The number of countries demanding a new reserve currency is growing. Add the UN to the mix.

U.N. Wants Global Currency to Replace Dollar

Wednesday, September 9, 2009 9:54 AM By: Dan Weil Article Font Size

Add the United Nations to a list that includes China and Russia in calling for an alternative to the dollar as the world’s sole reserve currency. A United Nations panel has recommended a multilateral currency regime instead. A report from the U.N. conference on Trade and Development also called for managed currency rates as opposed to free floating ones. "A viable solution to the exchange-rate problem would be a system of managed flexible exchange rates targeting a rate that is consistent with a sustainable current-account position," the report said, according to The Wall Street Journal. "But since the exchange rate is a variable that involves more than one currency, there is a much better chance of achieving a stable pattern of exchange rates in a multilaterally agreed framework for exchange-rate management." The U.N. report points out that the dollar’s current role absolves the U.S. of having to make necessary policy adjustments. "Thus, the dominance of the dollar as the main means of international payments also played an important role in the build-up of the global imbalances in the run-up to the financial crisis." Nobel laureate economist Joseph Stiglitz argues that the dollar is indeed in trouble. "Higher deficits spark market concerns over future inflation; concerns of inflation contribute to a weaker dollar; and both come together to undermine the greenback’s role as a reliable store of value around the world," he wrote in The Atlanta Journal Constitution. © 2009 Newsmax. All rights reserved. If the USD is to meet its demise, how do you think it will happen? We have seen the USD lost its value gradually over the last few years. It seems inevitable. All these money printing have to had an impact someday. It is just that the US had such a stranglehold on the world's economy that it is not easy to loosen its grip. People all over the world are so used to Wall Street leading the way. China with its trillions of dollars of foreign reserves obviously does not want the USD to collapse overnight. She is however gobbling up commodities all over the world and getting rid of those USD in the process. And frankly, without a replacement currency in place, it is hard to drop the USD. So, in essence all of us have been given ample warning and time to prepare for the replacement of the USD as the reserve currency. Buying precious metals and divesting into foreign currencies are two ways to lessen its impact. Putting money into Swiss banks is apparently no longer an option. I know this is a controversial subject and welcome your comments.

Extremely troublesome and scary.   I don't see the push for this waning escpecially with this administration.

Are you guys preparing for this ?  If so how ?

shredmonster said:

Extremely troublesome and scary.   I don't see the push for this waning escpecially with this administration.

Are you guys preparing for this ?  If so how ?

I would definitely divest into precious metals, and foreign currencies. I like the idea of holding physical gold and silver. ETFs that deals with foreign currencies like FXE, FXY make it convenient to trade foreign currencies. I agree with Darrell that getting some silver rounds for barter trading purposes is wise.

Hey Darrell what new regulations are you referring to?

Currencies worry me some – I know a guy who trades them.

He tells me the markets can be manipulated on any given day – moved by an entity that has enough money to move them.  He told me it takes someone with at least 400 million or so but it is done quite a lot apparently.

What percentage of your money do you put into gold and silver coins?  And Darrell you are referring to just gold and silver pre-1964 coins correct – not nickels or quarter right?

Suppose to be 1000 bank failures next year so I don't think I would keep them in a safe deposit box.

When I was holding stocks and bonds I was always concerned about the market. Since I divested about 20% into gold and silver, I am still concerned with the market but only over 80% of the rest of my portfolio.

Since I divested into PMs, the spot price of gold has varied between $800 to $1,000 while silver had varied between $13 to $17. I have not lost an iota of sleep over PMs. For me, it is not so much capital appreciation that I am concerned with but rather wealth preservation.  With the USD impending devaluation (already ongoing) the only way up for PMs is up. It may meet some resistance along the way but so long as the USD keeps falling, gold should keep moving up. In other words, the purchasing power of gold has a better chance of remaining intact compared to the USD.

I know of no other place to keep the PMs but in a safe deposit box. I know some companies rent out storage vaults. Until silver catches up with gold, I will keep them in my home safe.

I wouldn't mess around with Forex. I am just talking about ETF's like FXE (Euro), FXY (Yen), and others.

Darrell, can you enlighten me on what regulations are you referring to?

To those who ARE LOOKING FOR A WAY TO DIVERSIFY OUT OF THE $. I suggest you take a look at The Merk Hard Currency mutal fund. (MERKX). Do your own DD and decide what portion of your portfolio you want to "shelter" away from the coming inflation storm.   

Perfectism: I saw that article as well.  Obama is going the wrong diretion.  China will retailiate somehow.  It seems that Obama sees great needs to protect the unions, and presumably, his voters.  Just as he has done with GM and Chrysler, the bailout was not meant to save the car companies, it was made to save the union jobs.  Same as the tire tarriff.  Now is just not the time.  My guess is that they will retaliate by adding tarriffs.  China is still holding a bunch of our notes, and inflation will hurt them as much, if not more, than us.

Post edited 4:15 am – October 6, 2009 by Will

Hot News!!!!!!

Now it is not just the BRIC countries. The oil producing countries of the middle east are also in. Transition from the USD within 9 years. I think it will be much faster than that. Let's see how the market react to this news tomorrow.

