Reader Thoughts On The Rise of SDR Denominated Bonds &
Reader Thoughts On “Full Validation Of The PoM Thesis”
Safenet Excellent for J.C and fellow POM members!! It’s so obvious that Fed can’t act without considering the implications for their actions on renminbi and other currencies.
This alone demonstrates Fed’s new role in the multilateral system. Hopefully, SDR bonds will stabilise the value of likes of $,£ against the currencies of our so-called emerging economies. Let’s see how Zerohedge spins this(or omits)
Silverboxervancity My financial life changed when I found this site! I was buying silver thinking the collapse was just around the corner. Now I have a basket of currencies and buying up stocks. Thanks JC … I wish you could take a victory lap for this one!!!
benny b. Which currencies are you currently holding?
JC Collins Benny, as a part of the SDRF strategy, I have focused on holding the currencies in the SDR composition, at similar weightings. Outside of that, I consider the currency of nations with trade surpluses as good investments. As a part of the multilateral transition, trade surplus nations will see an upward valuation of their currency in order to increase the costs of exports and bring trade surpluses into balance. It is best to consider this as a long-term strategy as opposed to a short-term strategy.
Doug Kauffman I love this site. It is refreshing to read the truth and not the fear-mongering that many other sites are spewing just because it sells. This is the only site I subscribe to on the Internet and it is well worth it.
One question I have is, I’m trying to figure out how I can capitalize on this? Maybe I’m missing something ovious. Can anyone point me in the right direction?
JC Collins Doug, there have been a few posts here under Multilateral Investment Strategies. As a summary, the biggest areas which I see as investment opportunities are the following:
1. Commodities – low now but will increase greatly in the coming years on the back of massive infrastructure development around the world.
2. Currency – nations with trade surpluses will see the value of their currency go up in order to decrease exports and balance trade.
3. American companies – as the USD depreciates US exports will begin to explode. China has heavily invested in American factories and companies. They are not wrong, but choose which companies you invest in carefully. Make sure they have none or low debt, as when interest rates continue to increase, companies with large debt positions will be hit hard.
I hope this helps to get your thoughts pointed int he right direction.
Muad'Grumps Gold RMB internationalization of the foundation stone of -RMB international gold market on China http://gold.jrj.com.cn/2016/04/02115320779655.shtml
“Currently around the world there are 15 offshore renminbi clearing center, and China’s central bank has signed bilateral and 26 national and regional currency swap agreement, including the UK, South Korea, Australia, Russia, the total size of $ 430 billion.
At present, China, Hong Kong, Singapore, London, Paris, Frankfurt, Luxembourg or so in striving to become an offshore yuan center has a certain strength. Whether it is based on convenience, freedom, or risk control, and even motivation arbitrage, coupled with policy support inside and outside the offshore renminbi market to flourish again.
Existing offshore renminbi market in which the total amount of customer deposits currency has more than one trillion yuan. At present, China’s foreign trade with other countries almost always denominated in dollars.
Therefore, direct light Currency exchange into RMB, US dollar without an intermediary, a single conversion costs from the point of view, we can save a lot of costs. After the establishment of the RMB center, we can set up to further strengthen the country’s offshore renminbi center Forex trading competitiveness.
Spare no effort to promote the yuan in the domestic gold pricing of the moment, set up a number of offshore renminbi center shows the international capital affirmation of China’s economy, directly in RMB exchange foreign currency billing model for the RMB to buy foreign direct gold, lifting gold prices RMB the right to create positive conditions.
Gold is easily realizable, it can be quickly converted into any currency, forming a convenient relationship between gold exchange, local currency, foreign currency between the three, which is still the gold in the contemporary monetary and financial functions with an outstanding performance.
Enhance the RMB internationalization will help ease domestic inflation, in favor of the bulk of the energy business, in favor of the national will show. Strengthening the development of the gold industry, gold reserves and gold derivatives such as credit help enhance the RMB, the yuan to enhance the ability to control credit risk.
Both complement each other, influence each other. China’s gold industry, an occasion to stand upwind capital foot exhibition, the goal will be the future for a long period of time.”
Daneackerman Here’s mainstream confirmation of SDR bond issuance within China and pushing the world wide use of the IMF’s SDR :) April 1, 2016 12:08 a.m. ET
BEIJING—China’s central bank Governor Zhou Xiaochuan said the government will make efforts to expand the use of the International Monetary Fund’s basket of reserve currencies in its domestic economy.
Mr. Zhou said China will use both the U.S. dollar and the special drawing rights when reporting the country’s reserves of foreign currencies in the near future, according to transcripts of his remarks posted on the central bank’s website Friday.
The government will also consider issuing bonds denominated in SDR in China, he said at a briefing after meeting with officials of the Group of 20 major economies in Paris on Thursday.
The central bank chief said last month that as the host of this year’s G-20, China will push for a gradual increase in world-wide use of the IMF’s SDR as a way to improve management of financial risks.
The IMF decided last year to include the yuan into its elite basket of reserve currencies, a move designed to spur greater liberalization in the world’s second-largest economy. Beijing has considered the move, effective October, a chance to promote the use of its domestic currency in the global economy.
China’s foreign-exchange reserves, the world’s largest, fell by $28.6 billion in February from the previous month, to $3.202 trillion, following a decline of $99.5 billion in January.
