11 September 2017: The end of the dollar as we know it?

For as long as we can remember, the US dollar is the global reserve currency. This means that not only the USA, but nations all over the world have to hold the US dollar for their international trade, instead of their own currencies. As a result, the US dollar has dominated foreign currency reserves ever since the Second World War — long enough to consider it a solid fact. But there are signs that the US dollar is on course to lose its reserve currency status any time soon, since the International Monetary Fund (IMF) admittedly wants to make the special drawing right (SDR) the principal reserve asset in the International Monetary System. This led James G. Rickards, American lawyer and regular commentator on finance, to send an open letter to the President, warning him that ‘the U.S. dollar is under attack, right in front of our eyes’. According to him, this major event is widely ignored by the mainstream media, and will have an enormous impact on the plumbing of the US financial system as soon as January 2018. By then, a new worldwide banking system called Distributed Ledger Technology (DLT) (also known as blockchain technology or distributed database technology) will be implemented. Rickards rings the alarm bell, stating that the ‘transition from a U.S. dollar system to a new system dominated by SDRs will be messy. Stocks will collapse… and will stay down. There will be no recovery this time, because the U.S. government won’t be able to come to the rescue like they did in 2008.’
Whether or not President Trump will dismiss Rickards’ letter as “fake news” (that is: if he even gets to read it), remains to be seen. But of the many things Donald Trump chooses to ignore or deny, we can only hope that he picks the right ones…

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Investors ended the four-day trading week in a cautious mood, worried as they were about Hurricane Irma’s arrival in the state of Florida, a potential missile test by North Korea and the composition and policy direction of the Federal Reserve. Of the three major US indices, the Dow was the only one that managed to eke out a tiny gain Friday: +0.06%. Both the S&P500 and the NASDAQ closed the day in the red. They lost 0.15% and 0.59% respectively. All three indices ended the week with a loss. The S&P500 lost 0.6%, the Dow 0.9% and the NASDAQ 1.2%.
Volatility continued following last Thursday’s zigzag course on Friday, albeit with a rising trend this time: the VIX closed almost 5% higher at 12.12. UVXY ETFs profited from Friday’s rise in volatility with a gain of 4.67%. XIV ETNs closed 2.56% lower Friday.
Danny Daredevil‘s RSS rose 8 percentage points to 87.8%. Adventurous Anny is still holding cash. Solid Suzy and Lazy Larry saw their RSS drop by 3 percentage points to 19.5%.
None of our models gave a trading signal at the end of Friday’s session. Danny and Anny are slowly getting closer toward a signal. It is possible that they will get one in the upcoming days.

Model  Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

87.79%

-53.41%

-56.86%

45%

Adventurous Anny Cash 6 March 2017

3.84%

3.84%

-25.11%

8%

Solid Suzy XIV 6 March 2017

19.53%

19.53%

-4.51%

42%

Lazy Larry
XIV 6 March 2017

19.53%

19.53%

-4.51%

42%

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

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It’s September again. Summer’s (almost) gone. For the next eight months to come, the letter ‘R’ will be in the month. For more than 400 years it has been known that this is the period to avoid certain things, and to pay extra attention to other things. According to Henry Buttes, in his 1599 cookbook Dyets Dry Dinner: “The oyster is unseasonable and unwholesome in all months that have not the letter R in their name.” For those in favor of eating seasonal products, this should be no problem. They know that in every season there is plenty of fresh, delicious foods with high nutritional value to choose from. But during the eight cold, wet, dark months to come, the Dutch will miss their fresh, locally grown strawberries, cherries, melons, apples and pears just as much as the long, warm summer days with plenty of sunshine and spare time to enjoy it all.

Fruit still life with shells and a tulip, Balthasar van der Ast [Public domain], via Wikimedia Commons