Below is Fitzwilson’s exclusive piece for KWN:

“In the 1920s a popular phrase was ‘Follow the bouncing ball.’  The phrase was created by Max Fleischer of Fleischer Studios.  Included among the characters attributed to Fleischer Studios were Superman, Popeye, and Fitz the Dog, later to be renamed Bimbo.

“Following the ball was an early form of a sing-a-long.  As the audience watched a cartoon, subtitles for the music appeared at the bottom of the screen, and a bouncing ball would hover over the words to the song so that the audience could participate.

An economic and investment version of following the bouncing ball is the Dollar Index....

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“The largest component of the Dollar Index is the euro.  The rest of the mix contains a few other European currencies and the Japanese yen.

In recent years, we have become transfixed by the back and forth oscillations of the index.  Other than the precipitous decline from the highs prior to the introduction of the euro to the current level of roughly 80, it has been an insight-devoid oscillation appropriate only for traders.

We have been following the bouncing ball as intended.  The dollar goes up, the euro weakens.  Coincidentally, swaps occur between central banks at the same time.  For example, if the U.S. Fed provides dollars to the Europeans, the dollar weakens as they are converted into euros and the euro rises.  It often occurs around solvency crises, keeping the aggregate banking system from capsizing and on a seemingly even keel.  The pattern then reverses.  It is all part of the charade.

We find that following the Dollar Index is a worthless exercise if one wants to gauge the condition of the currency markets.  Will it go to 50 as some suggest?  Perhaps, but that will only occur if the current range of the high 70s to low 80s cannot be defended.  The usefulness of the Index is to divert our attention from the real battle being waged between the fiat currency bloc, the yuan, and gold.

The currencies that comprise the Dollar Index and the dollar itself are really part of the same team.  The components move around a bit to create excitement, but those countries and their currencies are joined at the financial hip.  We recently saw Japan appear to be getting out of line with Mr. Abe’s call for unlimited printing, but then subsequently saw an announcement that the yen had depreciated “enough”.

This is all part of the pretend drama that the fiat currencies are engaged in a currency war.  If there is a war, it is the fiat group against gold and the yuan.  A wondering mind, however, might consider the possibility that the latest moves by Japan are really about rearmament given their growing tensions with China and North Korea.  An announcement of rearmament would be politically problematic.  Unlimited stimulus would provide the perfect politically correct cover for rearmament.  One can only ruminate on the possibilities.

Talk of currency wars continues to dominate the financial news.  Ghosts of the ‘30s and the “beggar thy neighbor” policies have been resurrected.  This is not about beggaring a neighbor this time around.  This is not about nationalistic policies to provide markets for goods and employment for citizens. 

In the Western bloc countries, this time around it is about allowing citizens to remain unemployed.  It is about maintaining banking systems at all costs.  It is really a policy of “beggaring thy citizens”, not thy neighbor.  It is about power.  It is about China wanting to regain what they consider their historic role as the economic powerhouse.  Russia and China both know that gold is sovereignty and power.

Gold, oil and the success or failure of the yuan as a reserve currency are the only bouncing balls that matter in this game of Titans.  As investors, we can only step out of the fiat currency arena and acquire what the powerful desire, primarily oil and precious metals.  Tangible assets should also be accumulated, not for their role in global supremacy, but their intrinsic value for whatever comes next.

The devaluation of fiat currency is on a non-linear trajectory.  The dollar deteriorated relatively slowly for 90 years.  It deteriorated rapidly in the next 10 years.  The final destruction will take only a few years.  It could virtually happen overnight as we saw with Venezuela and North Korea.

The template was unveiled in the ‘30s with Roosevelt, and that was to confiscate the gold first and then devalue.  Venezuela followed that same approach which was to reclaim their gold and then devalue.  Russia and China know that the final devaluation of the fiat currencies is coming soon.  Their version of the template is to produce and purchase as much gold as possible in anticipation of the final throes of the dollar as the reserve currency.  One needs only to be following the relatively few real bouncing balls to know how and when this story ends.”

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with John Hathaway, Gerald Celente, Eric Sprott, Art Cashin, Michael Pento, MEP Nigel Farage, and Michael Belkin are available now.  Also, be sure to listen to the other recent KWN interviews which included James Dines, William Kaye, John Embry, Jean-Marie Eveillard, Rick Rule and Pierre Lassonde by CLICKING HERE.

Eric King

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© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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