A gold backed alternative to the dollar may finally be here in the Iranian PayMon cryptocurrency

7:35 AM dollar, dollar hegemony, eu, europe, iran, jcpoa, payment system, paymon, reserve currency 1 Comment

Yesterday, U.S. Vice President Mike Pence severely chastised members of the European Union for defying Washington and for their plans to create an alternative to the SWIFT system.  Additionally, he threatened these nations with sanctions or worse if they continue to follow in their support of Iran and the JCPOA.

Yet ironically, Europe's defiance to the U.S. regarding the Iranian JCPOA could have triggered the final battle for dollar hegemony in the world as multiple nations within both Europe and Eurasia are being recruited to ditch the reserve currency for a new gold backed cryptocurrency replacement.

Iranians though are opening other creative fronts. Four banks – Bank Melli, Bank Mellat, Parsian Bank and Bank Pasargad – have developed a gold-backed cryptocurrency named PayMon, and negotiations are already advanced with the Europeans as well as Russia, Switzerland and South Africa to expand PayMon trading. Iranian officials are adamant that blockchain will be crucial to improve the nation’s economy. 

The Iranian move mirrors Venezuela’s action in launching its own oil-backed cryptocurrency, the petro, last October. But count on the Blocking Iran Illicit Finance Act to swing into overdrive in the US Congress. 

Meanwhile, Russia and Iran have all but bypassed the US dollar in bilateral trade, using only ruble and rial and “in case of urgent need, the euro, if we have no other options”, according to the Russian Ambassador to Iran, Levan Dzhagaryan. 

China, Russia, Iran and Turkey – the four key vectors of ongoing Eurasia integration – are investing in bypassing the US dollar on trade by any mechanism necessary. The Eurasia Economic Union (EAEU) is also working on a common system for “boosting economic sovereignty”, as defined by President Putin. It has free-trade agreements with an array of partners, including China and Iran. - Mint Press News

With populism causing the very foundations of the European Union to crack, as seen by the UK's Brexit vote, Catalonia's bid to secede from Spain, and Italy's defiance to Brussels, individual nations within Europe may soon be front and center in a race to cultivate trade agreements with nations sanctioned by both Washington and the EC.  And in doing so, it may also spark the downfall of the dollar as the world's reserve currency since it would require these countries to use an alternative form of payment that could very well be gold backed.

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Chopping down trees versus hugging them as new poll shows Americans rejecting Green New Deal and going long Capitalism

11:59 AM alexandria ocasio cortez, aoc, capitalism, green new deal, neiman marxist, socialism No Comments

Alexandria Ocasio-Cortez is quickly validating her new moniker as a Neiman Marxist by the fact she just moved into a luxurious new condo barely a month after complaining she couldn't afford rent in the DC area.  But that has always been the ways of the Limousine Liberal as they love to decry wealth inequality among the proletariat while they themselves live high off the hog.

So without deciding to take that dark road to investigate how someone like AOC could quickly go from waitress/bartender to prosperous politician in a matter of months, we will instead relish with glee a new poll out on Feb. 13 which shows that Americans don't want the Socialism that she and many of the new Democrats are trying to push,  and instead rally a cheer to the fact that Capitalism is once again rising in the hearts of the masses.

The meteoric rise of Alexandria Ocasio-Cortez and other young progressive politicians has led many to believe that the American public must be warming up to socialism.  But what if that isn’t true at all?  Certainly there is a certain segment of the population that absolutely embraces the message that AOC, Bernie Sanders, Elizabeth Warren and other socialists are preaching, but could it be possible that the American people as a whole are actually moving in the opposite direction?  According to a shocking Fox News poll that just came out, the percentage of Americans that want the government to leave them alone is going up, and the percentage of Americans that want the government to lend them a hand is going down… 

The 34 percent saying “lend me a hand” is down from 41 percent last year and 39 percent in 2016. The 55 percentwho would tell the government “leave me alone” is up from 51 percent in 2018 and 54 percent in 2016. 

