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What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

The USD & The Elephant - How To Eat Them?

Jeffrey C. Borneman | July 21, 2014

The answer, of course, is one bite at a time. On the heels of last weeks' kickoff of the BRIC's bank to challenge the USD/IMF/WB, we learn the Swiss have taken a seat at the USD-eating table.

It's a relatively small currency swap deal "allowing the two central banks to buy and sell their currencies up to a limit of 150 billion renminbi, or 21 billion Swiss francs ($23.4 billion)," say Dow Jones, but traders I've spoken with have said, Oh no! Not the Swiss too!

"Switzerland is the latest of a series of countries to set up swap lines with China, which is keen to promote the international use of the yuan." 

Investors will understand what "promote the international use of the yuan" means. It means that China and the BRIC nations intend to have a currency that will, one day (sooner is better for them), challenge the USD's status as the world's common currency. The USD is being devoured one bite at a time. The more the USD becomes irrelevant to international trade, the higher the Inflation rate US consumers will experience as our dollars will purchase less and less in the international arena. Remember, Energy (oil) is priced by the world market and not by domestic producers ...  

The question investors must ask is: As Inflation continues its controlled rise, where is the breaking point where the consumer chooses - or is forced - to purchase only necessities versus what the consumer may desire? This is the reason the MDEF™ Investing strategy exists.

Here's a money quote from the Dow Jones story (full article follows):

Last year China signed swap agreements with the European Central Bank and a clutch of others, including the U.K., Brazil and Indonesia.

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