentarians, confirmed to the reporter Roudao network media “as in the case of non-approval of the legitimacy of laws limit such abuses in the specified period, you will not be able to any country must be prepared to make any loan, whether for Iraq or for the Kurdistan Region, and is no doubt that the real source of this Funds are senior officials of the state, they are washed 5 trillion Iraqi daily by a number of banks are converting these amounts into neighboring countries. “

BGG: which points out one of the main sources of corruption was the whole auction process.

BGG: interestingly – during this “rooting out process” the auctions have been lighter for a few days now…

clay: didn’t they also arrest Malikis son w/billions stolen that would lead them to Maliki

BGG: he is out now – Lebanon let him go… probably kept the cash (1.5 Bil USD)…

Clay: wow, not good

BGG: (obviously) he’s got Finnish status…
BGG: Finland.

Rcookie: That was a quote from “Iraq concern of its inclusion in the international black list for money laundering”

Rcookie: and the network of corrupt banks inside and outside Iraqi borders

BGG: TYVM

Pablo: Have you heard any more about M fleeing into Iran a day or so ago?

BGG: I did hear about that – but not for sure if it is accurate. Could easily just be “noise” in the media… however, if he thinks this will go badly for him – he will ROLL.

BGG: bank on it – he will never face a trial in Iraq (willingly).

_firefly_: Keyword …. willingly ~(

Jguy: Do we know when Allaqs term is up at the CBI ? sept 8th or is it in Oct ?

BGG: He is a “proxy appointment” so he will be gone when he is replaced. Not until…
BGG: here is another interesting piece…

BGG: Ordered the prime minister, Haydar al-Abadi to form a higher committee competent to recover funds stolen and smuggled in inside and outside Iraq, stressing the need to prosecute those involved stealing money and submit to eliminate characters.

The government said the morning newspaper in its edition on Wednesday, and “The Council of Ministers form a government committee to follow up on the country and the recovery of money stolen and smuggled out of Iraq, and working to detect smuggling operations involved.”

She said “billions of dollars that have been smuggled out of the country, enough to remove Iraq from the financial hardship experienced by, resulting from the lack of revenue due to lower selling global oil prices, and its impact on economic and monetary reality.”

 She explained that “the government has taken a series of measures recently in order to reduce corruption and money smuggling, the steps that comes as part of the reforms package and activate the role of the regulatory institutions and the disclosure of spoilers and activating the role of the Anti-Corruption Council, which was formed recently under the chairmanship of Abadi and in cooperation with the judiciary.”

BGG: which was formed recently under the chairmanship of Abadi and in cooperation with the judiciary.”…
Oldmechanic: hi bgg, the 50k and 100k notes. as I take it will come out when the lower demons come out and they are for big business? and we all know what it will take for the lower demons to come out. thank you.

BGG: I am not of that opinion… I am not sure we will ever see the 50 and 100k notes…

Rcookie: Got something on Alaq that contradicts previous report as former Governor…Obviously term has to be after 9/15 by the ink

BGG: let’s hear it…

Jguy: Yes i read that piece, i thought i read something a couple months ago about allaq having till sept 8th ,maybe not thanks

Rcookie: Beirut hosts the Iraqi banking forum By: wab1 Date: Wednesday, 02-09-15 10:33 am Baghdad: Baghdad news An informed source in the Iraqi Central Bank, the Lebanese capital Beirut will host this month’s Iraqi banking forum which will be attended by selected banks and Arabic and foreign countries “. 

The source said “tomorrow”, “on 15 and 16 September, the current date will be hosting the Lebanese capital Beirut for Iraq Beirut banking Forum held in Venice hotel in Beirut with the participation of Iraqi and Lebanese wide banking, in addition to the Monetary Authority’s participation in the countries represented by the Iraqi Central Bank Governor Ismail Al-allaq, Governor of the Bank of Lebanon Riad 

“The importance of the forum for the Iraqi side protrude through the axes to be discussed by the sessions, which will provide an overview of the latest developments in the Iraqi economy, as well as banking developments and the CBI plans to promote financial realities.

