Emerging Market Collapse – Why are Gold & Silver prices affected?

Emerging Market Collapse – Why are Gold & Silver prices affected?


Welcome to illuminati silver, we tell you
the truth about silver. Today is Monday 3rd September 2018 and we
are going to talk about Emerging markets and how they can have a profound effect on gold
and silver prices. But first a slight rant from us and a word
of caution to you our listeners. We have spent the weekend and today listening to so called
You Tube experts, with strong subscriber bases, correctly stating that what is happening in
emerging markets is affecting the price of gold and silver and then postulating a vast
range of theories (most of which are wrong) in the hope that by covering every possible
eventuality they successfully justify their conclusions – which they actually arrived
at by watching and listening to pumper and conspiracy theorist channels themselves, because
most of them have zero experience in International Finance, Trade and currency swaps.
In other words, they may have got the conclusion right but do not have any idea, how they have
arrived at it. This truly makes our blood boil, because we hear their subscribers pay
them homage so that when their next ‘pumpers video’ comes out about black swans, precious
metals about to fly to the moon or the dollar is about to collapse they believe them – without
realising they are being conned. This is history repeating itself as we have seen from 2011
onwards=these pumpers encouraging people to put most of their wealth into gold and
silver because their prices were not only going to recover, but double or treble or
quadruple in months. Now, let us just add that If someone says
I’ve been following this subject but I don’t really know what is happening but this is
my educated guess based on the information I’ve read and this is the conclusion I’ve
come to then fair enough. But if they say, emerging markets are having a profound effect
on the price of gold and silver and will continue to do so for some time to come and then not
stipulate what that effect is or how it came about in the first place with precision, then
sorry we get truly annoyed with these people who are trying to educate their audience about
subjects they know little about themselves and could very well lead them into a cul-de-sac.
What almost all of them have failed to mention is that the situation with the emerging markets
and their currency devaluations is precisely because what has happened to the US dollar
in the first place. The US economic policy and more precisely its currency policy has
led to this crisis, compounded with those countries affected, not putting in place the
economic regime or infrastructure they should have done in the beginning.
Let us explain – and you probably won’t get this from these channels that have set
up recently claiming to talk about and educate you on world affairs and economics.
The US dollar remains the single most important consideration for Emerging Market finances.
Why do we say this? The most important reason is:
The rise in the local currency cost of servicing dollar-denominated debt.
Borrowing in foreign currency on a meaningful scale is almost entirely an Emerging Market
phenomenon, spurred by the underdevelopment of local capital markets, which is typically
associated with low domestic savings, in turn often caused by recent experience with, or
lingering memories of, relatively high inflation rates.
That means if you are a country as these are, which have previously experienced high inflation
– prices going up, – you as a citizen and a nation are not going to save but spend now
because you know you will be able to buy less with that currency tomorrow. These conditions are evident in Argentina
and Turkey, both of which have been in the crosshairs of recent market turmoil, although
the increase in EM foreign-currency borrowing over the past decade, dominated by the dollar,
is much more widespread. Dollar funding has been cheap and plentiful, and EMs have responded
accordingly. So, what has exacerbated this situation? Well
the recent strength of the US dollar, which is up 3.5% – 4% per cent in nominal effective
terms since late January following a two-year depreciation, is causing investors to re-evaluate
their emerging market exposures. So If January was, in fact, a dollar inflection
point and the trend is for further dollar appreciation, then in the local vernacular,
emerging markets are stuffed, or in gentry speak ‘in line for a very difficult time.’ So in the most simple terms, these countries
have been taking out US dollar loans to finance their economies. Instead of creating a wealth
