Virtual Trading and the Global Economy

We have seen the rise of the virtual world in the twenty first century, which is a world that exists entirely on the internet. The currency that is used  is known as bitcoin, but it does not possess any physical form. Bitcoin has now become a widely used currency, especially in China, the economic powerhouse. However, the lack of physical form makes bitcoin completely different to what money should be.

A long time ago, the value of money was exactly what it was made of. Gold coins were made, and their value depended on the amount of gold in circulation. Nowadays, most money is printed on paper, which does not have that much value. Therefore, the government can print as much money as it wants as long as it has the cheap materials needed to print the money.

Bitcoin is the next step in this worrying trend regarding the creation money. Bitcoins have no physical form, and they cost almost nothing to create. However, using bitcoin is very convenient as online transactions can be carried out  using a currency which is suitable for  expediting simple financial transactions.

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Boeing share price soaring, but turbulence lies ahead

Boeing’s (BA) share price has risen an impressive 66% compared to this time last year, boosted by enthusiasm in the airline and defence markets. Increased travelling has had a positive effect on airline traffic, while rising international tensions have prompted countries to increase spending on defence.

But there is turbulence ahead for Boeing in the shape of increased competition in its biggest operating segment, airline business, which has yielded $65 billion of the company’s $95 billion total revenue over the last two years.

While this is unlikely to send Boeing’s share price into a tailspin, it might be expected to move sideways for the foreseeable future.

Airbus, Boeing’s main rival in the airline business, have traditionally made bigger planes and hadn’t been able to benefit from the recent downsizing trend in the airline industry and increased demand for smaller, more fuel-efficient planes.

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Patience may pay off for General Electric traders

Many analysts expect General Electric (GE) to exceed their profit expectations when they post their third quarter earnings report on October 20, as it has done in eight of the last nine quarters. However, there is also a high expectation that its share price will fall as it has done for the past seven quarters after earnings results are released.

Fears over a dividend cut have eased since last week – which would have led to an investor exodus and a serious drop in share value – but there still seems to be a lot of work to do for recently appointed CEO John Flannery who is overseeing restructuring and reorganising efforts.

“A dividend cut could crush the stock as retail investors flee, but maintaining it gives GE little or no excess cash to grow,” Jeffrey Sprague, an analyst at Vertical Research Partners, said last week. “GE has continued to shrink the company but it has not proportionally shrunk the dividend.”

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Buckle up the Tesla ride is going to be bumpy

This looks like the time for traders to bet against Tesla (TSLA) shares in the short term as the market reacts to reports that Model 3 electric vehicle (EV) deliveries are going to be delayed with news stories about escalating production costs, production line issues and lay-offs throwing doubt on the company’s ability to turn a significant profit on its new model.



The chart above shows that after steep rise of 68% throughout the year the share price is showing signs of volatility.

Barclays were among the first to advise their clients to short Tesla with their analyst Brian Johnson suggesting a $210 price target – well below the $340 consensus on Wall Street.

Barclays feel Tesla’s November 19 announcement about truck production will be decisive in swaying investor confidence in the company.

Tesla are projecting production targets of several million per year in the near future as well as significant progress in other business opportunities like battery storage.

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Traders cashing in on PayPal success

In his note to clients Faucette noted that the market may have been overly concerned about a potentially negative impact of renegotiation of its contract with eBay, and that PayPal is maintaining its massive acceptance as an e-commerce website over other digital wallets and that it is expected to benefit significantly from e-commerce tailwinds.

It looks like a great time for traders to start getting friendly with PayPal (PYPL) shares after Morgan Stanley’s James Faucette upped his price target to 76 from 62 along with a number of other analysts who are equally enthusiastic about the online payment service provider.



The above chart plots the increase in share value which has grown steadily from the beginning the year, and which is expected to continue after the third quarter earnings report is released.

In his note to clients Faucette noted that the market may have been overly concerned about a potentially negative impact of renegotiation of its contract with eBay, and that PayPal is maintaining its massive acceptance as an e-commerce website over other digital wallets and that it is expected to benefit significantly from e-commerce tailwinds.

What PayPal has over its competitors is consumer trust. It feels like it has been around for a long time, and that’s a priceless commodity in the e-commerce age.

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Did the markets miss what happened in Vegas?

It’s the morning after the Vegas shooting. Over 50 innocent lives lost in another act of random violence that has shocked every decent person to their core.

Everyone except the markets, it seems, despite it being the deadliest shooting in modern US history.

Predictably, gun stocks have soared while the value of MGM shares (the company that own the hotel chain that was the scene of the massacre) have plummeted.

But for Wall Street and the other markets it’s almost like it never happened.

But imagine yourself, if you can, in America’s playground today. What would you be doing?

How many people are out and about enjoying what makes Vegas what it is?

How many have decided to end their visit early and go home?

How many others have decided to cancel their trip to Sin City?

How much money that would have been spent in Vegas today and in the coming weeks is going to stay at home. Probably billions, but that disturbance to the economy is being treated like a scraped knee.

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How to choose technology and industrial stocks

The common denominator for everyone who invests in stocks is to make predictions on the price evolution in order to capitalise on market movements and consequently make money.  But how they go about it is dependent on how risk averse they are, and the time frame over which they want to realise profits.

Investing in the stock market is both an intellectual challenge and a reflection of your own character. Before you decide which stocks to pick you need to understand what kind of investor you are.

Growth investors tend to focus on a company’s potential for future profits, and whose earnings are rising the fastest. Since growth-oriented investors are interested in big future earnings, they are often willing to pay a high price for a stock relative to what it earns right now. The metric used to value stocks here is the price-to-earnings ratio (commonly referred to as the P/E).

Value investors hone in on the current value of a company’s assets (factoring in its debts), and look for stocks that are cheap compared to those assets. Optimistic forecasts for profits are less important for them so they end up buying stocks with lower P/E ratios.

Taking the value approach sounds like a more conservative approach, but there is the risk that these stocks go out of style for long periods of time.

What may have initially looked like a bargain may turn out to a bad investment which other investors avoided because they identified serious problems with the business.

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Cryptocurrencies and gold: You need to take a position

Any trader looking to make money on the markets needs to invest time researching before taking a position.

If you do a search on cryptocurrencies it won’t be long before you’ll see an article that compares their merits against gold.