“As for the second command is closed bilateral meetings between the Governor of the Central Bank of Iraq and the Executive Heads of Lebanese banks operating in Iraq who can bypass that leads lhadl the various problems they face in Iraq.”

Rcookie: This meeting is also on the heels of the G20 in Turkey!!

BGG: Gotcha – makes sense… I only brought the “former” thing because it was curious, not that anything as “sure” about it..

quicktolegit96: I thought alak was appointed official by ink or am i wrong?

BGG: he is a “proxy” appointee – (by Maliki) and not an entirely legit appointment at that…
BGG: they need a legitimate CBI Gov soon.

quicktolegit96: understandable and ty…i agree with everything

Jguy: BGG frank 26 reported that they caught allaq red handed transferring millions from the cbi to his personal account in united arab emirates

BGG: well great… now to do something about it.

jguy: yea that’s what I say what else do they need to nail him

wilson6060: Can they sustain their country on the recovered funds, will that affect the RV

BGG: I wouldn’t hold my breath – and no, in the long run, they still need it.
BGG: OK gang – that’s it for Round Table…
BGG: power packed, exciting, thanks to all of you!!

Tune in for News Time this evening at 7:30pm EST!!

 http://www.dinarupdates.com/observer/

http://www.dinarupdates.com/blog/

Highly motivated to buy gold bullion



3/9/2015 0:00

Baghdad Joseph Zayer
met with the process of selling gold bullion launched by the Iraqi Central Bank to boost liquidity large turnout by citizens and interested in dealing with the precious metal.
According to the Director General of the release and cabinets in the Iraqi Central Bank’s «morning»

remarks the very good turnout and still sell bullion operations continuous, and this turnout reflects citizens’ awareness of their role in supporting the Iraqi economy and the strengthening of government hedges to mitigate the impact of the financial crisis and transit.

Dr. Ihsan Shomran Yasiri He noted that the bank did not put non-small margin on the price of ingot is currently only one percent, which represents an administrative cost in line with the Bank’s policy to encourage the citizens of the Optional savings to diversify its means and put forward different options for him, where the bank also continues to sell bonds after that extended the completion date of sales to the end of the month of September.

In a statement released earlier, and I followed the «morning» by the Central Bank of Iraq explained that he put bullion in order to diversify the public savings and ensure that they get the gold 24 carat The statement continued,

«the Iraqi Central Bank has contracted with a leading global coined bullion companies Stamping gold bullion weights ( 5, 10, 15, 20, 25 and 50) g and put up for sale through banks and through its center in Baghdad for employees ».

The statement continued, «the bank will basic alloy of big weights (100 250 500 and 1000) and GM launched soon. Bank has called for banks to submit their requests to the General Directorate for issuance and cabinets to buy quantities you wish to purchase for its own account or on behalf of the public.

The selling price was determined on the basis of cost and out of Baghdad International Airport plus administrative uploads by 1 percent.

http://alsabaah.iq/ArticleShow.aspx?ID=99425

Memphis “A delegation [of] senior government officials and experts [is] scheduled to travel to the United States and Britain next week to discuss the issue of Iraq sovereign bonds. The delegation will include [the] Governor of the Central Bank, [various] government officials [most notably the] ministers of the [departments of] oil and finance and consultants and experts in economic and financial affairs. …discuss the process of issuing sovereign government bonds in the global financial market.” A few things we can conclude from this with confidence: 1) They will be traveling to the two key money centers of the world. 2) The names listed for this trip are at the top of the food chain for Iraqi finance.

 

Iraqi Dinar exchange rate against the dollar on Wednesday 9-2-15 Iraqi dinar exchange rate against the US dollar on Tuesday in the Iraqi banks and markets: US $ 1 = 1144.5950 Iraqi dinars 1 Iraqi dinars = US $ 0.0009…

KTFA:

PDids:
  A little clarity from someone would help as my own notes that I have taken from previous CC state that the RI or RV or some increase in value of the Iraqi Dinar WOULD NEED TO OCCUR PRIOR to any International Bond Sale taking place or why would any Country or large Corporate entity invest in 1186 merely on someone’s word who has not been very good at keeping it .

Even Randy in this mornings Summary of his indicates that in his opinion these Bonds mentioned in the article below will be grabbed within moments of being offered this coming weekend.

