By Patrick A. Heller
Commentary on Precious Metals Prepared for CoinWeek.com …..
The poor economic news is starting to come out in droves, but you wouldn’t know it if you only looked at the headlines of the US mainstream media.
Buried in the stream of reports, the US Commerce Department last week revealed that the US is no longer the world leader in international business. The total US 2012 imports and exports came to about $50 billion less than China.
Also last week, Argentina’s government imposed a freeze on rising prices. This is a last ditch attempt to halt rising consumer prices. It isn’t working. The almost immediate reaction was a surge in consumer demand in anticipation of supply shortages and eventual soaring prices.
Then Venezuela’s government devalued its official exchange rate with the US dollar so that it will now take more than 46% more bolivars to purchase US dollars than before. Despite this drop, the free market exchange rate of the bolivar is still more than 60% lower than the official rate.
The next country that might be forced to push through an official currency devaluation is Egypt. About the only thing that could prevent this would be a quick handout from the US government (meaning the US taxpayers).
Then the Japanese government and the Swiss National Bank both reaffirmed their commitment to suppress the values of their currencies. Even US Under Secretary of the Treasury for International Affairs Lael Branaird had stated that she supported the effort by Japan to end deflation and reinvigorate growth.
For the sake of avoiding public panic, the US government is pretending or lying outright that it is doing fairly well holding up the value of the US dollar, all the while sabotaging it with quantitative easing and other programs.
It is becoming obvious to more people, over time, that the world is gripped in a war of competing currency debasements. In the circumstances, you would expect that the G-7 Group of Ministers and Governors to acknowledge this fact. Instead, this week’s statement explicitly denies that there is a currency war.
“We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates.” (emphasis added by the author of this column).
This statement by the G-7 Ministers and Governors may be an attempt to pre-empt a scarier announcement that might come out of this Friday’s G-20 Ministers meeting in Moscow.
It is pretty typical that the last steps before governments are forced to admit the truth is that they openly deny reality. When you see such denials, you should understand that the truth will come out soon—that the US economy, the US government, and US dollar are in deep trouble. Perhaps this is why so many first-time buyers have started purchasing physical gold and silver in the past few months.
Patrick A. Heller was honored with the American Numismatic Association 2012 Harry J. Forman Numismatic Dealer of the Year Award. He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Numismaster (under “News & Articles) . His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com.