structure and encouraging savings, they have basically misspent these monies. Now the dollar
is beginning to rise, they cannot afford the loan repayments, this puts pressure on their
own currencies, which were already under threat, making the situation even worse. On top of
that President Trump imposes tariffs on these countries goods and so they cannot even trade
their way out of the situation. So those who have investments in these countries – move
what monies they have out of the local currency and into the ever-strengthening US dollar
which in turn strengthens it even further. So, when you hear these idiots or deceivers
on You Tube telling you beware of the US Dollar imminent collapse – they just simply do
not know what the heck they are talking about or are trying to encourage you to buy gold
and silver now before its too late. The second reason for a strong dollar posing
challenges to EMs is the usual inverse correlation between the dollar and commodity prices. With
some important exceptions including China, India and Turkey, EMs as a whole are net exporters
of commodities. Leaving aside all other considerations with respect to what might drive commodity
prices, the dollar price moves inversely with the dollar’s nominal exchange rate. This
was apparent most recently in the 2014 commodity price collapse that was mirrored by a strong
surge in the dollar. With oil currently trading at a four-year
high, it is clear that the inverse relation between commodity prices and the dollar does
not always hold, but the implications and importance of the dollar as the world’s
currency or No 1 currency cannot really be a point of debate.
Other factors may cause temporary, or even extended, interruptions in the correlation,
but as long as the dollar retains its global pricing role, and this is the key message,
as long as the dollar retains its global pricing role it will be a driver of commodity prices
and the overall EM current account position. Weaker EM currencies should stimulate net
trade and growth in the short term but this is adversely affected by tariffs. Notwithstanding
this, medium-term growth is driven more by investment, especially in EMs that need expanded
capital stocks to harness the potential economic windfall associated with favourable demographics
and rapidly growing labour forces. The overall growth impact will depend on whether
the effects of local currency depreciations are larger on net trade or investment, and
the timeframe considered. A final impact is how the Central Banks operate
their exchange rate policies – floating or fixed or shadowing , now we wont go into
this, because it is so technical and boring you will stop listening to this video – if
you haven’t already done so, needless to say the net effect is if they get it wrong,
which they broadly have, EM external balance sheets are hit doubly hard by dollar strength.
So there we have it in a nutshell. Emerging market currency failures, because of borrowing
too much dollar denominated debt and not structuring their economies correctly to manage it, further
cause investment capital to leave their country and flee into the US dollar, thereby strengthening
the dollar further resulting in lower commodity prices such as gold and silver and this is
likely to continue while the emerging market crisis plays out. Economists differ as to
which countries may fail first or the most, but Adam Slater of Oxford economics based
on his calculations state that the first major wave will be Turkey, Brazil, Chile and Malaysia,
followed by a second group of Colombia, South Africa and Argentina. We shall have to wait
and see if he’s right in terms of pecking order, but the writing is on the wall, for
these countries, unless the US changes its interest rate policy and begin to lower rates
– and for the US dollar to fall, which is very unlikely to happen if the US adopts an
US First policy. Lets just wait and see but please heed our caution, be careful to whom
you are listening and the authority and experience that those who profess to guide you actually
have. We hope you have found this video interesting
and informative and if so, please give it a thumbs up and share it on twitter. Please
ensure that you have subscribed to our channel and pressed the bell sign so that you are
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updates and offers. Disclaimer:
Illuminati Silver owners come from a background of Banking, International Wealth Management
and Economics. Having now retired from these worlds we are not qualified to give investment
advice. Therefore, this and other productions must not be deemed to be giving such advice
and merely represent the personal views of its owners.