So my QUESTION IS why in the opinion of DELTA AND FRANK are we waiting until OCTOBER if they have always stated that the RATE WOULD NEED TO PRECEED THE SALE OF THE BOND?
….
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Frank26:  With us and You Friend ………… Many unopened files will be shared with You tonight.

i invite You to come.

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Walkingstick:  Iraq displays sovereign bonds for sale

2/9/2015 0:00

BAGHDAD Alaa al-Tai

scheduled to travel a senior government delegation, including ministers, officials and experts in the financial and economic affairs, next week, to the United States and Britain to discuss the issue of Iraq sovereign bonds, and to explain the ability of the country to fulfill its obligations to investors who Septaon those bonds and Atdaolunha in markets Alaalmih.ocd high-level government source, who preferred anonymity, said in an interview singled out the “morning” that a government delegation will travel next Monday, accompanied by a credit rating talks team, to the United States and the UK to clarify Iraq’s ability to fulfill its obligations to investors who Septaon Sindh Iraqi and international promotion, in a move that serve the welfare of economic reform measures and to maximize state revenues.

The source said, “The delegation will include government and finance ministers, oil and Governor of the Central Bank and the consultants and experts in economic and financial Shan officials to discuss the process of issuing sovereign government bonds in the global financial market.”

The source noted, that the Iraqi government delegation held talks in Turkey during last June in order to promote Sovereign bonds to be issued by Iraq, stressing that the delegation held meetings with representatives of international banks also reviewed the financial and economic, political and security of Iraq report. The source said that the talks with my company has a credit rating and the International Tribunals “Modiner and Fitch” in order to determine the credit rating of Iraq in the international capital market, also held talks with British companies rating and contacts to get a credit rating. The source indicated that Iraq’s current credit rating within the group (B), noting that the delegation will explain the possibilities and Iraq’s oil export.
Print

http://www.alsabaah.iq/ArticleShow.aspx?ID=99287

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Walkingstick :  Iraq poised to meet investors ahead of crucial bond sale – IFR
BY MICHAEL TURNER

LONDON, Sept 2 (IFR) – Iraq plans to begin marketing a new Eurobond following the Labor Day holiday in the U.S., according to several sources, as the sovereign hopes to issue in the capital markets for the first time in nearly a decade.

Representatives from the country are expected to meet investors across the U.S. and Europe ahead of the deal, which is likely to be unsecured.

Citigroup, Deutsche Bank and JP Morgan will be the lead managers, the sources said.

The U.S. Labour Day holiday is on Sept. 7.

The sovereign is seeking to raise up to US$6 billion through bond sales to relieve the pressure of low oil prices on state finances, though sources indicate this first deal will be much smaller.

Last month Iraq received its first international credit rating after Fitch assigned a B- rating with a stable outlook, six notches below investment-grade.

In its assessment Fitch cited political risks and insecurity that are among the highest faced by any sovereign rated by the agency.

Iraq last issued an international bond in January 2006. That US$2.66 billion 5.80 percent deal matures in January 2028. The note is trading at a cash price of 75.50, according to Thomson Reuters, to yield 10.23 percent.

http://www.reuters.com/article/2015/09/02/iraq-bonds-idUSL5N1181VZ20150902

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Dnari131:
  DEFINITION OF ‘EUROBOND

A bond issued in a currency other than the currency of the country or market in which it is issued.

BREAKING DOWN ‘EUROBOND’

Usually, a eurobond is issued by an international syndicate and categorized according to the currency in which it is denominated. A eurodollar bond that is denominated in U.S. dollars and issued in Japan by an Australian company would be an example of a eurobond. The Australian company in this example could issue the eurodollar bond in any country other than the U.S.

Eurobonds are attractive financing tools as they give issuers the flexibility to choose the country in which to offer their bond according to the country’s regulatory constraints. They may also denominate their eurobond in their preferred currency. Eurobonds are attractive to investors as they have small par values and high liquidity.  

Read more: Eurobond Definition | Investopedia
http://www.investopedia.com/terms/e/eurobond.asp#ixzz3kbVYsVIE


***************

Aggiedad77» September 2nd, 2015 Hello Family……two points…….