Should you invest your hard-earned money in gold or cryptocurrencies? They ask, and variations on that theme.

The number of these articles implies that they are somehow in competition with each other.

But it’s a phoney war, as they both have a different role to play in the world of finance and in your portfolio.

One of the reasons gold has stood the test of time is the stability it offers against the unpredictability of currencies and the sudden collapses that have taken place throughout history that can wipe out fortunes in an instant.

Gold is the perfect way to hedge against risk, impervious to natural, financial or political disasters.

Cryptocurrencies also offer a viable alternative to traditional currencies because they are decentralised, meaning no central authority can take it away from you.

But they differ in tangibility. Gold has been around forever and relied upon for centuries. Cryptocurrencies have no history, they are so new people are still waking up to them and their possibilities.

The sense of value that comes in physically holding gold can’t be replicated by cryptocurrencies. They don’t ‘feel’ as safe as gold because they rely on an internet connection, they can’t be seen, they can’t be held.

But in reality, very few people reading this will have actually bought anything with gold. The likelihood is that most never will, but there is a strong possibility that some will make a transaction with a form of cryptocurrency in the future.

Their full role or use hasn’t been fully explored or understood which has led to sceptics expressing caution. This month Ray Dalio of Bridgewater Associates gave an interview to CNBC where he expressed his concern that Bitcoin (one of the leading cryptocurrencies) is a speculative market that was a bubble.

JPMorgan chief Jamie Dimon went even further, describing it as a fraud and warning that he’d fire any trader he caught buying or selling it.

But Bitcoin and other cryptocurrencies are necessary because people are losing trust in money, and while gold offers the sense of security people are looking for it lacks genuine usability.

And, if central banks start to invest in Bitcoin and other digital currencies it will increase their legitimacy to a wider number people in a short period of time.

Gold will be around for the next hundred years and beyond. However, it’s difficult to predict how long cryptocurrencies will be around. So, as a store of value, gold holds sway.

But gold’s value won’t increase dramatically in the next 2-3 years or beyond. Cryptocurrencies have and will continue to gain value.

So rather than seeing gold and cryptocurrencies as an either/or situation, it makes more sense to find a place for both in your portfolio when you trade them on FXB Trading and focus on finding a balance between the level personal goals and exposure and the level of acceptable risk.

They both provide a great opportunity to enhance your earning potential.

Prime time to trade Netflix

If you’re already a Netflix (NFLX) subscriber you probably don’t need too much convincing about how good it is and will appreciate why analysts are predicting that its share price is set to rise even higher, despite the fact that it has already grown 59% this year as it teases the $200 per share mark.



You will notice from the chart that Netflix share price has a tendency to reach a peak as quarterly earnings figures are announced followed by a drop before picking up on its overall upward trend.

If you’re not a Netflix subscriber then you’re one of the reasons why these analysts expect its share price to keep on rising – they expect that you soon will be. Streaming is the present and the future.

It’s a service that meets the entertainment needs of our increasingly demanding lives and once you’ve subscribed it’s hard to live without.

Think of it as having unlimited access to one of those old video stores that you used to rent DVDs from. Only with Netflix you never need to leave your home to get your viewing entertainment and you watch what you want, when you want and as many times as you want.

Opt for the premium service and you can also view the content simultaneously from another screen, tablet or smartphone and enjoy your favourite show while other members of your family watch what they want.

And most important of all, Netflix offers some of the best shows and movies around in an app that’s very easy to use. So far, they’ve produced hits like “House of Cards”, “Orange is the New Black”, “Narcos”, “Peaky Blinders” and “The Killing”.

Last week Netflix announced a price rise which immediately boosted stock prices. And they are not worried about losing subscribers because it’s still value for money. By comparison, the monthly subscription for the premium service is about the same as it costs one person to go to the cinema.

Wall Street firm UBS has told its clients that Netflix will report a third-quarter subscriber growth, and this has been achieved without the addition of any compelling new content.

However, new content is being rolled out in the fourth quarter with the release of new seasons of “Stranger Things” and the “The Crown” – two of the network’s most popular shows.

Netflix recently made its first acquisition by buying Millarworld, a comic book publishing company that includes “Kingsman: The Secret Service” and “Wanted” among its titles which suggests further new original content should be expected.

Netflix has competition from rivals Hulu and Amazon (AMZN), and the potential entry of Disney (DIS) into the streaming market could disrupt their market share. Traders who have followed Netflix for a long time are also aware that the stock can be volatile. However, as long as it continues to produce its own steady stream of original content and remains price competitive it stands on firm ground.

For more advice on Netflix and how to capitalise on share price movements talk to the experts at FXB Trading.

Don’t bank on the banks

As earnings season edges closer, investors are looking over the banking sector’s biggest names to assess their potential.

JPMorgan (JPM) and Citigroup (C) release their figures first, followed by Wells Fargo (WFC) and Bank of America (BAC) then Goldman Sachs (GS) and Morgan Stanley (MS).

US banks have benefited recently from a perceived likelihood of interest rate increases from the US Federal Reserve. However, much of these banks’ future performance will depend on the tax cuts that US President Donald Trump proposed recently, and the ability of his administration to get them through Congress.

If passed, net income of the big six banks could rise $6.4 billion with Wells Fargo, Bank of America and JPMorgan the biggest beneficiaries, according to a recent Bloomberg report.

However, Trump’s administration has been frustrated by Congress’ unwillingness to back the president on a number of policies that he has wanted to pass since coming into power.

And Morgan Stanley’s chief US equity strategist, Mike Wilson, claims that S&P 500 companies will not hit their 2018 estimates without them.

JPMorgan chief executive Jamie Dimon predicted a 20% year-on-year decline in the bank’s trading revenues. However, analysts are expecting JPMorgan to report EPS (earnings per share) of $1.66, an increase from the $1.58 recorded in the same period last year despite revenues falling year-on-year to reach $25.3bn.

Citigroup’s chief financial officer offered a similar outlook revealing that total market revenues are down 15% in the third quarter. However, Citigroup EPS are forecast to be $1.30, six cents higher than the same quarter earnings posted last year.

Wells Fargo’s problems are self-inflicted as they are struggling to shrug off the battering their reputation took as a result of numerous recent scandals. Wells Fargo may be legendary investor Warren Buffet’s favourite stock but earnings are expected to be less than 1% up on last year.

