When will currencies collapse? All we can do is hazard some guesses.
First guess, is not imminently. There are still some tricks up the sleeves of our central bankers.
The central bank of Switzerland is buying stocks – eighty billion US$s of them. They bought seventeen billion dollars’ worth of US stocks in just the first three months of this year. The SNB is now the world’s eighth largest public investor.
The Japanese central bank is in the top five owners of 81 companies on the Nikkei225 Index. It is on course to be the largest stock holder in most of them by the end of 2018.
The European central bank and the Bank of England are both buying corporate bonds.
The risk of falls in these assets is a major threat to their balance sheets, but, the greater the risk, the greater their ability to prop up the value of the assets. It is a seriously dangerous distortion of markets and a strong signal of how desperate the situation really is.
Stock purchases are an avenue still open to the Fed, the B of E and the ECB. It will require some legal changes, but that won’t be a hindrance. On the subject, speculation that the Fed may try to engineer a crash in the stock market to bring down the Trump presidency makes no sense. If a stock crash happens, central planning of the economy, i.e. central banks, will be totally discredited. It would be aiming to shoot themselves in the foot and hitting themselves between the eyes.
Second guess, is that when the value of currencies begins to fall abnormally fast (POG rising for those who persist in thinking in terms of central bank propaganda) and with only small and short corrections, then that is a sign that the debt problem is becoming unmanageable and currencies are in danger of imminent collapse.
The third guess, is no guess at all. When Gold goes into permanent backwardation, then currencies will collapse within a month, probably within a couple of weeks, and maybe within days.
The fourth guess, is that the first guess will lead to the second guess, and that to the third.
Still, none of that tells us when. That is because it is a situation of chaos, with each consequence of prior market distortion being dealt with by one desperate measure after another. Distortion layered upon distortion. It is impossible to predict in such disorderly circumstances at what point the market will say ‘enough is enough’.
There can be no confident prediction with regard to when the dam breaks. Just spend some fiat now to make sure that you are as ready as you can be when it happens.