Abandoned U.S. Dollar and Paradigm Shift

By: Jim_Willie_CB

Currencies
Diamond Rated - Best Financial Markets Analysis ArticleA paradigm shift is underway, unrecognized inside the US kettle. Its water level is falling and its temperature is rising, even as fewer foreign born cooks stir its contents. The US banking and political leaders errantly pursue a path toward a return to normalcy, when all pathways have been washed out by powerful storms that to do abate and will worsen. Several key developments point to a new global order taking shape, as the Chinese actively work to plant global seeds that result in the Yuan currency serving more of a role in global trade. They will eventually de-throne the USDollar from its primal perch. The USDollar will be used less in global trade. The US$-based assets are being diversified. These developments are gaining traction, power, and publicity.The foreign creditors continue to protect their core US$-denominated reserves, while clearly undermining the US$ on the margin, as alternatives are chosen. To date, the alternative choice is hard assets, commodity supplies, and properties from the resource camp. The paradigm shift will change the face of the United States permanently, but to date few recognize the changing landscape.

EURO IS THE KEY, ON EDGE OF BIG UPLEG
The Competing Currency War is to reach a fever pitch. The USDollar weakness will force other currency custodians to wreck their own in response, so as to avoid the further damage from a rise. A sequence of currency structural changes seems evident in three stages, a currency crisis in three stages, shared in the July Gold & Currency Report posted this week. It involves the Euro and what are more commonly called Commodity Currencies. Gold & silver (along with platinum) will be primary beneficiaries of the deepening crisis. It is called a Credit Crisis nowadays. A better description is a Bank Crisis. In time, it will be called a Currency Crisis as money will be doubted for quality and reliability.The Euro currency is ready to challenge the 160 highs again. It is reluctant beneficiary to a crumbling USDollar. The custodians of the Euro want a stable currency, not a too strong currency. They will not have their wish. As the USDollar suffers the shameful global rejection, the Euro benefits. What is good for selling EuroBond debt is also bad for European export industries. A rising Euro keeps down economic costs across the continent, a vital buffer. However, the engine of Europe is Germany, whose export trade struggles and will feel greater stress as the Euro rises further. The reversal pattern dictates a target of 160, thus a challenge of 2008 highs. The base from last winter at 126 was a reaction low. The impulse high at 143 must be overcome, but all signs point to surpassing it. Hue and cry will come from Europe when the runup occurs. After 143 is overcome, a sudden scary fast move will come to 155, almost a 10% move with no resistance. In the currency realm, that is VERY DISRUPTIVE. The move will drag the US$ DX index down to 73-74 range, with blood on the FOREX floor.