Bank of America warned earlier this month that trading revenue in the third quarter is expected to be down 20% and that this is may have a negative effect on its quarterly earnings report.

Goldman Sachs produced record revenues in the first three months of the year and maintained a strong performance throughout the first six months. Goldman Sachs co-president Harvey Schwartz is predicting similar figures for the third quarter. Despite this the bank seem to have missed out on the recent big bank rally with its share price up just 1%. The EPS forecast is $4.25 down on last year’s $4.88.

Morgan Stanley’s share price has increased more than 16% this year. Analysts forecast EPS of $0.84, up exactly $0.04 from 2014’s $0.8 EPS.

For more advice on the banking sector and how to capitalise on share price movements talk to the experts at FXB Trading.

It’s going to get volatile sooner or later

Strap yourselves in, the markets are going on a rollercoaster ride. And depending on your appetite for risk you should prepare your portfolios accordingly.

If you want to protect what you have, the sign posts to the safe havens haven’t changed and are easy to read.

If you want to try and ride the volatility and believe you have the know-how to profit from it, then take a deep breath and start reading between the lines of news stories. There’s no roadmap for this because the outcome is far from certain.

The ongoing chess match between two superpowers has reached a critical point, and control of the Arab states is set to be redefined according to whose plans play out the most successfully with Syria as the focal point.

From 2012, former US President Barack Obama argued that the US shouldn’t intervene in Syria’s civil war, wary of the anti-US atmosphere resulting from conflicts in Iraq and Afghanistan.

Russian President Vladimir Putin stepped in and directed the Syrian conflict in favor of Russia, Iran and the Assad regime at the expense of the US and its Arab, Israeli and Turkish allies.

Perhaps it was payback for Washington meddling in Serbia and Bosnia in the 1990s.

Turkey, a long time US ally, now seems to be aligning themselves closer to Russia. The King of Saudi Arabia has just made the first ever state visit to Russia in a prologue to billions of dollars’ worth of deals between the two nations.

If Russia continue unchecked they’ll have a greater influence on the Middle East than the US, and that’s a situation the Americans cannot allow to happen – they’ll have to react – and that’s the big unknown. How they react and the outcomes that result are going to cause volatility in the markets.

So how does a trader prepare – or take advantage – of this upcoming situation?

Expect the currency markets and the price of oil to experience the highest levels of volatility in the wake of an escalation of conflict in the Middle East – especially in European stock markets. But other commodities will also experience volatility.

Significant movement in the VIX (Volatility Index) – also known as the fear index – reflects the market participants perception about the market’s future volatility.

The safe havens, like Gold and other precious metals, tend to do well during periods of extreme volatility.

It’s no coincidence that Russia has been stockpiling gold for years, and despite official figures no-one really knows how much they are holding because they’ve also been mining gold at a far greater intensity in recent years.

Gold is the insurance policy countries take out when currencies are set to fall, China has also followed Russia’s lead on gold and this could be very significant if the US dollar loses its status as the leading reserve currency.

Those hoping that Cryptocurrencies can step into the breach and restore calm to volatile currency markets need to bear in mind that their very existence is still precarious. If it doesn’t yet have the backing of the central banks it’s hard to envisage a reality where it is taken up in a significant enough volume to be able to provide buoyancy to free-falling currencies. This could explain why China has blocked Cryptocurrencies – perhaps it has designs to take over from the USD as the leading reserve currency.

As ever, the financial institutions will play a significant role in how the markets react.

New money has been pumped into economies at unprecedented levels in recent years in an effort to promote sustainable growth. But at the same time world debt has increased to a point where a significant crash is no longer being talked about in terms of ‘when’ and not ‘if’.

Why? Because world debt has increased to a point where it can no longer be paid off. It’s at $65 trillion and climbing.

If you were to ask a real estate agent to put a value on the value of all the land in the world today, based on current market values, it wouldn’t come anywhere near the figure of debt that countries have accumulated.

And what happens when what you own is worth less than what you owe and you can’t pay it back? The bank forecloses.

This will translate into an economic crash of proportions that have not been witnessed before. Years of depression will follow, as global economies effectively press the reset button to bring debt back to manageable proportions.

It’s time to prepare for the volatility, it’s coming.

Learn to read between the lines to make better trades

So, you’ve got the trading bug. You’ve made your first profits – albeit modest – by making safe trades.

There are riskier trading strategies that can earn bigger profits. You know about them, you’ve been warned about them, and you’re not interested because the downside is too great.

So how do top traders end up making so much more money?

It’s not by taking bigger risks.

Profitable traders earn more because they’re better at predicting and understanding how markets react to news and economic data. They read between the lines of the constant stream of information that is available on trading platforms to make more profitable judgements.

The best traders use information to make a trade before the trend becomes visible to others.

For profitable traders, breaking news stories and economic data is information to be deciphered into factors that can affect the market.

It’s not easy. If it was everyone would do it. But it’s far from impossible, and can be learned.

Understanding economic performance and what affects it is an area that profitable traders excel.

What follows are examples that demonstrate the importance of being able to translate data and news into something meaningful.

Example 1. Gross Domestic Product (GDP) is one of the key indicators used to gauge how a country’s economy is performing.

During the last recession in the US economy’s GDP was $14.3 trillion (2008), $14.2 trillion (2009) and $14.6 trillion (2010).

During one of the worst economic periods in recent history the US economy was actually flattish and ever-so-slightly growing.

But it felt much, much worse and to most people it probably felt like it was shrinking.

So why the disparity between perception and the economic indicator?

The answer is that America has been accustomed to growth. Since 1945 the US economy had averaged 3.3% growth per year.

Small changes in GDP can have a huge impact in stock market values. 4% feels like a boom and is reflected in consumer sentiment. 2% growth feels like a recession and flat conjures up bleak, black and white newsreel from the 1930s.

Any GDP figures above the 3.3% average triggers investors to pull their money out of safe havens, employers start hiring and consumers start buying. Anything less than the 3.3% average triggers negative reactions.

Example 2. How should you react when Apple, IBM or Microsoft post successful quarterly, half-year or yearly results?

These are companies with combined revenues that run into the hundreds of billions of dollars. So, clearly, they are important. But a far more significant indicator of economic health is the success of startups, not the giant corporations.

The Kauffman Foundation, the US’s top entrepreneurial think tank, revealed that the most important contributor to a nation’s economic growth is the number of startups that generate billion-dollar revenues within 20 years.

