Have You “De-Dollarized”?

China is getting out of the way.  You better get started, too!

The smart money has begun de-dollarizing.  They see that the future holds a more rapid devaluation of the US dollar.

It is the only way Washington can keep its mega-debt serviced.

The media tells you the Federal Reserve has raised interest rates dramatically, a replay of the Volcker method, designed to once again wring inflation out of the dollar economy.  But the Volcker method involved raising interest rates well above the inflation rate.

The current consumer price inflation rate is said to be 7.7 percent annually.  But the Fed’s targeted policy rate, the Fed funds rate, has only been raised to 3.75 – 4.00 percent, still way below the inflation rate.   The forthcoming December Fed meeting is widely believed to result in throttling back to a lesser rate increase than the prior months. 

Leaving the Volcker job undone.

If you wonder about the Fed’s apparent lack of resolve on the inflation front, we point you to the open secret that rates somewhere below the inflation rate are needed so that the monetary authorities can devalue the otherwise unpayable US debt burden.

We call this an open secret, because other central banks, know the craft of money printing themselves, are moving out of dollars and into gold.  

 In just the last week we learned that China has added another 32 tons of gold to its reserve holdings. It is the first officially acknowledged addition to China’s gold position in more than three years, putting its official reserves at 1980 tons.  

The World Gold Council reports that central banks added 400 tons of gold to their holding in the July-August-September quarter this year.  

Central banks have been net purchasers of gold for 13 consecutive years.  

Meanwhile, the WGC, looking ahead to 2023, is in the camp of those who foresee a recession.  WGC noted that gold has seen positive returns during five of the last seven recessions.

“Historically, tightening cycles [such as we are in now] have ended in a recession,” says Juan Carlos Artigas, WGC’s head of global research.  “The more severe the recession, the better gold does.”