Precious metal investments: news, consultancy, trends, reports & more!
HomeMarket WatchHard AssetsInvestor's GuideDownloads

Trade Wars, Financial Wars,
Currency Wars are Undergoing

Modern warfare is being fought with financial means and through trade.
In addition to conventional wars and other conflicts throughout the World, we're witnessing conflicts fought with money - the ravages can be just as devastating only less visible physically.

Prime Values has recommended the book "Currency Wars" by Jim Rickards, in which one can find out deep details about a looming global financial war.

Could the 3rd World War be fought by financial means, through currencies and through trade?

One thing is for sure: a plethora of events that are currently undergoing are pointing out to an intensification of such conflicts.

One of the most compelling example for a "trade weapon" is the sale of natural gas by Russia.
It is being used as a "weapon" against other states - particularly against European rivals.

The price of gas for Russia's clients varies: some countries pay less, others pay more - some even pay double price than others! It all depends on what political relations they have with Russia.

The "financial weapon" that Russia used recently to fight back against the West's sanctions was the bypassing of the petrodollar system in the sale of oil. Russia will sell its oil in rubles instead of US dollars or euros or other currencies.

But overall, the best example for a currency war is the one fought against the US dollar by various countries that are avoiding the dollar.

Various bilateral agreements are undermining the dollar's status as a global reserve currency.

China-Brazil, China-Japan, China-Australia, Venezuela-Russia, Iran-India and others have agreed either in barter or direct currency trade. This is diminishing the strength of the US dollar.

Perhaps because the "dollar zone" is contracting, the Federal Reserve is responding by through tapering (reducing the monetary easing), which contracts the volume of dollars produced every month.
Obviously, there will be consequences of the tapering actions.

One of the biggest "punches" against the US dollar arrived in November 2013, when suddenly China announced it will no longer build dollar reserves.

The US dollar has been labeled "a risky asset" by many countries that are reducing their exposure to it. So is China - the biggest buyer of US dollars.

And it's not just the rivals and enemies of America that are doing so. Australia, Japan and even Germany are taking actions that reduce the use of dollars in foreign trade.

Since the outbreak of the global economic crisis, the events explained above and similar ones are intensifying and spreading.

What could the next 5 years bring?

Most likely we will see more currency bypassing actions (especially targeting the dollar and the euro), trade wars (predominantly fought through commodity trades), currency wars (which might include short-sellings) etc.

comments powered by Disqus

Prime Values on FacebookPrime Values on Twitter

about us    terms of use    privacy policy    disclaimer    partners    advertising    contact us