The survey also found that the percentage of Americans that have a positive view of capitalism is more than twice as high as the percentage of Americans that have a positive view of socialism… 

Fifty-seven percent of voters have a positive opinion of capitalism. That’s more than twice the number who feel the same about socialism (25 percent). Some of the groups most likely to have a favorable view of socialism include self-identified liberals (50 percent), Clinton voters (43 percent), and those under age 30 (36 percent). – End of the American Dream

Sadly, it is this very same government which is now pushing for Socialism that also brought about the shame by which income inequality has turned the term Capitalism into a disparaging word.  This is because America is far more Fascist than Capitalist thanks to the advent of the central bank and cronyism by elected officials.

But history has proven time and time again that free markets have brought more people out of poverty than any other economic system (see China today), and that those who have been able to instill Socialism into their culture have nothing to show for it but ruined economies and a hundred of million dead citizens.

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Sorry CNBC but the consumer cannot save your stock markets as retail sales collapsed in December

11:30 AM cnbc, consumer, consumer spending, financial crisis, propaganda, recession, retail sales No Comments

The business channel known as CNBC is more well known for being a pumper of stocks than it is for reporting real news, and it appears their latest propaganda narrative just got destroyed.

In nearly every broadcast over the past two months, CNBC has attempted to promote the 'Consumer' as being the strongest part of the economy and the one to save the financial system from recession.  However despite the fact that consumer debt is at an all-time high, and retail businesses are going insolvent by the thousands, the final nail in the narrative may have just come out on Feb. 14 as retail sales for December crashed to their worst level since the financial crisis.

Retail Sales for the Control Group soared in November (+0.9% MoM) so some slowdown was expected; but, the government's official retail spending data for December confirmed BofA's concerns and plunged... 

• Headline Retail Sales -1.2% MoM (+0.1% MoM exp)

• Control Group Retail Sales -1.7% MoM (+0.4% MoM exp)

That is the biggest MoM drop in retail sales since 2009 for the headline and the biggest drop in the control group since the 9/11 attacks in 2001!... 

“These numbers are horrible,” said Ward McCarthy, chief financial economist at Jefferies LLC. 

“It appears to contrast quite sharply with reports of Christmastime sales that were generally seen as quite healthy,” and for the Fed, “rate normalization is on the back burner for a long time to come.” 

This is the worst December retail sales print since 2008 (and 2nd worst in history)... - Zerohedge

Perhaps we here at Shotgun Economics don't really need to remind you that consumer spending makes up between 70 and 75% of overall GDP.  And since this is the case, there can be no bigger validation that we, along with Europe for sure, are now headlong into the recessionary cycle.

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As Basel III gets closer to reality, central banks are buying gold hand over fist because it carries no capital requirements

10:13 AM basil iii, capital ratios, capital requirements, central banks, gold, gold price 2 Comments

With the turn of the year now into 2019, Western banks, especially those in Europe, are about to experience some new and difficult requirements come March 31.  And this is because Basel III will come into effect.

The primary change that Basel III will force onto financial institutions is that of new capital ratios meant to protect banks from insolvency and potential runs by depositors.  And with a new report out last week of central banks buying gold at the highest levels since Nixon took the dollar off the gold standard, their purchasing of gold may just be tied to the upcoming Basel 3 since holding the precious metal will not count against their capital requirements.

What is the relationship between Basel rules and gold? Basel rules are a set of recommendations on capital requirements for private banks. Bank assets are divided into several groups based on their perceived riskiness, with bonds and gold in the least risky category. Banks were required, according to Basel I rules, to cover 8% of their assets based on a special formula. The objective was that at least a part of the total banks' assets would be backed by assets, including gold, that were perceived as safe. 

In Basel II rules, bank assets were divided into three categories: Tier 1 included assets perceived as least risky, and Tier 3 included assets perceived as risky. Gold under Basel II rules was treated as either Tier 1 or Tier 3 capital, since the BCBS stipulated that "at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%." Seeking Alpha

However HERE is where things change for gold under Basel III:

Basel III rules abolished the Tier 3 capital class, and all assets fell under either Tier 1 or Tier 2 capital. In Basel III, gold's liquidity haircut is increasing to 85% from 50%. This percentage is used to help calculate a so-called liquidity buffer known as the net stable funding ratio (NSFR) that all banks must hold from 2018. The higher NSFR, the more funding is needed to meet the overall NSFR requirement.

