So Much for the Death of the Dollar

I sure hope you didn’t sell all your dollars as many investment pundits suggested, in order to buy the Chinese yuan… because these so-called “experts” just ended up with egg foo yung all over their faces!

Yes, a new currency was added to the International Monetary Fund’s (IMF) reserve basket on October 1 – the Chinese yuan.

And for months leading up to it, I’ve been hearing a steady drumbeat of doom from many financial pundits sending “dire warnings” about the imminent death of the U.S. dollar.

A collapse in the buck was inevitable they said, because once the yuan becomes an official reserve currency, the whole world would rush to sell dollars hand over fist and buy yuan instead.

Baloney, is what I have said all along.

Well … On October 1, the yuan joined the IMF’s basket of reserve currencies known as Special Drawing Rights – SDRs for short. And guess what? It has pretty much moved in one direction: Straight DOWN!

The dollar has enjoyed its longest winning streak in more than two years against the yuan.

Meanwhile, the dollar has enjoyed its longest winning streak in more than two years against the yuan. If fact, the yuan has declined against the dollar 9 of the last 10 days since getting the IMFs seal-of-approval.

Not only has the yuan dropped in value against the dollar, so has the euro, pound, and yen.

Look, anyone with an ounce of common sense could have figured out this prediction was pure baloney in the first place.

It’s simply impossible, and preposterous to think the yuan or any other currency for that matter can dethrone the dollar at this time!

The dollar has been rising in value against the yuan alone since 2013. So why would global investors now suddenly jump off that profitable trend by selling assets priced in dollars when they have been making a fortune off the dollar’s strength, and then swap into a currency that’s been steadily depreciating?

It just doesn’t make any sense.

One central bank that did take this wrong-way advice was the People’s Bank of China (PBOC). China’s foreign-exchange reserves declined in September, dropping to $3.17 trillion, the lowest since 2011. That’s because China’s central bank was selling dollars in a desperate attempt to prop up the yuan BEFORE the currency joined the SDR.

But once the deed was done, the PBOC was bound to go right back to letting the yuan weaken further, just as they have been doing all along.

Bottom line: The yuan is now a reserve currency, but the U.S. dollar didn’t plunge and the U.S. financial markets are not smoldering in a pile of ash, as so many “experts” predicted. If you got fooled by them, simply ignore the next dire warning you hear from these false prophets of doom and don’t get fooled again!

Best,

Larry

 

 

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 56

Rick October 17, 2016

Now. What to do with silver.

Tom October 17, 2016

none

Linda Simmons October 17, 2016

Back in late 2009, early 2010 -- I'd have to look back to be exact -- I did invest in the Chinese Yuan through Everbank. Was that not your recommendation at that time?

Bart Snow October 17, 2016

It was probably that CIA "expert¨ Rickards. When you read anything he suggests- run for the exits.

Ted F October 17, 2016

I learned a long time ago to ignore the Chicken Littles of the world.

Walter Risse October 17, 2016

Sorry Larry, no such thing as common sense, just look at our election as proof.

Terry October 17, 2016

Makes sense to me.

Nels October 17, 2016

Haven't we known for over a year that the Yuan would be added to the IMF reserve basket? Didn't it just happen on schedule? Who is surprised that this is already completely discounted by the currency markets?

RONALD Hirschey October 17, 2016

I LIKE YOUR APPROACH TO READING THE TRENDS OF OF THE MARKET I M NO ECONOMIST OR FINANCIAL GURU BUT NOT OF ANALALYST JUSTBA MORE WELL ENOUGH INTELELIGENT. WELL ROUNDED PERSON WITH A OPEN AND MORE THAN THE AVERAGE BEAR DISCERNING AND DISCRIMINATING MIND SET MOST OF THE TIME SO THIS IS ME SEEKING OTHERS OD MORE KNOWLEDGE THAN ME TO EDUCATE ME

michael cerino October 17, 2016

Hi Larry, I have been reading your daily reports for several days now and find them well written, interesting and educational. Thank You, Mike

J. Anderson October 17, 2016

Well said! Why would anyone think to abandon one of if not the safest storage of wealth amidst the turmoil and uncertainty on nearly every other major continent, whether totalitarian regimes, war, economic chaos or perceived growth but very high risk due to geopolitical issues or environmental disasters. If anything, I personally see more "flight capital" and wealth as a whole enter the US and North America for sometime to come; in search of safety and calm for the investor despite the negative or zero returns..

