Outlook for Dollar Not Good-James Turk…”Eventually, people realize the currency no longer makes sense.”

Wednesday, November 12, 2014
By Paul Martin

By Greg Hunter
November 12, 2014

Gold expert James Turk says the U.S. dollar is not going to stay strong. Turk contends, “Canada, one of the closest allies of America, just announced a Chinese trade arrangement to deal in Chinese yuan with Canadian dollars. That bypasses the U.S. dollar. So, the outlook for the U.S. dollar is not good, despite this temporary strength that we are seeing now. It’s not good and, to me, the writing is on the wall for the dollar.”

Turk goes on to say, “What the U.S. government will do, though, is everything in its power to protect the dollar’s position, and that means more capital controls. There are already capital controls in place. It’s almost impossible for a U.S. citizen to come over here in Europe and open a bank account. They just don’t want to deal with U.S. citizens anymore. Another type of capital control is that $16 trillion sitting outside the United States cannot come back and be spent in the United States. If that were to happen, all those dollars overseas would fall to a steep discount to the domestic dollar because they would not have the same usefulness if they can’t be spent in the United States.” But wouldn’t that be a default that would crush the U.S. dollar? Turk explains, “It wouldn’t crush the domestic dollar. It would crush the international dollar relative to the domestic dollar. The domestic dollar will be inflated away in any case over the longer run. The immediate impact would be on dollars outside the U.S. and, yes, that is a default.”

How long can this go on? Turk takes us back 100 years to the start of the Federal Reserve and says, “What the government is supposed to do is maintain stability and purchasing power of the dollar. Today, the dollar purchases one penny of what a dollar in 1913 purchased. That’s how bad the inflation has been. That big picture thinking is important because we’ve had inflation and debasement of the dollar for 100 years. People say it’s been 100 years. Why couldn’t it go another 100 years? Well, if you look at the Roman Empire, for example, it debased the denarius for 100 years until the denarius fell off the end of the table. Just because that trend has been in place, it is not going to continue forever. The key here is the amount of debt we have in the system and the amount of money the politicians are spending. The reason why we have not had hyperinflation is the U.S. government has managed to keep its debts lower than they should be because the interest rates are zero. . . . We’re walking on a tight rope here, and it could go either way. To me, we are looking at more currency debasement here . . .”

On gold, Turk says, “COMEX is just a side show. It’s just a paper market. The action is taking place over here in London. You are seeing this huge backwardation. If you want to put a big order in, say $50 million for physical metal, you can’t get that metal tomorrow. You are going to have to wait for a while before you can get that metal. That’s sign to me that gold is cheap. The same thing is happening in silver. As a result of that, you are going to see much higher prices as we move to the end of the year.” Turk goes on to add, “We’ve seen the slow burn in the dollar. You have these blips up and down and, right now, we are having this momentary blip of dollar strength, but eventually, it will go over the edge of the cliff. That is ultimately what happens when a currency collapses. Eventually, people realize the currency no longer makes sense.”

Join Greg Hunter as he goes One-on-One with James Turk of GoldMoney.com.

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