First with regard to the CC tonight…..I see several of you found the elusive post that I missed….thank you…..but remember patterns……it’s just not the norm for Frank to put the IQD ahead of the Bio Cell/Jusuru meeting….but maybe tonight is even than “educational” as he pointed out…..maybe it’s IMPORTANT….now I’m excited.

Second….regarding the bonds…..the Iraqis were a bit cagey I think…..they said after Labor Day here in the US….but what they failed to convey is when after Labor Day….what day…..my guess is it won’t be immediate…..after all the entourage and credit negotiating team that is coming to the UK and the US won’t be heading this way until Monday I believe…..and everyone knows how they work by now…..they travel to have these meetings and maybe negotiate some special rating….

Then they need to go back and throw it around between PM Abadi and the COM and the Parliament and their subcommittees and the Iraqi religious clerics…..get the picture that is forming ever so vaguely here…..it could still take a while…..but…and it’s a bit BUT….maybe we will hear some news on this action during the CC tonight…..stay tuned.

Oh and thanks again to those who did find Frank’s post for me…..much appreciate the detective work on that….teamwork!!     Aloha    Randy

JDTolle:  » September 2nd, 2015, Feel your new strength

Over the last few weeks and months, you have grown stronger. Today, feel your new strength.

In living your life, in meeting the challenges, you have learned and experienced, become more capable and effective. Step back, look at yourself objectively, and see how those new capabilities can be put to good use.

The future is bright because of the effort you’ve put forth to work through the past. Every challenge you’ve encountered has left you with new, positive possibilities.

Feel your new strength, and feel the urge that grows within you to put that strength into action. Remind yourself of what matters to you, and see new, creative ways to expand life’s goodness.

Once, you had great dreams, goals and ambitions, and you still do. Now, you are stronger and more capable of reaching them than ever before.

Feel your new strength, and feel the fresh new desire it gives birth to, the desire to make a difference. With purpose, passion, and an inspired love for life, put that desire into action.

Ralph Marston  Wishing All a safe and blessed day  JDT

P.S. Nothing would be done at all if a man waited until he could do it so well that no one could find fault with it.– Cardinal Newman

Decline in central bank sales to reach $ 166 million Central bank of Iraq sales recorded, Wednesday, a drop in sales of up to $ 166 million, while noted the participation of 26 banks and financial companies 9 convertible at…

The Central Bank of Iraq announced Wednesday selling 166 million dollars and 803 thousand ones in its daily auction. Rate exchange of 1166 IQD is 1 dollar.

Twenty six banks and nine exchange companies took part in today’s auction, CBI said in a statement. /End/

LINK

Us Dollar Will Devalue By 20% – 30%  By JC Collins

Reader Comments On “Us Dollar Will Devalue By 20% – 30% (Freepom)”

Steve Henningsen   JC, I’m not sure why you let the goldbugs get to you so much. As you know I’m a big proponent of holding gold bullion at the moment, but I don’t do so thinking the world is going to end or that hyperinflation is around the corner. To me it’s a hedge against central banks/governments doing stupid things.

I don’t pretend to know where the price will be in six months but my guess would be higher. (I don’t believe Asia is sucking up gold bullion in the expectation of seeing its price go down.) 

