Watch the Topping Dollar for Clues to Gold

In my article last week, titled, “It’s all About Defending the Dollar Based Wall Street Empire,” I talked about the global market balancing act on my recent radio show with Jim Rickards. Jim pointed out that in order to keep the global markets from spinning out of control, the G-20 were now in the process of trying to usher an orderly decline of the dollar. The importance of that stems from the need for the 2nd largest economy in the world—the Chinese economy—to stop slowing down. If China were to go into a recession while the rest of the world’s economy remains comatose, it would spell DISASTER!DollarYen

But there are big problems with market manipulation, aka market lying. Not only does market manipulation by the powers that rule America become hurtful to some countries and helpful to others, but it throws markets out of balance. As such each market lie requires still a bigger lie to cover up the prior lie, just like human lies.

And so, check out the U.S. dollar chart on top and the Japanese yen chart immediately to your left. Although the yen is only about 13.6% of the dollar index compared to a weighting of 57.6% for the euro, a low value for the yen is essential to stimulate Japanese trade, especially in Asian markets. But a stronger yen is very hurtful to Japanese exports and so a rising yen runs counter to the economic goals of Japan, a “friend” of the U.S.  For this reason a weak dollar policy that, according to Rickards, came out of the last G-20 meeting, may be good to help China’s economy from falling further or at least falling as rapidly, but it is hurting Japan which is America’s primary ally in Asia. Remember, the U.S. is blessing Japan’s rearming to try to hold China in check.  I’m guessing the U.S. is permitting Japan to build up its military since the American empire is reaching its limits.

More ominous for the global economy may be the increasing instability that is caused with yet another manipulation of the dollar. Keep in mind that with Japan leading the way toward low interest rates for decades, it is a leader in the carry trade, which means financiers from around the world have been borrowing yen. Now, if the yen suddenly starts to break through key resistance levels, huge losses will be suffered by enormous financial entities around the globe. That could set off the next global financial decline. Can a balance be maintained and if so for how long? No one knows the answer to that question. But what we can be sure of is that with each new massive monetary stimulus and each new lie the market is told by the landlords of the world, the more likely Humpty Dumpty will come tumbling down.

I find it interesting that the last time the yen was at the current level was around the 2007-08 time frame. Look what happened to it during the financial crisis. As the world began to experience the great debt deflation, the carry trade had to cover, sending the yen dramatically higher from around the current level of .92 to nearly 1.35.  Now, keep in mind that the yen debt is far greater now than it was in 2008-09 because the insanity of doing more of the same was enacted in spades even when it didn’t work in the past!

Of course that is true of all currencies as they all are in a race to the bottom, which is why I direct your attention once again to the dollar at the top of the page. Last week, I passed along Michael Oliver’s view with respect to the dollar index that “A 94.50 monthly close will credibly break this multi-year uptrend on quarterly momentum.” The dollar index closed this week at 94.252. Keep an eye on the dollar, the world’s reserve currency because it is the most reliable market to watch for our interests in gold and other commodities.


Of course the euro is by far the most important currency in the dollar index. Its weighting is 57.6%. Note how close it is to a breakout to the upside which, if/when it takes place, means the dollar will fall and along with it the dollar-denominated price of gold and all manner of commodities are likely to rise as the world’s leading reserve currency—the dollar—loses value.

As I noted last week, currency manipulation was possible by the United States as part of the spoils of WWI and WWII. Once Nixon removed the gold standard, he set the stage for American imperialism to run amok. It has been a great run for Wall Street and Washington parasites. But the problem with parasites is that they kill the organism from which they feed. And with that, life is eventually even sucked out from the parasites.

It is interesting how one of the greatest parasitic institutions on the face of the earth, namely Goldman Sachs, is calling for you and me to sell our gold. Meantime, as pointed out by James Rickards and others, the Chinese and Russians are building up their gold reserves like there is no tomorrow even as those two countries plus Iran engage in gold-based currency trades among themselves. Indeed, I believe the anti-Russian propaganda that is spewed out from our major media is nothing more than a complaint that a growing amount of trade between Russia and China is bypassing the West and for good reason. There can be confidence between those nations that the nations they trade with are on sound financial footing because their currency is based on gold not dollar fiction, which requires constant U.S. military victory to force countries to continue to use dollars. Ultimately the dollar lie will be recognized around the globe and when that day comes, no one should cheer because it will likely result in untold violence and chaos. But to be aware and prepared as best we can be is better than ignoring this growing reality. Those who are exchanging dollars for gold while the dollar is still valued by the mainstream will be in a much better financial position than the masses of Americans who continue to accept the dollar and other fiat currency lies promoted by central bankers and government partners in crime.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.