41 Comments

  1. I-S, you are always right ! You really tell the truth about silver. P.S. I don't listen to the pumpers. Only you and i feel fine.

  2. Yes, everything in this video is true. However, we need to look at the bigger picture and further into the future of the US dollar. What happens when faith in the US dollar fades and collapses. How much more can the US borrow? How long will confidence remain in a fiat currency that operates in the red and has worsening deficits year after year? The biggest person in the room is the last and hardest to fall!

  3. Erdogan plans to default on all Turkey debt and let the Western Banks eat it. He will not pay one penny on it. China will come to Turkey's financial aid.

  4. Go (all-in) slv TODAY, then sell when silver hits $17.76. Buy physical silver with all your extra cash. Silver will moonshoot soon illuminati. Read your copy of the US constitution. Silver is money . na' ah mean?

  5. Your house is not on fire until it's on fire. SOOooo just keep your insurance up to date by buying monthly. Gold/Silver are insurance and not an investment. Your home owners insurance is not one payment. You simply can't beat rigged markets. Just remember gold/silver does have a 5,000+ year history and will not disappear this time around either. Cheers to all!

  6. Basically Trump has weaponized the dollar, something I certainly didn't see coming. This certainly puts China in a interesting position as they're holding billions in US dollar instruments, at the same time they're posturing to challenge the US interest in the Pacific region. So is China willing to bite off its nose to spite it's face ? My feeling is they'll do whatever they deem necessary to save face (pun intended). The only thing I feel sure of is we're witness to some very interesting times, that aren't for the faint at heart. Whew…I'm hoping they (being team Trump) know and can also manage what they're doing…

  7. want confirmation about a HUGE currency change a coming, please refer to the 1988 Economist Magazine,……..predictive program right out front from 1988 !!!!

  8. the real truth is that this weekend when markets were closed ,the margin was raised almost 100% for long silver pos. sells would go in to cover margin requierments

  9. The dollar will strengthen , only to eventually collapse sending metals up . Metal is money ; what ever happens owning physical is it .

  10. I agree with you for most part. I live in Russia and see in real life things about which you are telling in this video! I buy USD and some metals (mostly gold as I have enough silver in my stack). Solid analitics as always!

  11. 1) Amen, thank you for this video.
    2) i would listen to any "boring" stuff you would like to talk about.
    3) If you would have done the exact opposite of most of these dollar doom clowns for the last 10 years, you would've done great.

  12. To summarize, the dollar's continued status as the world's reserve currency and Fed's most recent crisis policy of interest rate suppression has extended the scope of malinvestment beyond American borders, especially to those countries with favorable demographics, i.e. a growing labor force within the so-called emerging market. If the access to dollars to pay off a growing debt load is quashed by increasing trade barriers, then it is argued that the over-leveraged countries will step up their selling of gold and silver to satisfy their dollar demand. This serves to depress gold and silver prices by placing more of it on the market for sale.

    What is left unstated is how much gold and silver do these EM countries have left to sell. First it would be necessary to know how much of these metals are held by their respective central banks. Would the dumping of these reserves on the market be enough to trigger a sizable price decline? Second, how much reserve demand for gold/silver jewelry could be unleashed from these countries?

    The other factor involves the EM countries gold and silver production. Of the countries mentioned, three are among the top ten gold producing countries (South Africa ([7], Brazil [10], and Argentina [13]) for a total of about 9.4% of 2017 world production. Note that this percentage is likely to fall going forward since South Africa's gold production has been in monotonic free-fall since 1970. Hence this decline is unlikely to be offset by new gold production investment.. The situation is similar for silver, where only two mentioned countries are in the top ten (Chile [6] and Argentine [10]) with 7.5% of world production.

    My only criticism would be that referencing a general inverse correlation between the dollar's strength and world commodity prices is too vague (even bordering on tautological) to be of specific use with regard to projecting market supplies of gold and silver.

  13. I take great joy in thinking about the individuals I.S. has gotten off the "pump & dump" train.
    They have saved these individuals (who payed attention) a lot of pain & suffering.
    Amazing work gentleman

  14. I usually get question on Silver Stackers. I reccomend to them get a financial counselor. If your not talking about alot of money. Buy some every now and then. And watch illuminati silver. I watch , 10 others and buy and sell on ebay. I actually sold my last ounce of 6 dollar silver. I'm all in at 13 and if it drops I'm in more. Monster boxes give my Coin store the boost. And stock piling the right dates, mintages, and condition rarity. Add to that the different printed bars people like to collect. This is a beautiful thing right now.

  15. The U.S. economic numbers since 2006 have been false. Today the U,S. GDP of 20.5 Trillion is actually not a true number. As money paid out by States and the Fed programs are responsible for over 10 Trillion of that yes 50+ %.. http://www.usdebtclock.org/index.html The spending is not sustainable. It is the results of the largest legal ponzi scheme ever devised in history. Global Government debt, rolling it over and compounding interest while past governments kicked the can down the road for to long in order to make them selves look great during their time in power.

