Dollar To Donut


Rumblings from Russia two weeks ago about scrapping the dollar as the global reserve currency were largely ignored. Putin’s comments were taken as a wounded bear needing higher oil prices not afforded by the weak greenback.

On Tuesday, a Chinese central banker called on G20 participants to look at creating an international reserve currency. This is the second warning shot fired by Chinese officials speaking of fears regarding Uncle Sam’s ability to keep its preeminence in global currency markets.

The fact that these ideas are being voiced –– albeit from China and Russia –– signal an urgent reaction to Fed chief Ben Bernanke’s plan to begin purchasing Treasury notes today. Global bankers see the move as inflationary, which would cheapen the dollar and therefore reduce foreign investors Treasury holdings.

President Barack Obama, Treasury Secretary Tim Geithner and Bernanke all came out yesterday to reject the idea of a global currency.

As I have stated, an Uber currency during this global recession cripples the participating countries’ ability to adjust its trade balances by depreciating its currency. For this reason I foresee the euro as being in trouble later this year, when Germany finds its trade gap growing against other countries due to the mounting “beggar thy nation” currency moves.

The yuan, China’s currency, may be used as a regional currency for Asia, but China’s saber rattling does little for its large investment in US government assets.

Chinese Premier Wen Jiabao last month asked that the US “to guarantee the safety of China’s assets.” China’s US debt holdings climbed 46 percent last year and now stand at about $740 billion, according Treasury. China is the biggest holder of our debt.

G-20 leaders will gather in London on April 2 to forge a common response to the financial crisis that has spawned a global recession. The summit is to discuss proposals for reforms of the International Monetary Fund.

New World Order theorists see this as a move toward the endgame of a global government. This unified currency call along with calls for international financial governance panels overseeing markets and risk give the NWO theorists plenty of ammunition.

Gold prices should be soaring. The $50 price move on the news of Bernanke’s treasury purchases is an indication of the inflationary fears. The following days move down in gold pricing was very perplexing to say the least.

Gold proponents see manipulation of gold prices through government interventions into the market, whether it’s through direct sales or through the ETF.

Monday’s Dow Jones industrial average’s 500-point move created a short squeeze that had gold prices reeling as investors scrambled to cover short positions.

Some of the gold moves can be explained like the above. Other moves cannot be so. With dollar depreciation and talk of a global currency should give major price support for gold.

Every T –– as in trillion –– in the headlines coming out of Washington should move gold higher, hence my call for $1,500 by years’ end.

2nd Horse Of The Apocalypse

The British government’s debt offering yesterday could not attract enough buyers to cover the offering.

All gilts (UK bonds) slumped after demand at an auction of bonds fell short of the amount offered, the first time the Treasury failed to attract enough bids at a sale of regular debt in 14 years.

Investors bid for 1.63 billion pounds ($2.4 billion) of the 40-year securities, less than the 1.75 billion pounds of 4.25 percent notes slated for sale, the government said last night in London.

For more on Wall and Washington and the cratering economy see:


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