SGM Metals: China Encouraging Nations to Trade in Local Currencies & Drop the USD!

Sept. 11, 2012 - PRLog -- CNBC.com reports: [ China sounded the alarm about the state of the global economy on Saturday and urged countries gathering at an Asia-Pacific summit to protect themselves by forging deeper regional economic ties.

Chinese President Hu Jintao said his country would play a role in helping deepen cooperation between the 21 members of the Asia-Pacific Economic Cooperation (APEC) by rebalancing its economy to improve the chances of a global economic recovery.

Russian President Vladimir Putin had also expressed concern about the world economy on Friday, and particularly about Europe's debt crisis, as he prepared to host the annual APEC summit in the Pacific port city of Vladivostok.

"The world economy today is recovering slowly, and there are still some destabilizing factors and uncertainties. The underlying impact of the international financial crisis is far from over," Hu told businessmen in a speech before the summit.

"We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability," he said.

Russia sees the weekend summit as a chance to make a pivotal shift away from Europe, increasing political and economic links with countries in Asia that are showing relatively strong economic growth as Europe struggles with its debt crisis.

APEC, which also includes the United States, Japan, South Korea, Indonesia and Canada, groups countries around the Pacific Rim which account for 40 percent of the world's population, 54 percent of its economic output and 44 percent of trade. Boosting trade and growth is vital for APEC as a whole as it tries to remove trade barriers that hinder investment. ]

So as the world watches the federal reserve, along with its British & European central bank counterparts, in multiple failed attempts to jumpstart the western consumption based economies with endless waves of inflationary fiat money printing the realization that the past two decades of consumption were fueled by credit not cash funded demand is forcing China & Russia to seek out trade agreements outside their participation. America’s blind patriotism does not permit us to consider that there may arise a day where the other first world nation economies may move closer together and push the US out of the global economic leadership role. Even though it is happening right before our eyes, the western media is certainly not putting this information into the dinner table conversations and therefor most Americans are oblivious to this development.

How would the world economies look if the dollar was eventually dethroned as the world reserve currency in this global currency war? What would this do to the dollar if global demand for the fiat currency abruptly disappeared? Let’s say 1/2 of our global trading partners decided to trade internationally with other like minded nations who have been abused by the inflationary policies of the FED for decades, but instead of using USD for international trade they opted to simply exchange goods with their neighbors and settle those exchanges with their respective currencies? That would severely reduce the need to hold US dollars for many of the world’s central banks and this would lead to an opportunity that everyone of these nations have been quietly wishing for to send back pallets of newly printed dollars back to the United States marked “return to sender”. This would permit these nations to reduce their exposure to the consumer inflation their nations have been plagued with for decades as a result of being a trading partner locked into an antiquated monetary system that only benefits the one who designed it. For most Americans this concept is ridiculous and would never happen according to the education they have received in the public school system but I can assure you that these nations are asking themselves the tough questions that we would be wise to ask of ourselves, but that probably wont ever happen. For as long as the nation is hearing a coordinated parroting of the recovery mantra by the trusted cornerstone media outlets why would they ever consider they may be a dangerous threat heading our way?

It is time we ask the tough questions and get the tough answers or else there is no possible way for us to prepare for what is coming. The fourth quarter seems ripe for yet another economic convulsion that will go a long way to further eroding the investing portfolios of those who have already experienced a painful 39% reduction in their net worths. Where do you really think the stock market has to go from here? Currently sitting at a heavily inflated pre-crash high on the DOW is a very precarious position to be in especially if attaining these pre-crash highs only got back a fraction of what was lost in the Q/4 2008 crash. Now would be a wise time to take whatever gains have been put back into your portfolio, whether purely from FED pumping or not, and move those dollars into an asset that will hold its value in a dollar devaluation campaign such as gold & silver bullion. These precious metals will serve as an inflation hedge while at the same time offering up the potential for tremendous gains as the metals rise to offset the dollar devaluation campaign the FED is obsessed with to try and stimulate the economy at home.

Time is running out and the prices of the metals will continue to rise as the time gets shorter & shorter. Emerging economies have aggressively moved to acquire metric tons of gold to shore up their nations wealth. While this is happening abroad, at home we see govt. agencies purchasing massive volumes of hollow point ammunition and riot gear while in the background bizarre announcements by the DHS are being unveiled suggesting that we prepare for zombie invasions at home? Up is down and down is up all of the sudden? Establish your ‘uh oh we didn’t quite get the recovery we were hoping for at home & instead created an inflationary disaster’ insurance policy in gold & silver bullion today & begin to participate in the sound money debate with alternative currencies. Remember that it is a far better strategy to PREPARE your portfolio than to attempt to REPAIR your portfolio once the damage begins. Tick, tock.