–Liyan Qi http://www.wsj.com/articles/chinese-central-bank-vows-to-expand-use-of-imf-reserve-currencies-1459483713
Muad'Grumps Where’s the market for these SDRs? If McDonalds is going to open a 1000 stores in China, the revenue will be in RMB, not SDR. What CFO is going to want the complication of another variable? Another cross rate and additional costs of managing? Just another middleman financial transaction.
JC Collins You don’t understand the function of the SDR. It will only be used by governments, central banks, and other international institutions. Regular commerce will still be completed in domestic currency. You will still use domestic currency.
John John Dear Mr.Collins, Thanks for your new free POM.
May I ask how do you consider (or not) Karen Hudes’s points of view concerning the GCR and global financial situation? With kind regards.
JC Collins I don’t. It’s a joke.
Justin Prumers Any comments on the: Wikileaks Reveals IMF Plan To “Cause A Credit Event In Greece And Destabilize Europe” ?
JC Collins First, the premise and framing of your statement and question is incorrect. The IMF does not have a “plan” to destabilize Europe. The actual posting from Wikileaks stated that an IMF internal meeting “predicted” a Greek default. I’ve provided the link for your confirmation. https://wikileaks.org/imf-internal-20160319/
Second, I have long predicted that the answer to the EU debt issue will partially be found in a return to the use of domestic currencies of the member nations. Trade between members can still be balanced with euros, but each nation will again use domestic currency. Debt’s can be re-denominated in domestic currency and marked down. This will leave the euro relatively unscathed.
If anything, the IMF is building a case for the return of domestic currency on an individual basis. Such a change would buffer the broader EU from a Greek default. It is always worthwhile to confirm the source information as many sites, including some extremely popular and reputable sites, skew the wording to increase tension and fear in order to prompt more clicks.
This is a perfect example of certain sites getting caught red handed twisting the information out of context. The Wikileaks release did not state “Cause A Credit Event in Greece and Destabilize Europe”. That was the “interpretation” of someone outside of the IMF and Wikileaks. That was then repeated and promoted by a site we all know to well. The same site which is now completely ignoring the fact the China will be issuing SDR bonds.
It is time for people to wake up from these sorts of tricks and propaganda. The alternative media is no better than the mainstream media. Makes me angry – this abuse of people’s trust.
Justin Prumers Thanks for the response, I should have read deeper into it before putting it out here. But I think it served a purpose, how easy people are manipulated when all we are trying to do is learn to improve ourselves.
Justin Prumers That was my first post ever, I have been a lurker here. I want to personally thank JC for all of his extensive effort in this website. I have a lot of faith in what I read here, and it has truly helped me manage my anxiety over everything that is happening in this world.
JC Collins: Thanks Justin. I hope you comment more. Some of the best posts and information exchanges are prompted by the readers such as yourself.
chaosut17: Thanks for the immense work JC and also the information from other members in the website. Because of the ongoing POM thesis, my idea of money and the world at large are evolving.
I have become more comfortable with investing not only in real assets like real estate, but I have been doing well with the US stock market despite the constant crying of wolf by media of stock market crashes.
Your site have given me the confidence to look at great companies in other countries outside America that are extremely undervalued.
In addition your emphasis of your time and labor is very important – as I have began to increase my efficiency at work and for my clients. Thanks for keeping the “fire” burning !!
Muad'Grumps: Small Caps will signal the end of the Rally!
Published on Apr 2, 2016 Are the small cap stocks giving us the clues for the end of the bear market rally? The chart is of the Russell 2000 Index vs S&P 500.
JC Collins: What’s your point? Providing only a link without any thoughts on that link doesn’t tell us much.
Sam: Thanks for your work. It looks as if everything is unfolding exactly as you predicted.
“…The Executive Board of the IMF is responsible for SDR allocation. Let that sink in for a moment. The BRICS countries are going to have an equal say on SDR allocation…”
My guess is they will starve the developed countries for capital or at least the idiot ones like the US and Europe. I think the Asians are too smart to let private bankers control their countries future.
JC Collins: Sam, this multilateral transition categorically proves they are a part of the same international system. The alternative media will spin these new realities under similar re-framing. I would just ask that you consider this.
Jean Paul Karcz Month after month I gained faith in POM theories. Like many, I spent a lot of time over the last 10 years or so reading the opinions of alternative medias, which almost all announce a coming Armageddon. No doubt, I was helped by my 40 plus years in finance, and they saved me from buying their extreme theories of coming chaos. Their ratio is 90% opinions at least and 10% facts and less.
POM is the exact contrary. And over the months the opinions of POM proved right with facts happening in the reality and shaping things to come. At that time, a couple of years ago, SDR were a bottle of ink. JC is virtually the only contributor to explain to us the numerous aspects of them and the puzzle is getting more complete as we progress in time.
Things Are Never As Bad as they Seem or As Good As they May Seem! Like JC, I know that we are facing extreme changes. The present catastrophic situation of the financial system has been made possible namely by money creation by the banks, thus a wild extension of the debt.
It is time for this system to be cured in depth and SDRs are a big part of the solution. A number of hikes of the interest rates will be instrumental too. These two major changes will happen in the months to come.