The Independent
October 6, 2009
The demise of the dollar
By Robert Fisk

In a graphic illustration of the new world order, Arab states have
launched secret moves with China, Russia and France to stop using the
US currency for oil trading

In the most profound financial change in recent Middle East history,
Gulf Arabs are planning – along with China, Russia, Japan and France -
to end dollar dealings for oil, moving instead to a basket of
currencies including the Japanese yen and Chinese yuan, the euro, gold
and a new, unified currency planned for nations in the Gulf
Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and
Qatar.

Secret meetings have already been held by finance ministers and
central bank governors in Russia, China, Japan and Brazil to work on
the scheme, which will mean that oil will no longer be priced in
dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese
banking sources in Hong Kong, may help to explain the sudden rise in
gold prices, but it also augurs an extraordinary transition from
dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although
they have not discovered the details – are sure to fight this
international cabal which will include hitherto loyal allies Japan and
the Gulf Arabs. Against the background to these currency meetings, Sun
Bigan, China's former special envoy to the Middle East, has warned
there is a risk of deepening divisions between China and the US over
influence and oil in the Middle East. "Bilateral quarrels and clashes
are unavoidable," he told the Asia and Africa Review. "We cannot lower
vigilance against hostility in the Middle East over energy interests
and security."

This sounds like a dangerous prediction of a future economic war
between the US and China over Middle East oil – yet again turning the
region's conflicts into a battle for great power supremacy. China uses
more oil incrementally than the US because its growth is less energy
efficient. The transitional currency in the move away from dollars,
according to Chinese banking sources, may well be gold. An indication
of the huge amounts involved can be gained from the wealth of Abu
Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated
$2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global
recession was implicitly acknowledged by the World Bank president
Robert Zoellick. "One of the legacies of this crisis may be a
recognition of changed economic power relations," he said in Istanbul
ahead of meetings this week of the IMF and World Bank. But it is
China's extraordinary new financial power – along with past anger
among oil-producing and oil-consuming nations at America's power to
interfere in the international financial system – which has prompted
the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments,
along with India. Indeed, China appears to be the most enthusiastic of
all the financial powers involved, not least because of its enormous
trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East
and Russia. The Chinese have oil production concessions in Iraq -
blocked by the US until this year – and since 2008 have held an $8bn
agreement with Iran to develop refining capacity and gas resources.
China has oil deals in Sudan (where it has substituted for US
interests) and has been negotiating for oil concessions with Libya,
where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer
than 10 per cent of the imports of every country in the Middle East,
including a huge range of products from cars to weapon systems, food,
clothes, even dolls. In a clear sign of China's growing financial
muscle, the president of the European Central Bank, Jean-Claude
Trichet, yesterday pleaded with Beijing to let the yuan appreciate
against a sliding dollar and, by extension, loosen China's reliance on
US monetary policy, to help rebalance the world economy and ease
upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second
World War which bequeathed the architecture for the modern
international financial system – America's trading partners have been
left to cope with the impact of Washington's control and, in more
recent years, the hegemony of the dollar as the dominant global
reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain
to stay out of the euro in order to prevent an earlier move away from
the dollar. But Chinese banking sources say their discussions have
gone too far to be blocked now. "The Russians will eventually bring in
the rouble to the basket of currencies," a prominent Hong Kong broker
told The Independent. "The Brits are stuck in the middle and will come
into the euro. They have no choice because they won't be able to use
the US dollar."

Chinese financial sources believe President Barack Obama is too busy
fixing the US economy to concentrate on the extraordinary implications
of the transition from the dollar in nine years' time. The current
deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh;
the Chinese Central Bank governor and other officials have been
worrying aloud about the dollar for years. Their problem is that much
of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial
transactions," one Chinese banker said. "America and Britain must be
very worried. You will know how worried by the thunder of denials this
news will generate."

Iran announced late last month that its foreign currency reserves
would henceforth be held in euros rather than dollars. Bankers
remember, of course, what happened to the last Middle East oil
producer to sell its oil in euros rather than dollars. A few months
after Saddam Hussein trumpeted his decision, the Americans and British
invaded Iraq.

Here is a link to a news report of the denial by Oil States:–

http://www.reuters.com/article…..06?sp=true

Would anyone trust these OIL States to tell the truth on this?

The folks in the Middle East are denying any movement on their part to change from the dollar.hum..can we believe them ? Gold is going up like crazy because of this report…$1040 at last check.

asafp said:

The dollar will be in a slow festering rot with an occasional dramatic event along the way. Australia has raised rates to 3.25%. This shows some confidence. Where is the confidence in the USA?

Obama would love a photo op with the Dali Lama, but has to bend over backwards to appease the Chinese.

A few months ago, I picked up a few shares of PowerShares DB G10 Currency Harvest (DBV) to take advantage of the carry trade. This was discussed on the old forum. It’s been a slow steady gainer without the stock market risk.

FXA has been enjoying a really nice run since March 2009 with no signs of it getting tired. What are the risk/reward of getting into FXA at this point?