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The 3rd Round Of A Currency War

With continued turmoil and volatility in global markets, today Canadian legend John Ing told King World News we are just at the beginning of the third round of a worldwide currency war.  Ing, who has been in the business for 43 years, also spoke with KWN about what investors should expect to see in major markets, including gold.  Below is what Ing had to say in his fascinating interview.

Ing:  “Gold is up about 6% since year end, despite all of the mainstream media anti-gold propaganda.  This rally in gold has taken place among the much feared taper.  This is really just the consequences of the three rounds of quantitative easing and the orgy of money printing and liquidity that’s been created by the world’s central banks

The emerging market turmoil has accelerated and increased as tapering has come into effect.  We saw Argentina devalue their peso, which automatically caused a rush into gold.  Gold has soared in peso terms and it’s a reminder that all of this means the onset of even more risk.

The classic shelter during this turmoil has historically always been gold.  The last time we spoke I suggested a major bottom had been made at $1,180.  Gold then moved up into resistance in the $1,270 area, and now we are just backing and filling.  But I think the next target after $1,270 is $1,325, and then there is a big gap to $1,600.  So despite the pullback in gold, people need to fasten their seat belts.”

Eric King:  “The turmoil we are seeing in the emerging markets, it’s just astounding the type of action we are seeing with the currencies collapsing.  It’s unprecedented in many ways.”

Ing:  “The emerging market countries have been running deficits and dollars have been financing it.  In a way it’s not dissimilar to America, which has been running huge deficits.  The US has had foreigners financing its deficit, and also the Fed itself.  This, too, is unsustainable.  Just the hint of tapering was enough to send money rushing out of the emerging markets and into safer yielding places.

The reality is that we are probably seeing the beginning of the third round of a currency war, or competitive devaluations.  The movement of interest rates are enough to cause some currencies to swoon and then everybody is looking at the US dollar as a safe refuge.  But I still feel that the 80 level on the US dollar Index remains suspect.  I believe that the Dollar Index is headed to 74 as a likely target.  This means the volatility has only just begun.

Source King World News

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