Over the past 5 years, the dollar has been the primary safe haven for investors who attempted to walk through the minefields of currency wars, and quantitative easing. And during this time the reserve currency hovered between 95 and 100 on the index, while purchases of U.S. Treasuries remained at very high levels.
But since the beginning of the year a sea change has taken place, and the dollar has felt the brunt of this investor revolt. And in its place has seen one old and one new stalwart that could shape the future of all global currencies.
That is because both gold and bitcoin have thrived in this new paradigm shift, and represent the growing desire for a return to sound money, or at least forms of money that are not as controlled by central planners as the world’s fiat currencies are.
Just three days ago, on April 21, when looking at the technical picture behind the recent bitcoin price action (having covered theextremely favorable fundamentals last September when it was trading at half its current price), we asked if “Bitcoin is about to soar.” We were focusing on the bullish pennant formation which suggested a breakout to the upside was imminent.
… hitting fresh 2016 highs.
And at the same time the dollar has fallen from just under 100 to a yearly low of 93.5 over the past three months.
The significance of it all is that most of the global financial system is built on a foundation that is dollar denominated, and any loss of confidence in that currency could bring the entire quadrillion dollar paper scheme to its knees. And with the Fed being unable after 10 years to both raise interest rates, or mollify the world that they remain in control of economic events, it is not surprising that currencies like Bitcoin, and monetary assets like gold and silver, are prepped to breakout much higher in the coming days or weeks.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.