On the heels of more turmoil in the currency markets, particularly in the Chinese yuan, today one of the greats in the business sent King World News a note from Peter Boockvar on the harsh reality of China's devaluation of the yuan. There is also a bonus piece about how a major turn in a key currency will impact gold and silver.
From Art Cashin's notes: "The China Move – My friend, Peter Boockvar, over at the Lindsey Group touches on the China move as a step toward reserve currency status. Here's a bit of what he wrote (and with which I agree):
"Devaluation and currency wars were the terms tossed around yesterday and I shared in that but the Chinese are trying to tell us that its not like that. It’s all about free float and market based pricing of the yuan according to Chinese officials. And towards this, it was said last night “the lower exchange rate was just a byproduct, not the goal…China is not waging a currency war; merely fixing a discrepancy.” The IMF also made the same claims saying on China, “the new mechanism for determining the central parity of the Renminbi announced by the PBOC appears a welcome step as it should allow market forces to have a greater role in determining the exchange rate.
The exact impact will depend on how the new mechanism is implemented in practice.” China wants to be considered a reserve currency and part of the IMF’s Special Drawing Rights and the IMF also said this, “a more market determined exchange rate would facilitate SDR operations in case the Renminbi were included in the currency basket going forward.”
I actually believe the Chinese in that this is not their determined entrance into a currency battle but more their attempts to further liberalize their financial sector (however messy the process and I’m disgusted by what they did with their stock market). The consequences for everyone else however remain the same, short term economic pain and disruption for anyone that competes with China and/or sells into the Chinese marketplace. After falling another 2% overnight, the PBOC actually intervened in the final minutes of trading, cutting the loss in half."
Also, Jason Goepfert from SentimenTrader comments on why Canada's currency may have already bottomed and is ready for a major turn:
Sentiment On Canadian Currency Plunges To All-Time Record Low
The latest Optimism Index updates for currencies show further deterioration in sentiment toward the Canadian dollar. With a current reading of 12, optimism toward the loonie is now the lowest on record, dating to late 1990, eclipsing the previous low from late 2001. Such depressed sentiment sets up the possibility of a "false breakdown" if the loonie can rally back above its lows from the spring, approximately $78 in the FXC fund.
King World News note: It appears that the Canadian currency may have already bottomed. If that is the case it certainly points to an upside move in the Canadian stock market that will most likely be related to surging gold and silver prices and quite possibly other commodities as well. If that turns out to be the case, investors accumulating shares of Canadian mining companies will not only benefit from the prices of the underlying shares heading higher, but they will also experience a "currency kicker" as the Canadian currency strengthens against the U.S. dollar. We will see how this plays out in the weeks and months ahead. ***KWN has now released the incredible audio interview with 50-year veteran Art Cashin, where he discusses why the worldwide liquidation scramble could morph into a full-blown 2008-style collapse, the chaos in China, global stock markets, commodity markets, whether the U.S. stock market has finally put in a major top and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Bill Fleckenstein Shares How He Is Shorting The "Uniquely Crash-Prone" Stock Market, Plus A Bonus Q&A CLICK HERE.
© 2015 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the articles is permitted and encouraged.
The audio interviews with Rick Rule, Gerald Celente, Bill Fleckenstein, Dr. Paul Craig Roberts, Robert Arnott, Eric Sprott, John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Andrew Maguire, Michael Pento, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.