Although I agree with the majority of your analysis, the one part that is confusing is that if you believe the dollar depreciates in a world that currently prices bullion in US dollars, then gold should go up in dollar terms.
~~~

Steve Henningsen Continues   Anyway I think the next several months will answer these questions and bring clarity to the new financial system on the horizon. With the turbulence that may lay ahead, I think the price of gold may be the least important issue for most people.

Btw- I hope all is well up there for you and your family, as I know the oil industry has hurt the local economy for you guys.

Jcollins   They don’t get to me my friend. I’m try to help those who fall for the whole doom and gloom gold bug script. I’m sure there are few that like to think they get to me though.

Things are okay up here. Lots of job losses, but I’m still chucking along and trying to diversify the company business outside of oil. But with all commodities down it’s challenging for sure.

Adam Sragovicz   Interesting. One question – “the USD will depreciate 20-30%” …. in relation to what? Thanks

Jcollins   It’s main trading partners.

Onrgaia    About an hour ago I was going to ask on the September Foreshadowing thread if you had another post cookin’ on the stove because I was feeling really hungry. Now I feel full. As always, you rock and thanks for making it a FreePOM. Just reposted it at the usual place.    Cheers.

Jcollins   You are a great friend. Thanks for the support.

Wim  When will the usd start to decline against the EUR (main trading partner) ?

Jcollins   Depends. I’m expecting it to start within a range, say the next 3 to 6 months.

Adam   Looking to clarify my understanding of your forecast…If the USD declines 20-30% against the Euro, and gold depreciates vs. the dollar (let’s say 20%), are you in effect saying that gold is going down 40-50% against the Euro? This scenario seems highly deflationary and it’s hard for me to imagine the high level of economic activity you are forecasting under this scenario. thx.

Jcollins  I don’t understand the flow of logic in your question. The value of gold is not pegged to the USD. The only reason gold will go up when the dollar goes down is because there has been a lack of an alternative safe havens.

With the euro and yuan, and eventually the SDR, there will be other safe havens. As the amount of yuan and euro in the foreign reserve accounts increases, that will build confidence in those currencies to act as safe havens in times of crisis.

This will give alternatives to the dollar, and in effect provide three suitable safe havens as the forthcoming crisis deepens. Does that help explain it better?

Jcollins  In addition Adam, as I’ve stated previously, gold could play a role in the SDR. This would likely be the one thing that would stabilize the price of gold. Let’s see what happens. Could take awhile though, unfortunately. Or could happen sooner than any of us think, in response to the next crisis.

Tony Graupp   Greetings JC  I respect your knowledgeable opinions and consider your thoughts…BUT…

Ray Dalio, the manager of the worlds largest hedge fund, with over $150 Billion under management has this to say…

“If you don’t own gold, there is no sensible reason, other than you don’t know history, or you don’t know the economics of it.”

I have investments in gold, and I think when the East Asian countries corner the markets by purchasing all the available supply, which they are currently doing to the tune of 40-70 tonnes a week out of the Shanghai Gold Exchange…the amount of which is greater than the annual current world mining supply…some thing is going to happen..

Some how I still believe in the old adage, the  “”He who holds the gold, makes the rules””

Well currently the US holds the most gold at more than 8000 tonnes.. This may change  Take Care Tony

Adam   Yes, thank you.

casmar5503   When? This time frame seems awfully close to the time that Martin Armstrong has said that America loses its #1 economy. In fact I noticed your gold prediction sounds like his too. He doesn’t talk about imf and sdr’s as much as you but, he has mentioned it. I’m curious about what you think happens in 2017-2020 (pre-hyperinflation)?

Jcollins   I’ve never read anything by Martin Armstrong so I can’t honestly say. And what hyper-inflation are you talking about? My analysis does not include hyper-inflation in the foreseeable future. At least not for the US or any other major economy. So the framing of your question doesn’t work for me.

casmar5503   Let me clarify my earlier statement. Your prediction of the value of dollar to the euro being less in 6-9mo. ISN’T similar to Armstongs time frame. He thinks the dollar will enjoy appreciation for a couple years due to emerging market problems.

Jcollins   I’m unable to reconcile the flow of logic in your two separate comments. I’m not sure what you are asking. In addition, I didn’t say 6 to 9 months for euro/dollar changes, I said 3 to 6 months.

casmar5503   Yes you are right you did say 3-6. The dollar seems to be getting stronger and there are signs of weakening emerging markets that seem to point to an even stronger dollar well beyond 6months. The euro appears threatened by a brexit or other exits from troubled countries which weakens confidence in the euro as an investment. What about the euro makes you believe it will not continue to depreciate for the next couple of years?