They suggest that the US needs between 75-125 billion-dollar startups per year to maintain economic growth.

Example 3. GDP is a widely used by economists to measure economic progress, but it falls short of incorporating the impact the economy is having on average citizens and the day-to-day realities of life.

The Genuine Progress Indicator (GPI) was created in 1995 by the Redefining Progress think tank as an alternative measure to GDP and tries to reveal a perspective on a nation’s economic prosperity.

GPI and GDP calculations are based on the same personal consumption data, but GPI is adjusted by applying monetary values to non-monetary aspects of the economy.

Many GPI factors have a direct impact on people’s quality of life, while traditional economic focus is more strictly on making money.

So far, it has been adopted except in Canada and some smaller European nations. But it has been reviewed by the scientific community and recognised for its validity at gauging the public’s consciousness, which is critical for understanding how an economy feels to consumers.

There are also some popular economic ‘myths’ involving government that need to be debunked to clarify their relevance and impact.

‘Increased government spending helps the economy grow.’ All monies that a government injects into the economy must first be taxed or borrowed. It doesn’t create new income or increase production it simply moves money to another part of the economy.

‘Government spending makes people more productive.’ This can often have the opposite effect, and can make an economy worse. For example, there are some welfare programmes that encourage recipients to rely on government handouts rather than work. However, spending on infrastructure improvements can reduce transport costs which can then increase productivity and help the economy.

‘Governments should bail out faltering industries to revive the economy.’ Again, the opposite is largely true. Bailouts effectively reward reckless spending and encourage more of the same in the future. However, government leaders are sensitive to bad headlines, for instance when a high-profile company closure will result in widespread job losses. Politically, it makes sense to save those jobs with a bail out, but not economically, especially if they are not followed up with measures to improve how that organisation runs its finances in the future.

‘Tax cuts only reward the rich.’ Strategically programmed tax cuts stimulate economic growth by encouraging work, savings and investment. In the US high tax rates were reduced during the 1920s, 1960s and 1980s. Economic growth and increased investment followed. The economy grew 59% from 1921 to 1929, 42% from 1961 to 1968 and 34% from 1982 to 1989.

The populist headline that usually follows high end tax cuts is that the government are simply helping the rich get richer. To an extent this is true, but they also create more jobs, help people to save for their children’s education and increase earnings in general.

The real point is that the ‘rich’ got rich because they are better at making money than other people and are far better at using money than most governments.

Some traders are better than others because they are better at understanding economic data and news and its implications.

And now you know how to become a better trader.

Why Catalunya’s battle for independence is a bigger problem for EU than Brexit

On Sunday the people of Catalunya voted overwhelmingly for independence, some 2 million from 2.3 million votes cast (5 million were eligible to vote), in what the Spanish government had already declared an illegal vote.

Days of tensions erupted into a day of extended violence as over 850 were injured as the authorities attempted to block entry into polling stations and riot police were called in to quell tensions.

The area is famous for its football team and Antoni Gaudi’s haunting Sagrada Familia but this vote will have ramifications not just for Spain but for the European Union.

Catalunya effectively subsidises the rest of Spain, generating 20% of the country’s GDP. One third of all investment into Spain occurs in the region and it is responsible for one third of its worldwide imports. Without the region’s revenues Spain would be heavily weakened.

By comparison Scottish independence would result in the UK losing 7.5% of GDP.

Long before declaring Sunday’s vote illegal the Spanish government had already made it abundantly clear that it would resist Catalunya being part of the EU if it achieved independence. And it has the legal right to exclude the Catalans.

But the EU is in a phase where unity and economic viability is a priority, something that including Catalunya makes more viable.

The European Commission issued a statement on Monday (October 2) which effectively ruled out an independent Catalunya being part of the EU. However, if the rift between Spain and Catalonia cannot be repaired the economic impact on the EU could be greater that Brexit.

A unilateral declaration of independence is expected this week or early next week by Catalan President Carles Puigdemont. Independence may be declared on October 6, exactly 83 years since Puigdemont’s predecessor Lluis Companys was executed by the Franco dictatorship after declaring independence.

Spain’s economy, which had staged an impressive recent recovery, may now stall if the minority government struggles to get anything done and Catalunya remains the centre of attention.

A declaration of independence, despite having no legal force and no support from the international community, is going to have a destabilising effect on the Euro.

The initial reaction by the Euro saw it fall 0.5% against the US Dollar – which is no disaster. However, the Euro could be in for some heavy falls while the possibility of Catalan independence remains in focus as it may encourage other areas to promote the agenda for independence from the EU.

Why Choose the MetaTrader 5 Trading Platform

Successful traders from around the world have chosen the MetaTrader 5 (MT5) platform for trading Forex, exchange instruments, futures, and CFDs. MetaTrader 5 is an effective, multi-functional platform that provides everything you need to trade the financial markets. MT5 platform can be used by advanced traders as well as beginners since it can be expanded to incorporate additional programs and instruments.

The platform offers advanced financial trading functions as well as superior tools for technical and fundamental analysis. MetaTrader 5 can also trade automatically by using trading robots and trading signals. It is a trading platform that is capable of processing different financial instruments with a wide range of trading activity. Traders may use a wide selection of pre-installed technical indicators and graphical objects to analyse the markets.

The MetaTrader 5 trading system offers an advanced Market Depth feature (with a tick chart and Time & Sales information), a separate accounting of orders and trades, the support of all types of trading orders and execution modes. It also allows you to chart assets at 21 different time frames and gives you the ability to have up to 100 charts open at any given time. With the One Click Trading function and the Market Depth option, users can buy and sell currency pairs, equities, futures and CFDs with just one click. More advantages of MT5 include a user-friendly interface, larger icons, and a wider range of timeframes.

The MetaTrader 5 Web platform allows you to start trading from any browser and operating system. You can analyze quotes of financial instruments, perform trading operations, and access the history of your trades from any computer or laptop powered by Windows, MacOS or Linux. As well as high flexibility, the web trading platform offers maximum data protection, while all transmitted information is securely encrypted. The web platform also supports an additional enhanced protection method through the use of two-factor authentication.

MetaTrader 5 is the best choice for the modern trader as successful trading begins with a powerful and multi-functional trading platform.

Water will be a more valuable commodity than oil

Water will become a traded commodity, like oil, gold and silver, it’s just a matter of time.