So with central banks playing the game of vilifying gold for the common investor while at the same time buying it at depressed prices, the fundamentals for the gold price to move much higher are incredibly strong, especially judging how stock prices soared over the past five years from so much direct central bank intervention.

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Cryptocurrency capitulation? Crypto investors dump digital currency for paper gold

10:33 AM bitcoin, cryptocurrencies, gold, investing, money, paper gold, trade No Comments

Perhaps one of the most telling trends occurring in the cryptocurrency industry is not the fact that investors are dumping their digital assets in favor of the paper gold trade, but that these investors are moving from one intangible asset for another.

The mainstreams of both the cryptocurrency community and Wall Street both decry that cryptos and paper gold are money, but in reality they are neither.  The power to use something as a medium of exchange is only one component of what determines whether something is money, and perhaps it is this misunderstanding that sees very few investors in the end holding any real tangible wealth.

The plunge of cryptocurrencies has forced investors to seek other safe havens in traditional commodities, like precious metals. Investing analysts have revealed that many are turning to gold exchange-traded funds (ETFs). 

The world's most popular cryptocurrency, bitcoin, has been trading below $4,000 for nearly three weeks. Other major digital currencies, including Ethereum and Ripple (XRP) have also fallen sharply since the beginning of the year. 

The crypto market selloff has changed the investment climate, CEO of Van Eck Associates told the ETF Edge program. While back in 2017, when bitcoin reached its historic peak above $20,000, demand was “a little bit” shifted away from gold, now investors are reportedly switching back. 

“Interestingly, we just polled 4,000 bitcoin investors and their number one investment for 2019 is actually gold. So gold lost to bitcoin and now it’s going the other way,”Jan Van Eck said. – Russia Today

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Gold is wealth protection against every currency and not just the dollar as the metal is at or near all-time highs in 72 countries

11:58 AM currencies, dollar, gold, gold price, reserve currency, wealth protection No Comments

Contrary to popular belief, the world runs on more than just five primary currencies (Dollar, Pound, Euro, Yen, Franc).  But because the U.S. still has control over the global reserve currency, the narrative often is that all other currencies really don't count.

For thousands of years gold been both a balance and a check on the avarice of men and governments when it comes to purchasing power.  And in a new report out this week, gold still continues to do so as 72 national currencies are now at, near, or above their all-time highs in relation to the price of gold.

Popular belief has it that gold prices have not performed especially well despite some egregious geopolitical and economic factors. Well measured in 72 currencies, gold is at ... or within a few percentage points ... of being at an all time high for people in those countries. Not on the list are the British Pound, the Swiss Franc, the Euro and Chinese Yuan - but we are not far off in all of those currencies too. Only in USD does gold lag - and not all of us live in the US.  - Zerohedge

And here by the way is a list of these 72 nations and currencies.

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Central banker asserts Chinese yuan will challenge dollar as primary reserve currency

10:23 AM bank of england, bi-lateral trade, central banker, china, dollar, dollar hegemony, reserve currency, yuan No Comments

On Jan. 10, Britain's chief central banker asserted during a forum that the Chinese Yuan will soon challenge the dollar as a primary reserve currency.

Speaking in a conference regarding Future global trends, Bank of England head Mark Carney stated that the days of the dollar being the singular reserve currency are diminishing, and that the Chinese yuan appears to be the best choice to rival dollar hegemony.

The US dollar may one day be rivaled by the Chinese national currency – the yuan – which is likely to become a major global reserve currency, according to the governor of the Bank of England (BoE), Mark Carney. 

“I think it is likely that we will ultimately have reserve currencies other than the US dollar,” the UK top financial official claimed during an online question-and-answer session carried out as part of the Bank of England’s Future Forum. 

According to Carney, the global financial system is currently lagging behind the evolution of the global economy, facing asymmetric concentrations of financial assets in advanced economies relative to economic activity. 

“As the world re-orders, this disconnect between the real and financial is likely to reduce, and in the process other reserve currencies may emerge. In the first instance, I would expect these will be existing national currencies, such as the renminbi,” he said. – Russia Today

Besides being added to the IMF's basket of currencies in recent years, China is suddenly becoming the go-to currency for large swaths of the global economy as the U.S. continues to sanction or use the dollar as an economic weapon on nations that reject their hegemony.