Stan D October 17, 2016

Larry, I've read and heard that the IMF was in the tank with Russia and China and numerous other countries world wide scheming to dethrone the dollars reserve currency title. I started seeing that several years ago and it is now a constant stream. Is there some kind of plan by them to substitute another countries currency or to create another from thin air. I have heard it said both ways. I can see another countries currency. But I realize there is a element of a new currency having no backing or value except that of the relative value placed on it by a Bretton Woods like group of nations. The only good thing I could see coming out of the inclusion of the dollar to the World Currency Reserve list is maybe it would be a call to the Federal Reserve and American law makers to head the warning of a world that is becoming intolerant of our propensity to print dollars willy nelly. I know "fat chance".

Linda Simmons October 17, 2016

Actually, I think it was late 2008, early 2009.

Stan D October 17, 2016

sorry I meant to say "inclusion of the Yuan not the dollar"

Tom H October 17, 2016

10 years ago I took a visit with my wife to her brothers family in Japan. In prep I took a cashier's check for expenses. No bank there would cash it. Neither a local or American CitiBank.

Harvey October 17, 2016

You've been right-on with the dollar and Euro has finally turned now that Merkel has trashed Germany's finances propping up the Euro zone and immigrants; as you have said all along!!! And, yes I subscribe to the other boob you refer to . . . and, yes he is a 'Bag of Hot Air' who likes to pontificate; is a BIG waste of money, which I will not re-up when due; and is one of those who runs on and on and on and on and . . . well, you've read his crap!! Nice ending with Roger Daultry's "Don't get fooled again!!!" (I hope that was in your head) You must be left-handed!!!

Charles Stinson October 17, 2016

My major concern is this irresponsible debt we have. I do not believe it good for the country having such a debt.

algy wood October 17, 2016

thanks for the info on the doller collapse. I was worried about it

Bob Schubring October 17, 2016

The real pain for Saudi Arabia comes now. China can buy Russian oil and Iranian oil, priced in yuan. Saudi Arabia seeks payment in dollars. To compete with the falling yuan, the Saudis must drop the dollar price of oil even further. Meanwhile, the religious-right wingnuts who demand that the Kingdom get an ounce of gold for every 20 barrels of oil they sell, are running way behind the curve. Last February 10th, they reached a point of maximum discontent, when it took 48 barrels of oil to buy one ounce of gold. Gold will probably rise slowly against the dollar because of seasonal demand for bling-bling: Christmas. Chinese New Year. India wedding season. The dollar will rise against the yuan. Iran will gladly take yuan because it's better to have income than no income. The poor old Wahhabi gold bugs, meanwhile, face growing irrelevance. To trade with the world economy, one must engage with the world and learn what the world needs, and then supply it. The Sufi branch of Islam, founded by the pacifist poet Rumi, could teach wisdom to the world, if the Wahhabi branch would stop buying weapons and funding wars. A little economic humbling of the Wahhabis might work wonders for Mideast peace. There are a great many Arab technocrats who would move the Gulf nations toward advancement, if they were free to do so.

David October 17, 2016

It doesn't make sense until it does.All my comments always get non published,it is not right!There are literally,physically not enough dollars to reconcile the derivative or global debt problem were in.Help is on its way.SDR's,local currencies,and a gold reset...

is gold coins strong October 17, 2016

is gold coins still an option or the USD

Trump to be president October 17, 2016

Only honest person to be our next president because he knows what real money is and and has $10 billion.Sincerely. ANdrew Hughes

Peter W October 19, 2016

Trump Honest...really what planet r u from? If u & others hopefully made $$$ in the Stock Market since Jan. 2009 then sit back for another 4 yrs. of stability under Clinton & calm down.

Jesus October 21, 2016

And what is your feeling as to how the rest of the world will react to Trump becoming president.

Rose Schulz October 17, 2016

I did not buy yuans, but I am wondering about the safety of the banks and the talk about the government confiscating our money to pay off the national debt. I have very little cash and don't want to see that vanish. What is your opinion on this. I have exactly one ounce of gold and no other precious metals. I have only one investment and it is an annuity. I have three annuities that I have annuitized and that is what i live on . What do you advise in my situation?

Sawbuck October 18, 2016

Hey Rose, Don't worry, all the banks put together don't have enough money to pay off the U.S. debt! Just make sure YOU don't have any debt when interest rates start to rise.

Chuck Burton October 17, 2016

Speculation about higher interest rates alone, should cause a higher Dollar, as investors look for some kind of yield. The prospects of the EU dissolving, with the Euro going out of style, won't hurt the buck either. Watch the Italexit vote in November. Euro investors will want to switch to a stronger currency, and the biggest one is the Dollar, of course.

