Regardless of how the US debt crisis is resolved, the US dollar will depreciate. As long as the dollar is still depreciating, the prices of global steel, ore, coking coal, and oil will continue to rise. The iron ore price in the international market will return to the price of 200 US dollars / ton, and the price of oil will reach more than 100 US dollars / barrel. Coking coal, scrap, zinc, nickel and fuel prices will hit new highs. The rising trend in the medium and long term is hard to change.
For every US dollar spent by the U.S. government, about 40 cents come from borrowing. The United States has reached a statutory debt ceiling of $14.29 trillion, and its debt-to-GDP ratio is close to 100%. For a long time, the U.S. government has been eating grain, has a high debt, and the risk of debt has been rising. However, the Senate has passed a 74 to 26 vote by raising the U.S. $14.29 trillion U.S. debt ceiling and reducing the budget deficit by at least $2.1 trillion over the next 10 years. A long and fierce dispute was put to a close by the result of the vote in the US Senate.
U.S. President Barack Obama signed the law on August 2 to increase the U.S. debt ceiling and helped the United States avoid default when the government was unable to pay its debt for 10 hours.
It is worth noting that when the U.S. economy suffers a heavy blow to debt defaults, the shortage of funds and the increase in unemployment will force the Fed to launch a third round of quantitative easing policies, fueling the devaluation of the U.S. dollar and the rise in steel prices.
The depreciation of the U.S. dollar is an irresistible trend for the U.S. two parties to reach an agreement on raising the debt ceiling and avoid debt defaults. However, even if this is the case, it will only temporarily prevent the sharp deterioration of the contradictions, the problems still exist, and because the debts are even more severe.
Therefore, the US dollar is still unable to escape the trend of continuous depreciation. It is only a gradual mode of transition from the "storm-style" centralized outbreak mode to the "warm boiled frog type" mode. The reason is very simple. The accumulated debt of the United States is too much, and it is impossible to repay through normal income increase and expenditure, such as generously increasing taxes and reducing the deficit. The Fed has actually left only the devaluation of the currency and the only way to subvert it. Of course, the U.S. government hopes that the depreciation of the U.S. dollar will be controlled by the U.S. dollar, and that it will control the pace and pace of its depreciation at any time. It does not want to see a collapse of the U.S. dollar.
Under this mode of gradual depreciation, the nominal exchange rate of the U.S. dollar index will not depreciate too quickly. It is expected that within two years, the US dollar index may fall below 60, but its real exchange rate, that is, the purchasing power of commodities, especially gold, will decline even more, and it will accelerate. For example, the price ratio with gold will reach 2000 US dollars per ounce, or even higher.
It can be seen that the U.S. dollar will devalue regardless of the way the U.S. debt crisis is resolved. As long as the dollar is still depreciating, the prices of global steel, ore, coking coal, and oil will continue to rise. The iron ore price in the international market will return to the price of 200 US dollars / ton, and the price of oil will reach more than 100 US dollars / barrel. Coking coal, scrap, zinc, nickel and fuel prices will hit new highs. The rising trend in the medium and long term is hard to change.
The competitive depreciation of currencies in countries such as tin-lead and other hedging “premiums†has significantly increased. It is noteworthy that at this stage not only is the debt of the United States high and a debt crisis has occurred, triggering a currency devaluation, and the euro-area countries also suffer from aggravating grain and astronomical deficits. And because of other factors, its debt crisis is worse and more dangerous.
At the same time, the Japanese economy has suffered a long period of sluggish growth. It has recently suffered a severe impact from complex disasters, as well as huge amounts of debt, and the monetary foundation is also unstable. The currency devaluation policy of the United States which is estranged from its neighbors is bound to cause Japan and the European Union to rebound and compete for currency devaluation.
The competitive devaluation of the currencies of various countries in the world will undoubtedly increase the "premium" for risk-relief of some metal products related to steel production.
Originally, precious metals such as gold and silver became hedges for global funds when paper currencies devalued. Since there is so much liquidity in the world at present, almost all sovereign country banknotes are not credible, and there is no doubt that buying precious metals such as gold and silver is a safe haven. This requires the establishment of additional safe-haven sites in addition to their fields to accommodate more hedge funds.
In particular, zinc, tin, nickel, and rare earth metals, which are closely related to steel production, are likely to have high value, good physical stability, low storage threshold, low reserve cost, and suitable for storage by millions of households. As a special case, there is another temporary “safe haven†for domestic and foreign funds. The speculative capital boosting will surely increase the "premium" for the above-mentioned metal's safe haven and speculation, which will in turn push up the production costs of many steel products. If we say that garlic and mung beans will appear at “special prices†in a special period, how can the above-mentioned metals, which have much more advantages, not be able to soar?