70% of earth may be covered by it, but less than 1% of it is readily available freshwater, which makes it a scarce resource.

It’s value to human life is unquestioned – oil, gold and silver we can live without – we die without water.

The problem for Wall Street and the major international markets is that in addition to overcoming the difficulty of attaching a price to something so essential to our lives, for it to become a traded commodity it also needs to fulfil three criteria: standardised/interchangeable, tradeable and deliverable.

WATER IS MORE EXPENSIVE THAN OIL TO TRANSPORT

Water is always made up of H₂O, but the levels of minerals and metals it also contains depends on the location it is drawn from thus making it difficult to standardise.

Its tradability is dependent on location. There are parts of the world have so much of it their biggest problem is flooding. In others it’s a scarcity and they suffer droughts.

Water is also costly to transport – it costs more to pipe water than it does to pipe oil.

So how can it be said with any certainty that it will become a tradable commodity?

Jean-Louis Chaussade, the chief executive of French utility Suez, recently told the Financial Times that he believed water will become more valuable than oil because of the increased demand from people, industry and agriculture.

DEMAND FOR WATER IS INCREASING BEYOND SUPPLY CAPABILITIES

The United Nations has projected that by 2035, 40% of the world’s population will live with water scarcity. This puts companies in competition with people and farming for supplies.

Local governments around the world are refusing to allow industries to take water from underground to operate which is forcing them to turn to desalination plants or waste water recycling to meet needs.

Instinct tells us that it’s correct to give priority to people and agriculture to the supply of water over industry. But it clouds the issue of government’s inability to manage the provision of water efficiently, and how lack of investment in state-run infrastructure has led to the supply problem and why local government now create barriers for its use by industry.

Converting water into a tradable commodity will result in it being managed more efficiently as a resource. The misuse and over exploitation of the past would be prevented by assigning it a value.

This thinking prompted Fortune magazine to describe water as the commodity that will determine the wealth of nations in the 21st century, in the same way that oil did in the 20th century.

The counter-argument to treating water as a commodity is that it’s a basic human right, and the fear that the world’s poor stand to become worse off as social equality will traded in for economic efficiency.

Trading water rights is already happening in Australia, and to a lesser extent in the western US. The more this happens, the more it becomes accepted and eventually becomes part of the mainstream.

GOVERNMENTS WILL STRUGGLE TO MEET FUTURE DEMAND

The need for fresh, clean water will only increase – by 2050, 55% more water will be needed than supplied today –  and government are unlikely to be able to meet that demand because of the massive investment needed to improve supply management.

Markets can play an important role in providing future water security by helping to fund improvement to water infrastructure. The creation of a futures market to trade water would help to create a baseline pricing mechanism against which regional water tariffs could be fairly set.

There is another fear that water scarcity could eventually see water-rich countries (Brazil, Russia, the US and Canada) form into a group similar to the Organisation of Petroleum Exporting Countries (Opec) despite the current transportation issues inherent in moving water.  But if serious investment isn’t made into infrastructure – $22 trillion over the next 20 years to maintain current supply levels according to some estimates – then the problem of water shortage will become even more acute.

Online Trading Platforms and Stock Exchanges

The stock exchange market is one of the most liquid markets in today’s economic environment. Trading in shares on these markets is one of the most important activities nationally and globally as it is one of the most effective ways in which companies can increase capital with minimum loss. It also gives traders the opportunity to earn profits.

Traders can choose to use one or both of the available channels to trade in stocks. These are online trading platforms and stock exchanges.

The similarities and differences between online trading platforms and stock exchanges are outlined below in order to provide traders with appropriate information about which method to choose.

Charging of Commissions

The two methods have similarities because in the traditional stock exchange, the stock brokers will always charge a commission on every stock that is traded through them.

The same is also true for online trading platforms because online brokers will also charge a commission on the traded stocks. Sometimes this is hidden in the costs, but in spite of what is usually said, they may not charge a lower rate than the stock exchanges. These rates vary from one online broker to another and sometimes may be higher than those in traditional stock exchanges.

Capital Gains Tax

Governments usually impose a stamp duty in form of a capital gains tax on any stock that is traded on the stock market.

Regardless of the platform, whether it is stock exchanges or online platforms, the trading of shares will attract this tax.

Level of Competence Required of Traders

Although there is no minimum requirement with respect to trading experience required to trade in any of these markets, it should be a guide in deciding which platform to use.

For beginner investors, it is a good idea to start with stock exchanges since the advice and experience of stockbrokers will make them more able to judge markets, enabling investors to make the right move.

For more experienced traders, getting into online platforms as well as the stock exchange would be a good way of diversifying the places they invest their cash or sell their shares.

Availability and Accessibility

Online trading platforms are easily accessible to traders as all that is needed is a computer and an internet connection. You can also move from one platform to another by just opening a new tab.

On the other hand, you would need to physically transfer to the stock exchanges, which would cost more in terms of time, energy and money.

Volumes of shares being traded

The two platforms trade essentially the same number of shares in the same region. However, online platforms may offer traders more variety since there are several of them, each of which offer a broad variety and volume of shares.

Online CFDs Trading

Benefits of Online CFDs Trading in Foreign Exchange Trading

Forex market is the greatest money market in the world as well as the best platform that offers sufficient trading facilities. People can begin with demo accounts to gain skills and knowledge. Then they can start investing with their minimal investments and can become millionaires in a short time. However, in order to minimize the risk, they can use online CFDs Trading that makes investors hedge their investments to reduce the risk.

What is Online CFDs Trading?

CFD in Forex market represents the contract for differences that you can make in order to reduce the amount of risk with a particular investment or currency. These contracts are now being offered to the millions of Forex investors that use the Forex online trading system. It is not necessary for people to visit their brokers in person and look for the trade of CFDs. They can access all the offers through online CFDs Trading and can make suitable investment decisions accordingly.

How is Online CFDs Trading Useful?

CFDs offer people an opportunity to diversify their investment and minimize the risk associated with a particular currency’s trade. This risk can be transferred by investors trading through online CFDs Trading. Every investor has their own risk tolerance level. The best financial partners can provide risk management strategies which can be implemented with the support of online CFDs Trading. Huge returns can be made on investments by receiving the best risk management strategies from reputable sources.