Jcollins  As stated, the dollar exchange rate arrangements will begin to unravel as a response to the strengthening dollar. There are only a handful of alternative currencies that will be able to handle larger volumes of capital flow and reserve accumulation. The euro is one of those. As is the yuan.

casmar5503   You responded quicker than I could add … But seriously? You never read any of Armstrong…? He is worth a look just like your site is worthy as credible blog! Much respect for your analysis.

Jcollins  Haha, sorry friend. I’m out of town for work and sitting here in the evening responding while eating sugar-ice cream. It’s flowing fast. Yes, seriously, I’ve never read anything from him. Thanks for the respect.

casmar5503  I’ve been reading your postings since I read the analogy using water in an ice cube tray to explain how QE and liquidity affected the economy. Pure brilliance.????

Jcollins  Sorry if I come across as being difficult. I don’t mean too. I’m very literal and don’t often get the subtleties of non-literal and insinuated comments.

Ozymandias  I am quite old enough to remember the high inflation and gas shortages during ‘The Peanut’ years (1977-1981). I had to work three separate jobs (days, nights, and weekends) to feed and provide for my family.

The $USD will be devalued by at least 30% on the first pass and then a few months later after some of the shock is absorbed I strongly suspect that there will be a second devaluation of at least another 30%. A total of a 50% devaluation of the $USD within a 12-18 month period amounts to a ramp towards hyper-inflation.

Inflation is and has always been a means by which governments and money lenders stealthy steal labor and wealth.

Jcollins  A couple things, the US government will have increased opportunity to tax the population, as there will be more jobs from increased exports. The velocity of money will likely remain stable.

And last, I see the amount of USD in circulation actually decreasing as the international demand for dollars erodes further and deficit spending at home decreases. The pieces will all flow together with some rumblings of discontent, but nothing close to being defined as hyper-inflation. I respectfully disagree my friend.

Ozymandias Thank you for you response. I have personally experienced high inflation and its destructive affects. Therefore, in these regards I sincerely hope that you are correct and my analyses and expectations are incorrect.

Speedspirit    “What we are witnessing in the monetary world today is the re-balancing of currency as opposed to the collapse of currency.” JC

Very precise statement. Couldn’t agree more. And I also agree that central banks around the world have to much power and control to let hyperinflation happen. Not yet at least, more like by 2032.

And I concur with Casmar about Armstrong, who has built a super computer which predicts markets without bias or emotion and incredible track record.

The computer predicts tough choices to be made Oct 1 thru next year but most likely the stock market low in March 2016. But new highs in 2017, panic cycle 2018, bottom 2020 then economic confidence till 2032. Then TSHTF. After all I have come to understand thanks to JC this repeating of cycles fits perfectly with POM.

Diana Montijo  This IS a compelling article, but what do you say about the track record of fiat currencies? I am not saying this as an argumentative point. It is a legitimate question. In the 5,000 years of monetary history 100% of all fiat currencies have failed.

 They all return to their intrinsic value, which is zero since they are backed by nothing. Throughout history, precious metals have proven to be the only form of real money. I thought I had done my due diligence, but now I am not so sure about the investments I made to protect my retirement assets.

Only the powers that be know how this will all play out. It has already been decided. The majority of us are left scurrying to find a safe place to invest to protect our hard earned money. (Respectfully).

Jcollins  Though I share your view on fiat currency, I have yet seen the conclusive evidence that they all return to their intrinsic value of zero sufficiently quantified to 100% satisfaction. On the flip side of this, gold is deflationary by nature, which is why gold standards are eventually debased and abandoned.

 Fiat currency today, for the most part, serves a function as the evolution of money. Some currency in existence will inevitably be demonetized and new currency issued, and some currency will carry on in their evolution process to help construct the broader and more representative SDR.

The SDR basket of currencies will evolve into a real currency, like the European Monetary Unit basket evolved into the actual euro currency. We will see this evolution/consolidation of most existing currency before we see them reach to zero. This process will take decades.

 There is a lot of unsubstantiated information out there Diana. Historical trends, both accurate and made up, don’t always equate to future trends. There is a wealth of information on this site, provided by both myself and other readers. Hopefully you can find value in it and realign your own personal due diligence to increase your comfort level.