Jim Burnette October 17, 2016

Larry, It an't over until the fat lady sings. Things like this take time to filter into the system. Yes, the Chinese economy is in trouble, the Russian economy is in trouble, the Euro countries are in trouble, Japan has been on the bubble for years, Germany, the major supporter of the Euro and the IMF is in trouble, the British pound is in trouble, all the different countries that have gone together to create a reserve currency together are in trouble. So, what is causing all this "trouble"? (DEBT), (FUTURES), ( DERIVATIVES) and (STIMULUS, QEs, and BAILOUTS). The U.S. is the number one debtor nation in the world and has funneled "Stimulus after Stimulus", "QE after QE", and "Bailout after Bailout" and you think our well isn't going to run dry. (Probably sooner rather than "Later")

Frank Piscola October 17, 2016

Hi Larry, You make a lot of sense regarding the dollar compared with the yuan at this point in time. My concern is our debt of 20 trillion that we have to deal with. China is a very strong country and my feeling is that if they choose to put the move to become the owner of the primary currency they may have a chance, Especially the way our country is being run. I hope I never see it happen!! Regards, Frank Piscola

Marc October 17, 2016

Larry I thought that the presentation was good today. That being your 2017 predictions and I am in agreement in most cases as it makes sense. There is nothing like live examples of your calls and I am going to be doing that this year. If they work out well, you have yet another undeniable piece of proof. As you know predictions are one thing and having money on the line is quite another. Anyway all the best and appreciate your insights.

kenny jones October 17, 2016

I know the dollar has yet to decline, but it is on its way out no matter what you say. The other nations of the world do not like our dollar and they do want out of it. Obummer has printed so many dollars out of thin air since he's been in office we have 3 times more dollars now than we did when he took office and he printed them out of thin air, 85 billion a month to be exact! The IMF has just put their own global cyber money out there and the value of the dollar has started its decline whether you want to admit it or not. The global debt is close to 556 trillion dollars and that is 17 times more money than in the entire world!!! Our dollar does not have long to live. No fiat money has ever survived in the world. Ours has lasted the longest, but its days are numbered! The feds want it gone and they have already started a cyber currency, Fed Coin, and that's what they intend to go to, but it'll never reach that. Things are fixing to fall apart in the good ol USA beyond repair, and if you are not aware of that you had better start doing the research to find out because if you want to keep your green backs go ahead, you'll lose all your worth if you do. Enough said. Our world as we know it is fixing to go to hell in a hand basket and there is nothing anyone in this world can do to stop it. I pray you are right, but i know you are wrong. Keep your thought and you'll be sorry, unless you are part of this one world order! Then i see why you say what you are in this edition! You want people to go broke when it does happen. Enough said!

Amceey October 18, 2016

You are quite right Kenny but not now. At least a couple of years before things turn sour. The populace still has their mind set on the almighty dollars. I trust Larry on this issue. The simple fact is there is no alternative. Maybe when Saudi Arabia agrees to accept non-dollar currency payment the boat begins to rock. Until then I am fully with Larry. Best of luck.

Beth October 17, 2016

it just haven't happened yet...does that mean it won't happen?

algy wood October 17, 2016

Thanks for the info on doller colapse

Rose Schulz October 17, 2016

PS I am 88 years old in good health and afraid of outliving my income.

David Slinn October 17, 2016

Yes, the illogical confusion continues yet,. We Are At The Door Step that You speak of. Fasten your Parachute and say Your Prayer's! Your armorer Dave Slinn.

Stu October 17, 2016

Do your tea leaves see Trump winning? If so, how will markets react? Enjoy your commentaries, Larry!

Ashu juneja October 17, 2016

U say that European n Japanese wealth will transfer to Usa and Dow Jones will go to 32000 , comparing from 1932 to 1935. But in those days Usa was a creditor and currency was backed by gold. Put some thought on these points.......

Warren Latimer Williams October 17, 2016

Let me know how as an existing member how I can participate?

Shahid Huss October 17, 2016

If Trump had not self destructed green back would have been history come November. But don't worry many a Trumps's are waiting to rise.

Michael Skok October 17, 2016

The little boy cried wolf so many times until nobody believed him. Yet, in the end, there really was a wolf. The national debt cannot keep getting bigger and bigger (now close to $20 trillion) without the dollar crashing.

markm October 17, 2016

presentation was very general, for those like me who followed the predications they came true and i saved money being on the right side of markets and made money the same way, avoid lots of losses

Bill October 17, 2016

Larry. Based on your previous comments you are very likely referring to James Rickards. If so, you are mistaken about his prediction. Don't listen to what people say he said. Read what he said for yourself. He never said the dollar would lose reserve currency status in this time frame. To the contrary, he said you "would not" see the dollar die in the immediate aftermath of the yuan being added to the IMF's special basket of currencies. Instead he clearly said that these events would make it possible for this to happen over time. The IMF would issue new financial vehicles allowing sovereign nations to use the dollar to buy these "bonds" denominated in SDRs. That is exactly what has happened. You're one of the smartest analysts around today when it comes to currencies and global economics. Think about it. You know how this could result in the death of the dollar.