MetaTrader 4 UK- The Major FX platform

The MetaTrader4 (usually known as the MT4) is the most common choice of traders around the world. As Forex trading becomes more popular, software companies are continually launching new forex trading platforms to compete with MT4, but so far it is still the leading FX trading platform worldwide.

The MetaTrader4 is a full cycle trading platform that includes back-office elements as well as front-end terminals. Therefore, with the MetaTrader4, a broker does not need any additional software to run the brokerage business. The MT4 is totally user-friendly for traders and offers a wide range of powerful tools such as financial instruments, databases, data feeders, and many others.

The following advantages proves its popularity and increasing success.

API –Application Program Interface, this allows the software to extend its functionality and integration with other systems. It also grants access to ready plug-ins designed to ease smooth operation of the platform.

ML4 language- this is the programing language of the MT4 which is immensely popular as it allows the creation of new scripts, and integration of EAs, enabling full automated trading

The platform has the benefit of a strong security system on the online operations as the MT4 employs 128 bit encoding

A full set of technical analysis tools and graphics are available

The platform offers multi-lingual and multi-currency support

The MT4 server can serve over 10,000 traders working with multiple accounts simultaneously. The server has the ability to process several different financial instruments with quote history which go back years.

MT4 provides a clear and precise picture of graphs, algorithms and indices, and charts. The software supports the use of advanced methods of representation that even a non-MT4 trader will want to transfer to the MT4 platform.

Customization

MT4 allows its traders to customize trading operations within the market in combination with their level of expertise. It is suitable for their trading needs and practices. For example, if you wish you can begin by trading in gold, then change to FX trading in the middle of the day and finally end up with stocks and equities.

MetaTrader 4 UK is the most popular software available.

Learn How to Trade Currency

Guidelines to Learn How to Trade Currency in the Forex Market

Foreign exchange is now the largest currency market that offers a platform to trade in all kinds of currencies in forms of pairs. If you plan on learning how to trade currency in the Forex market, then you must learn the pairing of currencies in the foreign exchange market. It is essential that you learn the fundamental principles underlying the trade of currencies in the foreign exchange in order to get the maximum returns from the investments that you make in the Forex trade.

Learn How to Trade Currency in Pairs

In Forex market, investors have to deal in the pairs of currencies in order to carry out transactions. For example, if there is a pair of Euro and Dollar you have to pay the price of one currency in these pairs. If the current ratio of the Euro to Dollar is 1.4520 then it means that you have to pay 1.4520 dollars to buy one Euro. This is how currencies are exchanged in the Forex market. Similarly, all other currencies are offered in the form of pairs with other compatible currencies. If you want to buy any currency, then you will have to pay the price in the other currency from the same pair.

Role of Forex Market in Developing Skills

Forex market plays an essential role in making people aware of currency exchanges. It offers the practice accounts facility to allow people to learn the currency exchanges and trades on their own.

Foreign Exchange Trading Platforms

Many salaried individuals are now investing their money in Forex trade in order to increase their monthly income. They invest in Forex as it offers an absolute platform to make money with small amounts. However, you have to be very cautious as trading may reduce your capital if you do not monitor trends regularly. There are a large number of foreign exchange trading platforms available in order to conduct Forex trade.

Important factors related to foreign exchange trading platforms:

There are important factors to consider before choosing a forex platform:

• Is it free to use? Does it offer any additional features if it charges a fee?

• Which technical indicators does it offer?

• Interface for the orders and types of orders that are made available to all.

• Does it support back testing the strategies?

• Has it API for the additional programming?

• Does it provide historical data as well?

Why to Look for the Best Foreign Exchange Trading Platforms?

Taking into consideration the above mentioned characteristics, it is essential to choose the best platform to carry out Forex transactions most effectively and profitably. You can open up your account with a reputable financial partners in order to give a boost to your earnings and get the best returns for your savings.

Gold and Terrorism

In recent times, gold prices have fluctuated significantly. For example, from 2008-2013, gold prices increased by approximately 200% and reached an all-time high figure of $531.98 per 10 grams. Since then, it has been experiencing a decreasing trend with the current price being $430.28 per 10 grams. The unprecedented rise was mainly due to the global economic recession, which resulted in investment in gold instead of other failing financial instruments. In the context of gold prices, it is important to understand the basic forces which naturally or artificially control gold prices.

Effect of global market indices and Oil prices on gold The global indices are known to have a significant effect on the gold prices worldwide. From December 2013, when the US NASDAQ rose by 10%, France’s CAC rose by 4.4%, Germany’s DAX rose by 2.78%, and Brazil’s Bovespa rose by 13%, the attractiveness of gold as a safe investment has declined. This has also contributed in generating a 5% decrease in global gold prices to $1,218/- troy ounce. When interest rates rise, the yields on bonds and other money market options also rise, and make them more attractive to investors in comparison to gold. In addition, it is believed that the price of gold is also affected by the price of oil to a large extent. Higher oil prices reflect slow growth and so investors are driven to find alternative sources of investment like gold.

Financial terrorism in the gold market Contrary to widespread belief, it is important to understand that the price of gold is not determined in the markets where gold is bought and sold physically, but rather in paper futures markets where trade speculators place their bets on gold prices. The big hedge funds trade the various gold futures. When they buy, they pre-assign a ‘stop-loss’ order within their computer programs. The purpose of this stop-loss order is to sell at that specific price automatically.

On the other hand, the billion banks have total access to the computers and can see all the ‘stop-loss’ points set by the hedge fund companies. As a part of their strategy, these billion banks purposely dump in large contracts by selling futures in a large amount, with the intention of shorting gold. The purpose is to force the market low enough to auto-trigger the stop-loss orders to be executed. For example, contracts representing massive amounts of gold in several tons could be sold within a few minutes taking the gold price down drastically and generating a massive selling of futures at the ‘stop-loss’ level. Eventually, the banks use the selling from these hedge funds to generate trading profits, as they cover their positions of ‘short’ at a price level that is lower than the price level at which their positions of ‘short’ were established. This is how inside training and financial terrorism operates and banks make money from the manipulation implemented on the futures market.

Therefore, these aspects of inside trading performed by billion banks in the futures trade, act as the artificial agents to control gold prices, and thereby contribute towards ‘Financial terrorism’.

Factors Causing Foreign Exchange Volume Growth

The foreign exchange market is now considered to be the largest market in the world. The huge success of the market is down to the fact that it deals in the only asset in the world that possesses complete market liquidity: money.