For every US dollar spent by the U.S. government, about 40 cents come from borrowing. The United States has reached a statutory debt ceiling of $14.29 trillion, and its debt-to-GDP ratio is close to 100%. For a long time, the U.S. government has been eating grain, has a high debt, and the risk of debt has been rising. However, the Senate has passed a 74 to 26 vote by raising the U.S. $14.29 trillion U.S. debt ceiling and reducing the budget deficit by at least $2.1 trillion over the next 10 years. A long and fierce dispute was put to a close by the result of the vote in the US Senate.
U.S. President Barack Obama signed the law on August 2 to increase the U.S. debt ceiling and helped the United States avoid default when the government was unable to pay its debt for 10 hours.
It is worth noting that when the U.S. economy suffers a heavy blow to debt defaults, the shortage of funds and the increase in unemployment will force the Fed to launch a third round of quantitative easing policies, fueling the devaluation of the U.S. dollar and the rise in steel prices.
The depreciation of the U.S. dollar is an irresistible trend for the U.S. two parties to reach an agreement on raising the debt ceiling and avoid debt defaults. However, even if this is the case, it will only temporarily prevent the sharp deterioration of the contradictions, the problems still exist, and because the debts are even more severe.
Therefore, the US dollar is still unable to escape the trend of continuous depreciation. It is only a gradual mode of transition from the "storm-style" centralized outbreak mode to the "warm boiled frog type" mode. The reason is very simple. The accumulated debt of the United States is too much, and it is impossible to repay through normal income increase and expenditure, such as generously increasing taxes and reducing the deficit. The Fed has actually left only the devaluation of the currency and the only way to subvert it. Of course, the U.S. government hopes that the depreciation of the U.S. dollar will be controlled by the U.S. dollar, and that it will control the pace and pace of its depreciation at any time. It does not want to see a collapse of the U.S. dollar.
Under this mode of gradual depreciation, the nominal exchange rate of the U.S. dollar index will not depreciate too quickly. It is expected that within two years, the US dollar index may fall below 60, but its real exchange rate, that is, the purchasing power of commodities, especially gold, will decline even more, and it will accelerate. For example, the price ratio with gold will reach 2000 US dollars per ounce, or even higher.
It can be seen that the U.S. dollar will devalue regardless of the way the U.S. debt crisis is resolved. As long as the dollar is still depreciating, the prices of global steel, ore, coking coal, and oil will continue to rise. The iron ore price in the international market will return to the price of 200 US dollars / ton, and the price of oil will reach more than 100 US dollars / barrel. Coking coal, scrap, zinc, nickel and fuel prices will hit new highs. The rising trend in the medium and long term is hard to change.
The competitive depreciation of currencies in countries such as tin-lead and other hedging “premiums†has significantly increased. It is noteworthy that at this stage not only is the debt of the United States high and a debt crisis has occurred, triggering a currency devaluation, and the euro-area countries also suffer from aggravating grain and astronomical deficits. And because of other factors, its debt crisis is worse and more dangerous.
At the same time, the Japanese economy has suffered a long period of sluggish growth. It has recently suffered a severe impact from complex disasters, as well as huge amounts of debt, and the monetary foundation is also unstable. The currency devaluation policy of the United States which is estranged from its neighbors is bound to cause Japan and the European Union to rebound and compete for currency devaluation.
The competitive devaluation of the currencies of various countries in the world will undoubtedly increase the "premium" for risk-relief of some metal products related to steel production.
Originally, precious metals such as gold and silver became hedges for global funds when paper currencies devalued. Since there is so much liquidity in the world at present, almost all sovereign country banknotes are not credible, and there is no doubt that buying precious metals such as gold and silver is a safe haven. This requires the establishment of additional safe-haven sites in addition to their fields to accommodate more hedge funds.
In particular, zinc, tin, nickel, and rare earth metals, which are closely related to steel production, are likely to have high value, good physical stability, low storage threshold, low reserve cost, and suitable for storage by millions of households. As a special case, there is another temporary “safe haven†for domestic and foreign funds. The speculative capital boosting will surely increase the "premium" for the above-mentioned metal's safe haven and speculation, which will in turn push up the production costs of many steel products. If we say that garlic and mung beans will appear at “special prices†in a special period, how can the above-mentioned metals, which have much more advantages, not be able to soar?
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