11/2/09 The US Government Is Diversifying – Out Of The Dollar!

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

We all know that other nations are selling dollars and diversifying into other currencies to avoid US financial problems. Now, even the U.S. government is trading in its own dollars for another currency — the same currency that China, Russia, oil-bearing Gulf countries, the UN, the IMF, the World Bank, and many others have already suggested to replace the greenback as the world’s main reserve currency.
Over the past few weeks, the U.S. Treasury has liquidated billions of U.S. dollars to more than quintuple the national foreign reserves of this very currency. This is a clear sign that even the U.S. Government Doubts the future of the Dollar. But this is more than just an outright signal that the U.S. dollar is in serious trouble. We already know that much. It is an obvious signal to all investors to seriously prepare for another sharp increase in future commodity prices.
Despite Geithner’s public confidence in the U.S. dollar, the Treasury recently increased its holdings of SDRs in one week by 453% — worth $27.5 billion. The SDR was created by the IMF and many nations today are preparing for the day when a SDR or something very similar will be the world’s reserve currency replacing the dollar.Today, the SDR is currently pegged to four currencies: the U.S. dollar (44%), euro (34%), Japanese yen (11%), and the British pound (11%).
The SDR is unlike any currency you’re familiar with. SDRs are not backed by assets, nor do they represent a claim on the IMF. Rather, each member agrees to back its SDRs with the full faith and credit of its own government and to accept them in exchange for convertible currencies. A different name for a fiat currency. Our Money Masters today will continue to be our new Money Masters of the future and the US leaders know it.

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