Gold – the final bubble, page-4609

Can Gold compete with safe heaven currencies (SHC) and how long deflation chain is broken.

SHC are, Yen, Swiss france, Euro and USD, the most traded currencies. They do hold big foreign investment reserves ( FIR)

Since 2014, global currencies fell against the green back in conjunction with oil's poo.

USD has become the most traded currency while other countries had been trying to fix their budget deficits and worthless bonds price.

USD is debt denominated dollar so It's the best SHC to transact debts and bonds as it's the world biggest currency reserve especially in the times Argentina and Greece (plus some European union countries) were on the verge of defaults.

Argentina and Greece have learned how to trim costs and improve productivity.

For a whole year, investments have dried up with slow growths and low prices environment.
Investors tend to shift to alternative SHC due to the facts that Greece could paid up their debts and USD has less influenced in Europe and emerging markets in China, Russia and India as they want to thwart the purchasing power of USD.

Other countries don't want to hold too much USD because that will hurt their exports due to overvalued USD.
Export is the only key to help countries getting out of debts problem.

So Why Australia cannot improve its exports while AUD is at all time low. It's the demand sides. Australia is purely relying on China.

But I can sense that more investments will come to Australia because Australia miners are simply dirt cheap compared to US companies.

They're ready. They can deliver mini profits out of cheap assets. That’s why big projects are no longer make sense with lower for longer prices.


Deflation chain is still a problem for commodities sector.

There're some signs of improvement.
1. Yuan must be adjusted by markets.
China tried to depreciate its Yuan to prop up exports in order to resume its deflation successes.

The intervention had failed as China quickly bought USD and sold US treasuries reserve. China also bought more gold and bitcoins as an excuse to stabilize its equities root.

Why didn't they just cut some more interest rate which is at highest level compared to its peers. In 2014 Yuan was undervalued at 40%. In 2015 Yuan is overvalued at 25%. So Yuan is still overvaluedat 15%.

Well, China doesn't want more capital outflows. It wants growths but It is no longer capable of delivering cheaper products based on cheaper Yuan.

2. China is unsure about USD's direction. It's wondering whether to float Yuan or should it fully peg to USD to meet IMF's conditions.

The only way for a lower Yuan is another QE program. This will also help to spur its equities growth as US was an example.

What's about USD. Does US want to kill shales industry. The one that was built since 2008 GFC. The one that helps US job figures standing at lowest point as today.

Ok just lift the US rate to see more companies in insolvency/ defaults
And deliver a QE

We will know the truth that Gold is a redeemable currency, a SHC.