Mike October 17, 2016

Larry, I moved to about 40% dollars versus my dividend stocks about 2 months ago. I know you have talked about a time coming that Asia will dominate but I am concerned that most of your predictions are off timing and value by a fairly significant amount. The dollar will definitely fall it's common sense based on its rise, it remains to be seen how accurate you will be in your timing. I am basing my observations on your recent gold valuations over past year or so . You missed the bottom by 30% you missed the timing by 6 months or more. All of that being said your content is still of value and worth consideration in some portion of your portfolio. Thank you for the hard work

Maribel L. Chung October 18, 2016

October 18, 2016 (Tuesday) Of all the currencies in the world, the US Dollar printed in its currency IN GOD WE TRUST. That is probably the reason why it is still around and making good.

andy October 18, 2016

You sound so sure that the Dollar is as strong as the Fed is telling us all , The dollar is just another fiat (paper) currency and just as vulnerable as the rest of the worlds paper, the world is in debt thanks to the endless printing ,quantative easing, of all the currencies that find themselves in trouble and the dollar is not an exception, if anything it is the cause, the old method of bringing things back was to adjust the interest rate ,but that has hit the buffers ,in fact gone to negative rates in Japan ,can't drop them any further, the bankers are in a Cul-de-sac of their own making, and a total crash is on the cards,this time the Bond Market will come down too,people fiddling with numbers on computers and inventing currency out of thin air won't solve this one,!

stan October 18, 2016

Seems Real Wealth subscribers have been left behind! Only a bait?

Darlene October 18, 2016

Gold is real money. The Yuan is backed by Gold. My head is out of the sand. Get real!

James October 18, 2016

The precious metals market gold is the market to get into, but I am also expecting a bull market in stocks. I lived through a lot of recessions in the past.

Al October 18, 2016

Larry, I still own UUP which I bought back on 11/18/15 for 25.91--today it is at 25.28-- other currencies may being going down to the dollar but I don't see UUP going up--why is that? Also what do we do with the untrashort 2017 Euo??? Thank for your input. AL

Janet Hart October 18, 2016

The dollar is still not backed by anything but debt and deficit. All world economies are entangled. After the Euro fails, the dollar will by entanglement. The Euro will fail due to insolvent member banks and the migration realities facing Northern Europe.

Keith Greenwood October 18, 2016

It is all very confusing. The biggest reason we are in trouble is because we have let ourselves get here. We need to stand up for ourselves and our country and ouite letting our leaders become rich.IF they think the EU IS so great why are so many leaving?

James October 19, 2016

Baloney to the dollar collapsing that's what I think too, wasn't there a Breathless Maloney in a 80s/90s film.

marie tasker October 19, 2016

i being reading a lot of article regarding the uup dollars that you recommend that will go up ???????????? but every body expect the dollars to drop so please be accurate and you tell me the truth and i will prefer to loss a little and not to loss a lot money so please be honest with i beg you to let me know as as possible thank you

Rick Patrick October 20, 2016

I ran a small private B&B in NYC the past ten years. Chinese guests all had a very similar phrase, "Two things needed to survive this world. One, English Language Two, US Dollar." It was like a slogan. I'm pretty sure when the Chinese banks began to sell their Dollars, the Chinese people were waiting to snap them up.

ron goddard October 23, 2016

lets look at the impossible. fort knox has no gold..it went to china over the past few years under the radar so to speak. so there is no basis for us dollars ..well is there? but us of a does have some gold ..from libya and ukraine. just recently..under cover of course. no use telling everybody i wouldn't think. lol lets look at the possibles : russian bears turning nasty. they are, apparently, fed up with the lies.the western media tell about them, particularly in relation to aleppo. usa bombers isis bombing etc. after your mr. kerry promised to cooperate. and the russians and syrian forces stayed out. 89 syrian soldiers were killed in a 'safe' zone created for the supply trucks to come in...killed by usa bombers. kerry is a two faced arsehole..and the western media sucks again. if your country wants to be a force in the world get rid of the lires and cheats who 'run' your country. russian intelligence and military are light years ahead of usa. putin has a plan of peace for the world, but first he must destabilise america. and thats whats coming. no believe? well dream on people..you are better off with hima as leader that h.. (bodycount) clinton and her pedophile husband.