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Hey There Income Hunter,
Monday’s market brought back my memory of Black Monday in 1987 …
Not because it was a major one-day crash, but because it felt like there was a need to raise cash by selling whatever had a decent bid.
Let’s hope we never see a day like Oct. 19, 1987 when the market dropped 22% in one day.
We are, however, seeing critical warning signs of deeper funding and liquidity issues.
For instance, the iShares High Yield Corporate Bond ETF (Ticker: HYG) continues to trade lower, signaling potential funding and liquidity issues in the high-yield market.
The high-yield market is always the first to go and then, depending how bad the recession is, the problems will go up the chain to investment grade.
We have never had to worry about US Treasuries experiencing counterparty issues before …
But when you are talking about $12 trillion in US assets held by foreign central banks that are feeling pressure to get the hell out, well, anything can happen.
Today, we’ll look at the issues impacting central banks that may have them coordinating efforts to create a neutral reserve currency backed by gold.
Also!
I have prepared a special report on the topic of trouble brewing in US Dollarville. Attend my no-cost live event on Wednesday at 12:30 and it will be all yours, free of charge.
And I promise it will open your eyes to once-in-a-century trade opportunities.
Dollar Coup in the Works?
Our global trading partners who are beholden to the mighty US dollar for trade are now actively preparing an off-ramp in case the US continues its sanction proliferation.
Russia has visibly swapped its US Treasury holdings for gold and have been doing that for many years now.
China started doing the same thing 30-years ago after they inserted themselves as the No. 1 exporter of just about every good that Americans have purchased since 1980.
Europe created the Euro in the late nineties so they would have their own off-ramp in case the dollar began to weaken, limiting their ability to buy cheap energy.
Gold is the Answer
On two separate occasions the US showed its true colors to its trade partners.
Over time, that forced a change of plans for the international community.
The first instance was in 1971 when the US defaulted on its promise to redeem dollars for gold.
This was not a necessary step, but the US wanted to further insert themselves in global trade and ended the dollar/gold link to shift to a oil/dollar link.
Notice in the chart below how well it worked as long as the US maintained a tight dollar/oil peg . But the 2008 housing crisis made that impossible since our banking system would have collapsed if the Fed and government didn’t come to the rescue with trillions in new dollars.
Once the US broke the peg, oil soared.
That opened the eyes of our trading partners and led to a behind-the-scenes coordination to end the dollar’s reign as reserve currency of the world.
Bring It Home
We are in for a wild ride in the months ahead. The Ukraine invasion and the sanctions enforced on Russia have sent ripples of panic around the world.
The thought of being shut out of energy or access to global liquidity is an issue of national security, so this is game on!
There is no doubt that we are close to the day of reckoning for the US dollar, and guess what …
It will be the best thing that can happen to the US because it will get us back to our roots of innovation and manufacturing without having to worry about managing risks for the whole world.
There is much more in my special report out tomorrow and this information will give you the intel and confidence to crush in as the story unfolds.
But you can only access it when you register for tomorrow’s no-cost, pre-Fed LIVE event.
Live and Trade With passion My Friend,
Griff
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