Whither The World’s Reserve Currency

Where this asset goes, the world follows… AUGUST 29, 2024 THE WIGGIN SESSIONS A GREY SWAN PUBLICATION Whither The World’s Reserve Currency “The natural tendency of government, once in charge of money, is to inflate and to destroy the value of the currency.” – Murray Rothbard --------------------------------------------------------------- [Exciting News: You’re now seeing Grey Swan Investment Fraternity branding for this email, representing our new mission. There's nothing you need to do on your end to continue receiving your emails. Our "new look" simply better represents our goal of delivering you deeper access to the Grey Swan intelligence community — and warn you of potential low-probability, but high-impact events. Watch for the Grey Swan website soon!] [Turn Your Images On] Addison Wiggin Founder, Grey Swan Reader, August 29, 2024 – We’ll be brief today. In overnight trading on Tuesday, gold popped to another new all-time high of $2,562. This morning, it made another attempt, topping out in early trading at $2,558. We’ve been watching the price of gold with keen interest for several years. The main drivers have been consistent since gold settled above $2,000 in late 2020 during pandemic fear buying. [Turn Your Images On] Gold is up $480 year-to-date in 2024, up nearly 24%. Teetering this week at all-time highs… Rising interest rates should have been bad for the gold price, but they weren’t. Geopolitical tensions have been heightened since the Russian invasion of Ukraine in 2022, exacerbated by the Oct. 7, 2023 commencement of a hot war between Israel and Hamas. Still… As early as December 2023, Louis-Vincent Gave, a macro analyst we’ve been following since the early days of The Daily Reckoning, speculated that above central bank buying of gold, the real driver of demand comes from wealthy consumers in emerging markets. Per Bloomberg: On a quick romp across the big emerging markets, Gave concludes the following: India is a big buyer of gold, and this will probably continue as domestic wealth grows, despite competition from domestic stocks. The “de-dollarization” argument then starts to come into play. China may be keen to buy gold as a diversifier away from U.S. government debt, for example. It’s a similar — though even more marked — story for Russia. Citizens of both countries may also see gold as one of the better ways to store wealth outside of a financial system that they don’t necessarily trust. In a similar vein, Gave also notes that Saudi Arabia signed a renminbi “swap line” with the Chinese central bank. If the Middle East is edging away from the U.S. dollar, then that, as Gave puts it, makes “currency uncertainty” a live issue for investors in the region, which in turn is another tailwind for gold. This week’s headlines announcing increased military action in the West Bank are further stoking concerns of a wider war in the Middle East. And now, with the Fed’s pivot toward lower interest rates clearly on the table in September, the continued rally in gold’s price seems more evidently dependent on the price of the U.S. Dollar globally than on “wealthy emerging market” buyers … or even purchases from central banks in Russia, India and China. Since the dollar and its valuation is a funny thing indeed, we can’t help but share the thoughts of our quirky friend, financial writer and comedian Dominic Frisby. Dominic is specifically looking at where the dollar index is likely to go… but for our purposes, its impact on gold is even more interesting. Enjoy ~~ Addison CONTINUED BELOW... --------------------------------------------------------------- [Turn Your Images On] [How Masterworks aims to beat the art market]( [Turn On Your Images.]( It's no secret that contemporary art prices have outpaced the S&P 500 by 64% over the last 28 years, appreciating at a compound rate of 11.5% per year during that time (‘95-’23). But for Masterworks, an investment platform focused solely on contemporary art, keeping pace isn’t enough. It wants to beat the market. How are they attempting this you might ask? By buying works of art in artist markets with positive trends. It’s value investing 101. The Acquisitions and Research team is world-class, with decades of experience in the art and financial markets, powered by a proprietary database that aims to track historical artist market appreciation. Few, if any, players in this untapped $2.1 trillion market (UHNW art/collectible wealth as of ‘23) have the qualitative and quantitative investing capabilities that Masterworks has. So far, the Masterworks team has been successful, completing 23 exits out of over 400 offerings, each of them individually profitable. With 3 illustrative sales, Masterworks investors realized net annualized returns of 17.6%, 17.8%, and 21.5%. [Now, you can skip the waitlist to get started with this exclusive link.]