Tag Archives: Rule #1 Never Marry The Trade

Jan 22 2018

Central Bank Reserves – The Rise of the Yuan


Armstrong Economics Blog/Central Banks

Re-Posted Jan 22, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; I understand that your model shows that China will become the dominant economy post-2032. The IMF added the yuan to their SDR basket. Are central banks starting to use the yuan in reserves in a major way yet?

KD

ANSWER: Yes. The ECB (European Central Bank) converted a half-billion euros to yuan. So that is not what you would call major. This is a first step in the true internationalization of the yuan. The Bundesbank has also converted a small portion of their reserves. So it is starting. Reports that China was selling off US debt are false. The U.S. debt to China is $1.2 trillion as of October 2017. That’s 19% of the $6.3 trillion in Treasury bills, notes, and bonds held by foreign countries. The rest of the $20 trillion national debt is owned by either the American people or by the U.S. government itself. What China and most governments have been doing is reducing their holding in maturity from 10 years down to 5 years or less.

Despite what everyone may believe, the ECB reserves rank only number 30 on the list among central banks with just 75.1 billion. China has the biggest reserves of all followed still by Japan. Other than Switzerland, no European country ranks in the top ten. This is a reflection of their status in world trade as well. It only follows reason that the Chinese yuan will become a wider used reserve currency as it also dominates trade.

Jan 22 2018

Why the Dollar is the Mainstay of the World Economy


Armstrong Economics Blog/BRITAIN

Re-Posted Jan 22, 2018 by Martin Armstrong

QUESTION: A friend told me the one pound coins I have from a trip to Britain last year were canceled. How can a government simply cancel its money?

KL

ANSWER: Oh yes. Britain canceled the one pound coins last October. They estimated that £400-450 million pounds became worthless overnight. Europeans routinely cancel their currency. This is another reason why the US dollar is the RESERVE CURRENCY in the world. While you have these people who hate the dollar all the time in the USA, outside, it is the mainstay. The dollar is used worldwide because it is trusted while other countries routinely cancel currencies. India made headlines last year cancelling their high denomination notes overnight. This may force people to pay their taxes and prevent them from hoarding cash. But it is also why the US Treasury and Board of Governor’s staffs estimate that nearly 60% of all U.S. banknotes in circulation, or close to $500 billion, is held outside the United States. There are more dollars outside the USA than inside. This is also why the USA is not pushing the electronic currency as hard as you see in Europe. There, they just want to cancel all the currency to get more taxes.

 

There was a 1996 article on this they called the Money Plane when everyday planes full of $100 bills were flying to Russia. They were shipping $100 million per day. This is why the dollar is the world’s RESERVE CURRENCY. The majority of it is used outside the country because everyone else cancels their currency routinely. The US currency has NEVER been canceled so the very first note from 1863 can still be spent although its value is way beyond its face. This is why the dollar is the mainstay of the world economy. It is the preferred medium of exchange in the cash world outside the USA. The dollar-haters do not step a foot outside the country and are clueless about the real role the dollar plays worldwide.

Categories: BRITAIN
Jan 21 2018

RULE #1 – Never Marry the Trade


Armstrong Economics Blog/Training Tools

Re-Posted Jan 21, 2018 by Martin Armstrong

COMMENT: Mr. Armstrong; The goldbugs hate you for calling the top and a bear market. To my surprise, I searched Money Week here in London and it came up with an article in 2008 confirming you also called the temporary high in 2008 before the slingshot up into 2011 and were off 4 days on a forecast made 10 years before. They wrote:

“I was asked to follow up on last week’s piece on the subject of the Martin Armstrong March 22nd turn date. It’s too early to say for sure, but it does look like we are enjoying the early stages of a bear market rally with the financials having bottomed on March 17-18, since when we’ve seen about a 10% move up. If this pans out, he was four days out. Given he made the prediction in 1999 or before, I think we can forgive him that. But I’ll keep you updated.”

Just wanted to say, they love you when you agree with them and hate them when you do not. Seems to be fair-weather friends.

REPLY: Well when you let your bias and prejudice dictate your expectations, you are bound to lose. But keep in mind, those that tout gold as pretending analysts are either selling gold or are trying to sell shares in some gold mine. That is a conflict of interest that blinds them intentionally or unwittingly. I do not care if any market goes up or down. The object is to trade it regardless of the direction. I am an old trader. The RULE #1 is never marry the trade. You have to be willing to buy as well as sell.

 

I am writing the gold report now. It will be out soon.