The foreign exchange market deals essentially in the trading of currency, which means buying one currency by exchanging it for another. The value of currencies relative to each other is constantly fluctuating. It allows people to gain a profit by buying a currency during a period of stability and then selling it off if the value of the currency rises.

The dollar is often considered to be the most stable currency as the American dollar is known for its solidity and stability. However, this once highly regarded currency seems to be experiencing a downward trend. Several factors have resulted in the depreciation of the American dollar after an unexpected foreign exchange volume growth of currencies being exchanged in the market.

Recently, America has made certain economic and political moves that many countries considered to be hostile. In addition, America’s political strategies have had the opposite effect in certain countries where it was trying to gain political power. An example of this is America’s involvement in the lifting of sanctions against Iran. America’s under the table economic war against Iran has always been linked to nuclear weapons. The United States used its powerful economy and its status as the world’s major cultural exporter to leverage Iran’s abolition of its developing nuclear program.

The economic sanctions imposed by America and the other four permanent members of the UN security council (UK, France, Russia and China, as well as Germany) negatively affected the Iranian economy, which in turn resulted in massive depreciation of the Iranian currency, the Rial.

This resulted in the appearance of a unique trend among Iranians. They changed the Rials they possessed into dollars in order to retain the value of the money they had earned. However, recently the economic sanctions imposed upon Iran were lifted after Iran agreed to cancel its nuclear program. The result of this was a steady increase in the value of the Rial, so people who had invested in the American dollar converted their money back into Iranian Rials. As a consequence, there was a flurry of activity in the Foreign Exchange Market as the sudden overflow of dollars into the market began to undermine the value of the dollar.

Moreover, there are several middle eastern countries with strong currencies that were pegged to the dollar. This sudden depreciation of the dollar ended up creating a financial climate that forced

investors using these currencies to change to different currencies which further increased the volume of foreign exchange being conducted

Demo Trading Account

Exceptional Benefits and Minimal Requirements of Demo Trading Account
As Forex trading has become popular, a lot of people are gaining the practice for trading by opening a demo trading account. Forex market offers individuals all the resources required to help them acquire experience for online Forex trade. For this reason, it has allowed a large number of official financial partners to help their clients begin with a free demo account for Forex trade. By using the facility of this account, you can become a professional trader and investor by updating with market trends all the time.

Why Use Demo Trading Account?

Demo trading accounts have a number of advantages:

• Not required to invest money.

• Opened for free with leading brokers.

• Market trends can be observed.

• Buying and selling prices can be seen live.

• Experience of Forex trading without investing any money.

• Trade 24 hours a day during the 5 working days of Forex trade.

• Provides up to $100,000 of virtual money.

Requirements of Demo Trading Account:

To open a demo trading account with the leading financial partners in Forex market, you have to provide only the basic information. There are no requirements or rules for signing up with Forex market through demo accounts. However, in order to get the best practices and skills, it is advisable to open a demo trading account with a reliable financial partner. A reliable financial partner offers the best strategy to deal with risk. In this manner, you gain experience in developing the best risk management strategies as well as getting access to the largest money market in the world

CFD in Forex Market

What Is CFD And How Does It Assist In Forex Market?

Forex market is the platform that provides investors with many opportunities to earn money without even putting many resources into it. Many people attempt to use their own ideas in this trade and try their luck. In order to grasp the concept of CFD (Contract for Difference) in Forex market, you have to understand the short and long positions in the financial derivatives.

Long and Short Positions

When the price of a currency increases and one party decides to buy it for more chances of returns on it, then it takes the long position. However, when the price of a currency decreases and investors decide to sell it in order to retain the actual amount that they invested then it is called the short position.

What is CFD in Forex Market?

In Forex market particularly in the field of financial derivatives, people trade two currencies on the basis of their expected value at a given time. They do not have to buy or sell the currency at present time and only a contract is made with some maturity period on it. When the contract matures, only the difference between the current value of the currency and its value at the time of contract is calculated. Whatever the difference is, the seller has to pay that. However, if the difference is a negative amount then the buyer is responsible for the payment of the differential amount.

Best Forex Risk Management Strategies

How to Get Best Forex Risk Management Strategies in Forex Trade?

The Forex market has a daily trading volume of about three trillion dollars. In order to earn money successfully, you have to develop a very clever Forex risk management strategy. Of course, you cannot earn profits all the time with every single move. You have to deal with risk in order to earn profits as it is all about winning or losing in this trade. Portfolios that provide the best risk strategy are based on the experience of investors and traders.

Role of Brokers in Forex Risk Management

An investor should look for the most reliable and trustworthy financial partner with the best reputation in the Forex trade market. Trading in the Forex market becomes easier when you have professional and expert advice.

Best Investment Portfolio by Brokers

Someone who is new to Forex trading cannot devise the best portfolio for their investments. Reputable financial partners or brokers provide the best Forex risk management strategies. If you lose in one currency, but gain huge profits in the other then your net profits will be huge in the end.

Don’t write off Sterling prematurely

Last June’s post-Brexit vote sent GBP values plummeting against EUR and pretty much every international currency as the market tried to price in the negative implications for the UK economy.

As unexpected as the vote to leave was, the market reaction – perhaps overreaction – was entirely predictable. The vote was preceded and followed by a raft of analyst predictions of a weak GBP amid fears Britain’s economy would grow more slowly outside of the EU.

However, amid the eye-catching headlines, pro-Brexit economists said that leaving the EU would cause a shallow downturn at first but would end up boosting the UK economy in years to come.

GBP RECOVERS DESPITE GLOOMY PREDICTIONS 

Despite difficult Brexit negotiations and the continued uncertainty surrounding the UK’s relationships with the EU going forward, GBP’s subsequent recovery says plenty about its historical importance and longevity and that needs to be factored in when predicting its future value.

GBP’s is the oldest actively traded currency on the foreign exchange market, it’s also one of the most popular currencies traded on forex as a result that London is one of the biggest trading hubs in the world.

Political uncertainty and war has triggered volatility in GBP’s value over the years, but it has always stood the test of time and has been relied upon as a global safe haven for investors.

History seems to be repeating itself.

BARCLAYS FORESAW GBP RECOVERING 

Back in March this year Barclays, one of the UK’s most prominent financial institutions, wrote to their clients to say they could see GBP recovering against both EUR and USD.