Abruzzese1  Hi this is my first time posting but I have been reading here for the last 6 months. Despite being a somewhat intelligent and financial literate person (I’m a CPA) I do struggle to fully understand all of your writing.

If the USD were to depreciation 20-30%, this would in effect cause price inflation relative to goods/services, correct? Would a good hedge against this be an investment in TIPS treasury inflation protected securities rather than holding cash? (I do not consider any responses to my question to be investment advice and my question is purely hypothetical.)

Jcollins  The cost of imported goods would increase. This would equate to inflation, but will be made up by wage increases and more higher paying jobs. No doubt there will be some losses on those holding dollar denominated investments.

I’m not familiar with how TIPS works, so I’m hesitant to express an opinion either way. One measure I use is that countries with trade deficits, like the US, will have their currency depreciate in order to increase exports. Countries with a trade surplus, like China, will have their currency appreciate in order to reduce exports. Currency investment strategies should consider these balance of payments corrections.

Cadwaladr   Thanks for another great post, JC. I’m not a gold bug particularly, although, with my limited knowledge of monetary history, I can see why many predict collapse/hyperinflation. I can also see why fiscal adjustments and IMF substitution accounts might work to control the dollar’s depreciation, making this time different.

I would make the observations, though, that China and its SCO partners seem to envisage a more important role for gold in future, and that gold can rise in price whether the dollar and interest rates are falling or rising.

At the moment, the reported tightness of supply in the physical markets seems at odds (to say the least) with the price (which is set in the paper markets). Something feels very wrong.

I’m not an economist either, and I’m genuinely puzzled by why, JC, you think that inclusion in the SDR will give any currency safe-haven status? The USD, GBP, JPY and EUR are all already in the SDR basket, but their real purchasing power does nothing but fall over the medium and long terms.

I’ve always agreed with “diversification is protection from ignorance” (Buffett?), but see diversification as weakness. I see strength in knowledge and prefer to invest with high conviction and little diversification.

Eliminate the ignorance and the diversification. Needless to say, particularly in the present environment, it’s easier said than successfully done!!

What is particularly difficult, in my opinion, is for people like me, close to retirement, to choose assets for a portfolio which will provide adequate real returns and security of capital over what will hopefully be a long and adequately-nourished retirement.

 It seems to me that the traditional safe havens (cash and bonds) are at risk from debt re-structurings and bail-ins. SDR futures, assuming the counter-party survives, would neither win nor lose very much?

The financial systems of Europe and China (not to mention Japan and the US) are riddled with asset-price and credit bubbles and inspire little or no confidence in me.

Perhaps I should buy the shares of US-based manufacturers and hedge the returns into RMB? Or perhaps the new American factories will be mostly Chinese-owned anyway?!  Decisions, decisions!

If you were retiring next year, JC, what would your portfolio look like?!

Thanks again for your wonderful insights and thought leadership.

Jcollins   I would hold mostly currency of emerging economies, especially those with trade surpluses and big foreign exchange reserves. A little gold. More silver.

And a constant stream of incoming knowledge from multiple sources. The ability to remain nimble and make quick decisions will be instrumental.

In addition, modernization and infrastructure development in the emerging economies will push commodities up again. It’s cyclical. Just may take a year or two more.

Cadwaladr   Many thanks for your prompt reply, JC. Much appreciated. Your thoughts are very similar to mine. Incoming information is the least of our problems these days!

When you refer to “currency of emerging economies,” do you mean bank deposits and/or money market funds in those currencies and, if so, what would your assessment be of the risk posed by bank insolvencies/resolutions/bail-ins during the process of transition to the new Multilateral Financial System, please? I recall this article making a big impression on me:

http://www.telegraph.co.uk/finance/personalfinance/investing/11686199/Its-time-to-hold-physical-cash-says-one-of-Britains-most-senior-fund-managers.html

In that context the idea of abolishing cash and making currency 100% digital sounds like a bad one to me.

Thanks again!

Jcollins   I agree. And yes, my approach is that if you can’t hold it in your hand than it isn’t yours. As such, cash in hand is golden.

shawn smith  Great post JC!! I think I finally got my head around this now. I also just read your e-pub and really enjoyed it. You have a real gift with words and an ability to see things my mind can barely understand. Since I’ve been a member here I feel better informed and have since pulled back on my metals greatly …. with more money going into currency.

