Burgeoning Global Currency Crisis: Bonds, Dollars, Bitcoin and Gold Are The Answer: Ex-Hedge Funder
- Major currencies are right on the cliff of death, says Raoul Paul
- Bitcoin and Gold are the way to go while 10-year US bond yields are going to zero
US President Donald Trump threatens to impose additional tariffs, China’s central bank lets its currency fall, the US labels China a currency manipulator, China stops buying US agricultural products.
The situation between the world’s top two economies continues to intensify that has the US stocks market having its worst day of the year Monday. There seems to be no end to this burgeoning currency war as after getting stable after breaking the important 7 level, China’s yuan is back above 7 on Thursday at 7.05 against USD.
These events suggest “Something really BIG is going on,” said Raoul Paul, founder and CEO of Global Macro Investor and Real Vision Group, former hedge funder and a Wall Street pundit via Twitter thread.
A Currency Crisis?
When the long-term charts all start pointing to a single event risk, I pay attention.
When those charts are at the KEY level, I focus.
And when they break, it is time for action…
Something really BIG is going on…
— Raoul Pal (@RaoulGMI) August 7, 2019
Major Currencies Are Right On The Cliff Of Death
Talking about the current situation in detail, Paul says,
“We are at the most important juncture in FX markets in my entire 30 year career. The dollar appears at risk of an uncontrolled rise.”
Technically, he illustrates how the Fed Broad Trade Weighted Dollar Index is “incredibly close”— barely half a percent away — to breaking the “enormous” cup and handle pattern at 130.
This he says translates into the largest chart pattern in FX history, the ADXY (Asian Dollar Index) Head and Shoulders Top, whose outcome means a fall of 20% or even more across all of the major Asian currencies.
“We are RIGHT on the CLIFF OF DEATH,” said Paul.
The JP Morgan Emerging Markets Currency Index is Also At a Key Juncture.
Pointing out the different currencies, he said from Australian Dollar (broke a while ago and has been tumbling ever since), New Zealand Dollar (flightless Kiwi took its first step off the Cliff last night), Korean Won (one of the most crucial levels in its history), Canadian Dollar (going to very quickly get a lot weaker), to Pound (drinking at the last chance saloon), and Euro (shuffling towards the cliff edge), they are all doing worse.
As for Chinese Yuan (CNY), it could go to all-time lows versus the dollar, he added.
“This currency crisis of dollar strength is causing an enormous deflationary wave globally,” said Paul.
Bitcoin And Gold Are The Way To Go
Amidst this chaos, Paul said gold is doing its job. The bullion is not only exploding higher but also outperforming even the “super strong dollar.”
Another safer asset, 10-year US bond yields, meanwhile, are “going to zero, as the deflationary wave spreads like wildfire.” The short term rates he is expecting to go in the negative.
“That is how you totally FUCK the banking system. The EU Banks are RIGHT on the CLIFF OF DEATH,” along with the Japanese banks, he said.
“Bonds. Dollars. Bitcoin and Gold,” he concluded.