( --------------------------------------------------------------- CONTINUED... The Most Important Price In the World Dominic Frisby, [The Flying Frisby]( Now we look at what must be the most important price in the world: that is the price of the global reserve currency, the US dollar. Does it go up or down from here? There is probably no more important question in global finance to know the answer to. [Turn Your Images On] If the dollar is falling, it usually signals boom times for assets: equities and commodities especially. The US prints and spends, and then exports the inflation. Money gets loose and the party rocks. But when the dollar is strong, everyone gets the jitters. Today the US dollar is seriously oversold. Meaning, it should go up from here. Conversely, the inverse trade—[gold]( at all-time highs. US equity markets are flirting with all-time highs, while the euro and the yen, even the pound, have been soaring. Let’s start with US dollar index, which tracks the dollar against the currencies of the US’s main trading partners', over the past year. Look at the relative strength index (RSI). The RSI is an indicator designed to measure an asset’s momentum, which is both the speed and size of price changes. Technical traders include the RSI when trying to determine if an asset is overbought or oversold. The following is a chart measuring the RSI for the US dollar over the past two years: [Turn Your Images On] The RSI has gone beneath 30 for the first time in over a year. You would typically expect a reversal from these levels. Look at the 3-month rally the dollar had starting in July 2023, the last time it was this oversold, it was quite something. In fact, based on this, I have taken a small short position in cable, betting that the dollar will rise against the pound. Last week, Fed Chief Jerome Powell indicated that the Federal Reserve is now ready to start cutting rates, which should be bearish for the dollar. However, oversold is oversold. "The time has come for policy to adjust." he said. "My confidence has grown that inflation is on a sustainable path back to 2%." The market is somewhat divided as to whether that cut will be 0.25% or 0.5%, but lower rates go. The inflation—by their definition—monster has been tamed. “The 2-year yield has fallen to 3.9% compared to base rates at 5.5%, which is the bond market’s way of pricing in future rate cuts,” says Charlie Morris at Bytree. "The difference, at -1.6%, means that a full rate-cutting cycle lies ahead. Indeed, this reading is more pronounced than seen in 2001 and 2008, implying the cuts could come thick and fast." Both 2001 and 2008 were major turning points in the US dollar. And this time around will likely be a good sign for the price of gold. ~~ Dominic Frisby, [The Flying Frisby]( So it goes, Addison Wiggin Founder, The Wiggin Sessions P.S. Since 1985, the dollar has declined with the Republicans — Reagan, Bush x2 and Trump — and rallied with the Democrats — Clinton, Obama, and Biden. [Turn Your Images On] Who wins in November has a big impact on the price. But there are several months to go till November. And with the “vibe” election in full swing — a lot can change in just a few weeks. And we expect it will. Please send any additional questions you may have about gold and bitcoin, or any comments you have on rights, to addison@greyswanfraternity.com. P.P.S. How did we get here? A provocative view of the financial, economic, and political history of the United States from [Demise of the Dollar]( through [Financial Reckoning Day]( and on to [Empire of Debt]( — all three books are available in their third post-pandemic editions. [Turn Your Images On]( (Or… simply pre-order [Empire of Debt: We Came, We Saw, We Borrowed]( now available at [Amazon]( & Noble]( or if you prefer one of these sites:[Bookshop.org]( [Books-A-Million]( or [Target]( Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com [Turn Your Images On] (c) 2024 The Wiggin Sessions @ Grey Swan, 1001 Cathedral Street, Baltimore MD 21201. Dedicated to examining “highly improbable, but imminent events” likely to change history, economics, politics and finance. Although our employees may answer your general customer service questions, they are not licensed under securities laws. They cannot address your particular investment situation. No communication by our employees to you should be deemed personalized financial advice. [Privacy Statement.]( That said, your feedback is very important. Please do not hit “reply” … rather, contact us with an intelligent question or well-reasoned comments by using this email address: feedback@wigginsessions.com To remove your email from Wiggin Sessions @ Grey Swan: [click here.]( "Sent to: {EMAIL}" [Click here to Unsubscribe]( The Wiggin Sessions Past performance of whole art and Masterworks offerings are not indicative of future returns or artwork not yet sold. See important Regulation A disclosures at Masterworks.com/cd The content is not intended to provide legal, tax, or investment advice. Past performance is not indicative of future performance. Investing involves risk. Art sales price data is comparative only. Each painting is unique and historical data is not a direct proxy for any specific painting or investment. Data represents whole art not an investment into our offerings which includes fees and expenses. Art asset class is based on repeat-sales index of historical art market prices computed based on a value weighted-basis and focused on the Post-War & Contemporary Art category. While Masterworks believes art market comparisons to other asset classes can be useful to help potential investors discern long term trends in these asset classes, there are significant limitations to the utility of such comparative data, particularly over shorter time periods. Potential investors are cautioned not to place undue reliance on such data. “Net Annualized Return” refers to the annualized internal rate of return, or IRR, net of all fees and costs, to holders of Class A shares from the primary offering, calculated from the final closing date of such offering to the date the sale is consummated. A more detailed breakdown of the Net Annualized Return calculation for each issuer can be found in the respective Form 1-U for each exit. The 3 median returns above represent the ones closest in percentage to the median of the 12 exits with holding periods over 1 year.