    The jobless rate is due to age demographics not better economic activity. Japan reached it in the late 80's early 90's. There are more people retiring then their are people qualified to fill those left positions. This is also a reason why wages have not gone up. Unqualified people moving in to fill positions are on a probation cycle to prove they can preform the tasks on par with the person that left it to retire. Once realized then wages will start going up but that is years away and may be hampered by the next eco down turn. China will face this problem in 2050 but has been taken steps to address it by acquiring defunct factories in South America which has a massive young population that would be able to take over factory assembly in 2050. Profits would then be sent back to China.

    Silver is the metal for the economy of the future Gold is for a limited security of uncertain times but no where near what it use to be. Countries who hold a lot of silver will be able to supply industries of the future. Medicine,
    environment, defense, space and other vital sectors.

    When the shit hits the fan it will be the country with a reliable silver supply that will bounce back over the country who thinks gold is the answer.

    JP morgan has a lot of physical silver for a reason. When the shit hits the fan they will be able to supply the companies they have in their portfolio and watch those not decline in value and piked up for 10 cents on a dollar. Economic fall outs that create great monopolies after the fall. Use paper derivative trades to draw prices down then buy the physical metal at the lower prices. Then ride the cycle and repeat over and over to horde it over time(Years).

  16. Illuminati, so are you saying that EM currency weakness vs USD is actually damaging the physical demand for Gold in EM thus suggesting further weakness in Gold prices and weakness in Demand (by retail investors and jewelry likewise)? Please clarify. Thank you

  17. “Turkey now America tomorrow” said Ron Paul,is he an idiot or deceiver?what about others like Jim rogers,peter shciff?

  18. Have any of you read/heard of John Perkins "Confessions of an Economic Hitman?" I would be very interested in hearing your opinions on his reported process of enslaving 3rd world countries through debt.

  19. As I have been saying for some time the people talking trash about cash haven't given it a lot of thought. In a worldwide crisis, which looking at Turkey and then Spain who holds a large amount of Turkish debt, may start as soon as Christmas, and it still doesn't matter because physical cash when the ATMs are turned off will be KING. All world currencies, unless China has enough gold to call a fractional gold backed currency will be a distant second to physical U.S. Dollars. And without a crisis will reign for a while to come.

    Also as I said in April silver would drop to $15 this summer although it happened a month after I forecaster. I also said it could very well drop to $14 and even below. As of this comment silver is at $13.99 on its way to a return to pre 2016 lows.

    My canary in a coal mine indicator seems to be right most of the time as well as my observation that as Coins and Bar sales dropping 140 million ounces from 2015 to 2017 would pull the props out from under the silver market. Continued non buying will drop it even further because the data at The Silver Institute (Supply and Demand Chart) is clear as a bell. Stackers, Preppers, and Social Media Fear Mongers and Pumpers have been keeping the price up as it steadily fell from 2011 highs.

    I would say we are near the bottom though. $13.65 is my guess. It appears that it is indeed going to be seen from now on as a commodity and as such will be following supply and demand markets. Which is fine because its still a good commodity and if a crisis, or more accurately WHEN a crisis occurs those who buy now should be able to turn a very good profit among those who still view it as Money when TSHTF.

    And that's my opinion for September.

  20. Thanks for the videos!
    I agree with "Those that dont remember the past are condemd to repeat it".
    However, the problem is sometimes the past doesn't account for future enviroments or events. In my opinion its best to purchase pm based on the possibilities that it could go either way if you don't have insider information. So in general, buy low sell high and average it out but, never sell the farm.

  21. China recently provided select African countries over 60 billion in loans. As emerging countries are they paying these debts back in dollars or yuan ?

  22. "Every paper currency goes back to its original value." Benjamin Franklin.

    Gold and silver sound money. Paper money is communist money.

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