There is quite a bit going on all of a sudden that touches on things we watch for here. This post is just a news note update to provide links to some of that news. We see that gold has broken out of a years long range bound pattern and has shot quickly over $1400 as of this post. We see that the US dollar has had some weakness alongside the move in gold. We need to keep an eye on these markets to see if this is the start of new major trends in gold and the dollar or just short term reaction to increased geo political tensions and recent Fed news.
The release of the Facebook white paper set off an intense storm of debate as to what impact their proposed Libra coin will or will not have on our present monetary system. The group of experts I hear from have been engaged in a similar discussion. They are as interested as everyone else to see what happens with this over time and how much traction it gains. I don't detect any consensus view yet other than all seemed to agree that there are a lot of hoops for the Libra coin to jump through to achieve its goals.
Below are some links to a variety of reaction articles out there and some that were part of the discussion from my panel of experts.
--------------------------------------------------------------------------------------------------------------------Gold Breaks out over $1400 (see current price here - $1406 at time of this post)
CNBC on Impact of the Fed on Gold
Yahoo Finance
The Street.com
Gold Bulls React to the Sharp Move Up
Dollar Pulls Back
Facebook Reaction Articles
Bloomberg - France Reacts
Wired.com
Scoop.Co - New Zealand
CNBC - US Congress Reacts (letter requesting a Congressional hearing)
AVC.com
Financial Times Series of Articles
NY Times
(Professor Lawrence White responds to NYT article here)
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My added comments: Even though a white paper is now released, there are still many unknowns related to the Libra Coin Facebook intends to launch sometime in 2020. These are a few points I noted in the white paper:
- actual testing of whatever technology will be used for this project has not been done yet
- there is only a partial list of members for the Libra Foundation at this time who will govern the coin and manage it. The stated goal is to have 100 members.
- the system begins as a more centralized permissioned system with a goal to transition into a more decentralized "permissionless" system sometime in the future (5 years is noted as a goal)
- the regulatory status of the coin is still unknown in many jurisdictions
- the coin will be tied to a basket of major national currencies (not specified yet)
- the coin will have a floating exchange rate with the national curencies that is intended to be non volatile
- a reserve fund to fully back every coin is to be set up allowing Libra coin owners to convert to national fiat currencies at any time. Example, if you exchange 50 US dollars for 50 Libras, the fund will hold 50 US dollars in assets to fully back your Libras.
In some respects, this coin seems a little like a private sector version of the SDR used by the IMF since it will be tied to a basket of currencies and will have floating exchange rates with the national currencies daily. Of course it will not be a state sponsored coin or have any ties to the IMF.
As we can see, this is still an early stage concept with a lot that has to happen before the coin can go live for public use. We will monitor this project over time to see how things go with it.
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