Do you feel the sanctions will be lifted on Russia at some point in the coming year? That would send the Ruble to a more normal level. Tough for the EU to stay mad at their gas company during winter!

Jcollins  Thanks Shawn. Comments like yours make it all worthwhile. In regards to the sanctions on Russia, they could be lifted when the fate of Ukraine is decided, or they could just eventually rot away through irrelevance, due to some of the changes we are discussing here.

Carl Simmons   Great post JC. I just read your post and comments with awe and concern. I recently watched the Jim Sinclair video on the increase in cost of gold and was shaken.

I was about to change my portfolio into more gold until I read your post. Now I’m unsure if I should do so or wait. As you mentioned I have a diversified portfolio of foreign currency silver and gold. Again thanks for the great information.

Stewart Fenton  JC – Another well written and informative post.

One thing, you mention alternative “Safe Havens” to the USD, being the euro and Yuan.

Given what we are currently seeing in both those jurisdictions (Euro – with many of the member nations being technically bankrupt, China which is experiencing multiple bubbles e.g. property and equities) I am interested in why you believe either of them would be safe havens.   Cheers

Jcollins  Not all euro zone countries have debt issues, and the US equity markets have dropped more than China’s since the beginning of the year. Don’t believe all the hype you hear or read.

The euro and yuan are slowly accumulating more and more in the foreign exchange reserve accounts. This will increase in the coming months and years. This is what will build further confidence in both currencies as safe havens in a time of crisis. Along with the USD, this will provide investors with three safe havens.

Onrgaia  Off the cuff question JC…the other day I was thinking about when the USD became the reserve currency and how the Bancor was dismissed at Bretton Woods (reason unknown, maybe just wasn’t it’s time as the prototype needed to be tested, i.e. USD?, then a second Beta Test, the SDR?) Does this make any sense or am I waaaay off the mark?

I mean, if one wants to assure as best they can that something will succeed it needs to be tested and tweaked as it goes along.

Jcollins  That could be the case. You are right, there is a lack on information on this matter. I know you have been researching into this, as have I.

Something tells me that to understand why the dollar was chosen over the bancor back in 1944 will tell us a lot about what is going to happen in the coming years. I keep coming back to it. Let’s stay on it.

Anthony Graupp  Greetings again JC   I think I can interject here, by saying the reason the US Dollar was chosen to be the reserve currency in 1944 is simply because it was backed by 22,000 tonnes of gold….

History buffs may remember to saying.  “The dollar is as good as gold”

Countries could exchange there reserve currency dollars for gold, which France did, and finally Nixon closed to the gold window, because the US was down to 8000 tonnes, in a short 20 years…

Take Care  Tony

Rodriguez perez   Another big job, JC.  Looking at your figures it not seems to be too much interesting exit from euro to yuan, except euro contries adopt domestic currencies, although I see this matter politically delicate. Have you some news about how things are developing now in Greece and arround European crisis?  Regards

Jcollins  The same trend is continuing in Europe. I would suspect we will see this bubble over throughout the fall. Watch for the introduction of systemic changes in the statements by officials.
Mdaddy   An interesting take on it JC. I personally lean towards the freegold take on things and FOFOA. He too believes that the currencies will remain as the main conduit for trade, but that gold will be ‘freed’ from currency to claim it’s proper position as a stable long term wealth safe haven.

One question I have for you in regards to your article, if the dollar is devaluing and UST’s are coming home to roost…. doesn’t that then push up interest rates. 

Wouldn’t increased rates lead to a bankruptcy of the USG. Rough math, a 30% devaluation in the currency still leaves $12.8 trillion in debt. Sure, our exports will increase, thus increasing our tax revenue…. but that debt burden is still enormous at higher interest rates.

Also, wouldn’t the austerity imposed by less demand for UST lead to a large decline in the economy, decreasing the tax base and again making the debt load that much harder to deal with?

Mdaddy  Just checking if my comment was quarantined or something. Do you only post/answer subscriber comments on your public post? Feel free to email your response, thanks!

Jcollins   Not at all. You just need to give me more than 97 minutes to post the comments.

Mdaddy   Sorry about that :) Looking forward to your response. Love your work by the way… different than anything else out there. No one else really seems to understand how the SDR factors into this transition quite like you do.

http://philosophyofmetrics.com/us-dollar-will-devalue-by-20-to-30-freepom/#comments