Sunday, March 2, 2014

The US Dollar is the biggest key to possible monetary system change

We are watching many stories here in our effort to keep an eye out for things that could lead to major monetary system changes. Nothing is more important than the status of the US dollar. A major decline in the US dollar could be part of a global currency reset. It could be the result of a steady continued policy of the US FED to actually generate inflation. In a worst case scenario it could happen suddenly as part of another financial crisis. For all these reasons, watching the US dollar is our most important task here.

With that in mind, tonight we link to a chart on Jim Sinclair's blog site showing the US dollar. Jim is one of the most respected precious metals analysts on earth. His background has earned him the title of "Mr. Gold". Here is the link to his bio on his blog site. He is also famous for being asked by FED Chairman Paul Volcker to help return stability to the silver markets in the 1980's after the Hunt Brothers were forced to liquidate large silver holdings. 

This chart will allow us to track the predictions it makes that the US dollar is about to see a sharp drop this year. As the chart shows, last week the dollar fell through a very important support level (80 on the US dollar index). It now forecasts a fall all the way to 70 during 2014.

If this forecast turns out to be correct, it will have a huge impact on what we are watching here on this blog. A dollar drop of that magnitude that quickly would lead to markets thinking FED monetary policy is failing. It would concern holders of US bonds who would see their holdings being sharply devalued. Gold would probably move sharply higher as well which would also spook the markets. All holdings in US dollars would be hurt.

Because of all the already existing concerns about US debt and the ongoing weak economy, a dollar drop like this could also panic investors out the stock market and bond markets. Interest rates would likely have to rise to try and hold investors in US bonds. All these things are interconnected. Not to mention all the trillions of dollars of derivatives banks hold related to interest rates and currency exchange rates. Remember that China has been reducing its exposure to the US dollar as quickly as it can without starting a panic itself. By now I am sure you can see how important the value of the dollar is. 

We will definitely keep an eye on the dollar and this chart prediction. If the dollar starts into a sharp move downward this year, it will impact all of us. And this new uncertainty in the Ukraine will not help things. Any indication that the US is losing prestige will not help the dollar along with all the other problems impacting it.

For the record, Jim Sinclair is ultimately forecasting the dollar to fall to around 50  at least on this index eventually. If that happens we will certainly see MAJOR monetary system change. The dollar will no longer be world reserve currency. The FED itself will be in trouble. Gold will be much higher. There will be disorder in the markets and the world will be looking for some alternative currency to use that will hold its value. It will probably have to be backed at least in part by gold and perhaps other tangible assets as part of a mix. 

So what happens to the US dollar on this index is the whole ball game in terms of what we are watching for on this blog. Jim is forecasting a time frame anytime from 2015 to 2020 for this process to take place. Keep in mind all the others we have listed here with similar dollar concerns including Jim Rickards, Andrew Huszar, and all the "Surprising Insider Goldbugs" we listed in previous posts. To ignore all these people would be beyond foolish.

Update 3-3-2014: Today JS Mineset posted a link to this article on their web blog site. I cannot let that pass without extending thanks to them for this. I have been reading/following the JS Mineset blog for years and have learned more from Jim Sinclair than I can possibly express. People like him, Jim Rickards, and others mentioned on this blog have been providing information the public needs to help plan for whatever comes our way. We owe them a debt of gratitude. If this blog can contribute in some small way to helping anyone learn more, it will be a success. The extra benefit for me is I get to keep learning as I do research for posts here.

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