Is Gold Getting Ready To Rip? Fed Aggressively Buying Securities Outright, Japan Fired First Shots In Global ‘Currency War’, Trust In Central Banks By Other Central Banks Is Ending, And Fitch Prepares To Downgrade U.S. Credit Rating

First Shots Fired in Global ‘Currency War’

Faced with a stubbornly slow and uneven global economic recovery, more countries are likely to resort to cutting the value of their currencies in order to gain a competitive edge.

Japan has set the stage for a potential global currency war, announcing plans to create money and buy bonds as the government of Prime Minister Shinzo Abe looks to stimulate the moribund growth pace. (Read MoreJapan PM Says BOJ Must Set 2% Medium-Term Inflation Goal)

Economists in turn are expecting others to follow that lead, setting off a battle that would benefit those that get out of the gate quickest but likely hamper the nascent global recovery and the relatively robust stock market.

If Trust in Currencies Erodes, Gold Will Skyrocket

Is gold getting ready to rip?

Reports that Germany intends to repatriate the gold that is being stored at the New YorkFederal Reserve should be supportive for gold prices. The implication here is that trust in fiat currencies is being eroded by central bank involvement. Japan’s recent policy change toward a weaker yen, coupled with the Federal Reserve’s ongoing bond purchases, is making gold a more attractive asset.


Abe’s Stimulus May Trigger Japan Default, Fujimaki Says

Prime Minister Shinzo Abe’s fiscal and monetary stimulus measures may trigger a collapse of Japan’s economy as early as this year, according to Takeshi Fujimaki, a former adviser to billionaire investor George Soros.

Japanese Yen Falls To Lowest Price Against Gold Since 1980 – ¥149,588.2/oz

Thus, yen gold remains 37% below the record intraday nominal high from 1980. Given the Japanese determination to devalue the yen to escape deflation, the record nominal high will almost certainly be reached in the next year or two.


A Tweet from PIMCO’s Bill Gross

Gross: Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other?


Legendary gold trader Jim Sinclair has sent an email alert to subscribers today regarding last night’s news that Germany will begin repatriating it’s gold held on deposit at the NY Fed back to the Bundesbank, as well as all 374 tons held at the Bank of France.
Sinclair states that history will look back on this salvo fired across US war financing as being the beginning of the end of the US dollar as the reserve currency of choice, and that under normal circumstances, no major central bank would insult another major central bank in the way that the Bundesbank just has.

Sinclair states that the Bundesbank repatriating its gold reserves is the most significant event in the gold market since Charles De Gaulle called the US hand that it would stand by convertibility, and that gold is headed to $2111 in the near future in the wake of the Bundesbank’s actions.


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Fitch Prepares To Downgrade U.S. Credit Rating

LONDON (AP) — The United States could lose its top credit rating for the second time from a leading credit agency if there’s a delay in raising the country’s debt ceiling, Fitch Ratings warned Tuesday.

Congress has to increase the country’s debt limit, which effectively rules how much debt the U.S. can have, by March 1 or face a potential default. There are fears that the debate will deteriorate into the squabbling and political brinkmanship that marked the last effort to raise the ceiling in the summer of 2011. The U.S. Treasury Department warned then that it had nearly reached a point where it would be unable “to meet our commitments securely.”

If Fitch does move to downgrade the US, it will join Standard & Poor’s, which was so concerned by the dysfunctional 2011 debate that it stripped the U.S. of its triple A rating for the first time in the country’s history. Another major ratings agency, Moody’s, also has a negative view on the U.S. outlook…

A tweet From Jim Rickards

Make no mistake that a collapse is coming. #WallStreet, #Washington & media elites won’t inform you because they will be the last to know.


If financial collapse continues to haunt the dollar and the euro, as China’s renminbi needs time to hit its stride, the world may rush into the safe haven of gold, says a new report.

by Dorothy Kosich,

A report by the Official Monetary and Financial Institutions Forum (OMFIF) suggests that demand for gold will increase as central banks of emerging market economies become increasingly interested in gold in the transition from one global reserve currency system to a greater number of other currencies.

In an international monetary system where the U.S. dollar is considered the only real reserve currency, the role of gold has been limited. However, the OMFIF report suggests, “The role of gold is likely to be bigger in the transition period to a multiple reserve currency system than when system is in existence.”

The report, which was commissioned by the World Gold Council, suggests central banks will trade gold more actively. Nonetheless, the OMFIF stressed repeatedly that “gold will not replace fiat currencies” and that “the Gold Standard will not return.”


The master of bubble creation talks about preventing future bubbles and other circular banking logic. Fed aggressively buying securities outright.


It is no secret that the Federal Reserve is aggressively buying up a variety of securities and storing them in their opaque balance sheet.  The Fed in essence has become the bad bank and has served as the conduit to support bad banking policy.  There seems to be a policy of slowly shrinking the middle class and over time, maybe people will not notice it.  How can you not see that the central bank of the United States has been at the nucleus of many of the previous bubbles?  So with that said, I found it rich that the Fed has talked about its ability to moderate bubbles.  That is right.  The Fed, the numero uno culprit in the housing bubble is talking about preventing future bubbles.  Ironically by going deep into QE3 they are essentially inflating asset prices yet again by destroying fixed income investments and causing inflation to pick back up….


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