While it is unlikely that sovereign economies will call for a new 'Bretton Woods' to remove the dollar's status as the world's singular reserve currency, it instead appears that the dollar will continue to become isolated or even rejected more and more in exchange for bi-lateral trade, and thus it will eventually lose its place atop the global monetary system through a de facto takeover.

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Protests in France about to escalate as Yellow Vests planning a run on the banks to cripple the financial system

7:03 PM bank run, france, macron, protests, yellow vests 1 Comment

Protests are great, but as they say, money talks and bulls*it walks.  And after weeks of demanding regress from the Macron government with little to show, leaders of the Yellow Vest movement are upping the stakes by planning that protesters conduct a run on the banks in the coming days.

French grassroots political movement the Gilets Jaunes — Yellow Vests — is planning a bank run similar to Bitcoin’s (BTC) Proof of Keys, sources revealed on social media Jan. 7. 

Dubbed the “Collectors’ Referendum,” the latest demonstration by the movement calls on supporters to withdraw all their savings and other deposited cash from financial institutions on Saturday. 

Speaking in a video uploaded to Facebook, an activist known only as Tahz San said the gesture aimed to “scare this (French) state completely legally and without any violence, yet more effectively than ever expected” throughout the history of the Gilet Jaunes movement. 

“It’s our elected officials’ worst nightmare,” he added. 

As local magazine Capital notes, the potential disruptive element of the Referendum could technically be considerable. - Cointelegraph

By declaring on social media the potential for tens of thousands of people to pull their money out of the banking system, it is likely that the Macron government will enact plans to either limit or halt any withdrawals before they begin.  However this is also a catch-22 since a bank holiday or capital controls imposed on the people will extend to every French and EU citizen living in the country, and spark even greater consequences similar to what we saw in India just a few years ago.

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With China, the U.S., and Europe entrenched in a tariff war, Africa is preparing to become a continental free trade zone

11:19 AM Africa, brics, china, free trade zone, tariffs, trade war No Comments

With the global economy deeply entrenched in an ongoing tariff and trade war, one region of the world is looking to free itself from the restrictions that governments impose on free trade.

In a new report out on Dec. 26, South Africa is ratifying a 49 nation treaty to make the entire continent of Africa a virtual free trade zone.

South Africa’s and Togo’s parliaments this month ratified the agreement establishing the African Continental Free Trade Area (AfCFTA). The total number of countries committing to the deal has thus grown to 49. 

Once the agreement comes into effect, it will create a tariff-free continent, covering a single market of 1.2 billion people in 55 nations with a combined gross domestic product of about $3 trillion. 

It will constitute the largest free trade area globally, according to South African Trade and Industry Minister Rob Davies. 

Economists say that tariff-free access to a huge and unified market will encourage manufacturers and service providers to leverage economies of scale. - Russia Today

Over the past five years, China has been investing heavily into Africa, and the country of South Africa has been a solid member of the BRICS coalition.  And with more and more nations rejecting globalism and seeking to participate in trade agreements using their own currencies, the time appears right for Africa to open its doors to new investment and development and potentially become the fastest growing region of the 21st century.

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Gold and silver continue their own Santa Claus rallies by moving over $1275 and $15 respectively after Christmas

10:16 AM equity markets, federal reserve, gold, gold price, monetary policy, rally, safe haven, silver, silver price, stock markets No Comments

Gold and silver prices expectedly took a dive a week ago following the Federal Reserve's announcement to continue with their policy of raising rates.  But this pullback didn't last long as the metals have subsequently moved upward every day after, and appear to be one of the primary safe haven assets investors are using to move cash into during the global equity selloff.

In fact not only have both gold and silver regained their 200 day moving averages in just the past five days of trading, their momentum has pushed prices above $1275 and $15 respectively for both metals.

Gold price:

Silver Price:

If volatility continues in the equity market through the rest of 2018 and into early next year, chances are very good that gold will soon break through a year long resistance level of $1300.  Yet only time will tell if this is only a short term rally for the precious metals since the European Central Bank is just beginning its cancellation of the same money printing policies the U.S. used to prop up their markets.

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