Is The Dollar Collapse In Motion? 2013.8.21

A few intriguing developments in the last month and especially the last few days.

The Indonesian stock exchange is down nearly 10% in the last month http://www.bloomberg.com/quote/JCI:IND

The Brazilian stock exchange fell 2% yesterday http://www.bloomberg.com/quote/IBOV:IND

Indian stock exchange fell almost  3% yesterday http://www.bloomberg.com/quote/INDIA:SP

In June 1% of all US treasuries were sold and bought by “X” (probably the Fed) http://www.zerohedge.com/news/2013-08-20/buyer-last-resort-guess-mystery-buyer-x. Japan and Chine being the biggest sellers.

797 tons of Gold was exported from the UK to Switzerland in the first half of 2013, apparently so it can be melted down into smaller bars and coins http://www.zerohedge.com/news/2013-08-20/gold-flooding-out-london-switzerland-alarming-rate

Silver is up almost 15% in the last month http://www.bloomberg.com/quote/XAGUSD:CUR

So what does all this mean?

The selling of treasuries obviously hints the investors are concerned about future inflation in the Dollar.

The Fed is having to step in and buy up these treasuries by printing money further inflaming the fears of Dollar inflation.

The selling of stocks in India, Brazil and Indonesia suggests certain parties are liquefying their positions in order to finance/prop up something else. Could it be connected to the massive buying of treasuries by the Fed?

The outflows of gold from the UK suggest those dumping the dollar are buying commonditities, hence the uptick in Silver prices and the mass importation of Gold into India and China http://www.zerohedge.com/news/2013-05-08/chinese-gold-imports-soar-monthly-record-insatiable-demand

These developments all point to a gradual loss of confidence in the dollar.

People are getting out of treasuries and into commodities and in order to avert a complete collapse in the dollar others are having to liquefy their asset positions in order to assist the Fed in propping up the dollar and to suppress the inflation that the Fed’s money printing is inevitably going to cause.

So what is next?

The power of the Fed and the money centre banks is awesome. They have plenty of positions they can unwind that will severely damage markets which are seen as a convenient piggy-bank for the customer assets, eg Brazil, India and Indonesia.

If pressure continues on US treasuries then expect Asian markets to continue to fall.

The pressure on US treasuries will inevitably lead to a massive demand for physical gold and silver for two reasons.

The first is that by selling US treasuries investors need to put their money somewhere.

The second reason is people are not going to be putting their money into stocks in Asia if they see the stock markets continuing to fall. The only logical place left for the money is in gold and silver and to wait until the storm blows over.

 

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