On September 17, 2017 HSBC admitted it was wrong to predict a deep dive in the value of GBP this year. The banking giant had previously said GBP would end the year at $1.20 and around parity with EUR, their bearish currency analysts have now revised their forecasts to $1.35 and €1.12.

The difference is that GBP is now behaving like a normal, cyclical currency and moving after things like data events. It is now less susceptible to Brexit developments.

The Bank of England’s (BoE) announcement that a first interest rate rise in a decade sent GBP to its highest level since the day after the Brexit vote. The BoE said rising inflation and stronger household spending merited an increase in the coming months.

UK ECONOMY LOOKING AT NEW MARKETS 

BoE Governor Mark Carney, in remarks prepared for Washington today (September 19), said a long period of inflationary pressure on the UK was expected as it reorients its economy toward new markets and away from the EU.

In the immediate aftermath of the Brexit vote and GBP’s dramatic fall in value Carney said he was happy with Sterling’s level and wasn’t averse to a further depreciation. He explained that a weaker GBP was an important reason why the economic effects of the vote to leave the EU would be less than gloomier pre-referendum predictions suggested.

In other words, a weaker GBP was helping to limit damage to the British economy during the Brexit process. The natural reaction to ‘weakness’ is that it is to think of it in negative terms. However, certain situations warrant a weakened currency valuation. UK produce became cheaper, this stimulates demand, and helps cushion the wider economy from turmoil.

The UK lessened the damage of global financial crisis in 2008 in a similar way.

ECONOMIC GROWTH AND STRONGER GBP PREDICTED 

While the long-term ramifications of the Brexit are unknown Brexit supporters have consistently argued that it will result in greater potential economic growth and appreciation of GBP through a reduction of government spending and the establishment of trade alliances independent of EU regulation.

Carney describes Brexit as a unique example of deglobalisation and while the economic effects of Brexit are subject to “tremendous uncertainty” it will mean lower immigration to the UK which will potentially boost domestic wage growth while new barriers to trade would lead to higher prices for goods and services.

While the long-term future of GBP’s value looks safe, unpredictability is a possibility in the short-term.

GBP WEAKENS IN 2018? 

Upon revising their GBP valuations HSBC added that 2018 is likely to see Sterling weaken again. Their economists feel that politics will have a greater influence on GBP’s value as the deadline to Brexit nears. They offer a worst-case scenario where no Brexit deal is agreed and the UK economy starts to slow as a result of BoE interest rises.

HSBC concluded that GBP would drop “well below” $1.20 and around €1.05. But as they were forced to admit yesterday, they might be wrong.

There’s little doubt business fears are rising.

More than 100 companies, including Ford, GE and IBM, wrote to Britain’s top Brexit negotiator and his EU counterpart on Sunday urging the two sides to agree a transitional period of up to three years so that they could make investment and employment decisions.

Britain’s Prime Minister Theresa May is hoping some momentum will be sparked by her speech when she visits Italy on Friday (September 22). It will a key address designed to set out Britain’s latest position. Talks will resume the following Monday and it remains to be seen how they will develop and how investors react to any developments. One thing for sure is that it will be a thrilling journey for GBP

Is time running out on US Dollar as the leading reserve currency?

The might of the USD and its position as the leading reserve currency has been called into question by numerous analysts over the years.

During periods of political and economic uncertainty doubts about the USD attract a wider audience, prompting further proclamations about its demise.

Some analysts claim a collapse is imminent, others predict that it is just a matter of time and yet it remains the most highly traded currency in forex, the dominant currency in international trading and remains the leading reserve currency.

It has history on its side and is clearly still trusted by its trading partners.

But the question of its future warrants consideration as it comes under threat from the EUR and other currencies who may be ready to challenge the USD as the dominant reserve currency.

TROUBLE FOR TRUMP’S ECONOMIC POLICY 

When US President Donald Trump came to power in 2016 he pledged policies that would propel the value of the USD to new levels. The objective was to boost US structural economic growth while at the same time reducing the US trade deficit.

Trump’s plan was going to be achieved by making large investments in infrastructure and extensive tax reforms in combination with a highly protectionist trade policy.

Thus far Trump’s plans have been hamstrung by political division and budget constraints. The US trade deficit continues to grow and there’s been little sign of the promised protectionism.

Concurrently, doubts about the eurozone’s future, following the Grexit crisis and the shock of Brexit, have receded. Germany’s vision of economic convergence is shared by new French President, Emmanuel Macron, a pro-European reformist, and this axis has rejuvenated the EUR. It is pressing a strong claim, similar to when it was first launched, as a rival reserve currency as foreign investors shift capital into the eurozone.

If US trade deficit continues to grow while the eurozone finally delivers on its potential, then a sustained period of EUR performance would follow and prove it might be a viable alternative to the USD as the leading reserve currency. It’s one of the key conditions that would make the prospect of a USD collapse easier to accept and navigate through.

The eurozone is not alone in its ambition to establish the EUR as a reserve currency. China will also look to benefit from uncertainty regarding US’s strength, and Asian countries will be more sympathetic to their offer of a closer relationship.

Gold has also benefitted from the apparent weakening of USD’s status, recently peaking in value after years of slow decline.

Bitcoin has the potential to stake a claim, but it’s too soon to be sure if it can accede to the role.

LESSONS FROM THE PAST 

This isn’t the first time doubts have been expressed.

Ten years ago, in the aftermath of the global financial crisis that was triggered by the US house market collapse in 2006-2007, similar doubts about the USD’s status as the leading reserve currency were being voiced, and echoed most notably by billionaire investor George Soros during the Bretton Woods conference in 2009.

Then the US government bailed out financial institutions to rescue the situation.

Incidentally, it was the inaugural Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, in July 1944 which formally established the USD as the world’s reserve currency.

Delegates from 44 allied countries concluded the Bretton Wood Agreement where it was decided that central banks would maintain fixed exchange rates between their currencies and the USD, which in turn was pegged to a fixed gold value.

In reality the USD had already established that position by 1919 when it replaced GBP as the world’s leading reserve. Britain had held to the gold standard to maintain its position as the leading reserve currency but had been forced to borrow money for the first time by its draining participation in World War I.

Countries began buying US Treasury securities which were seen as a safe store of money and by default it became the world’s reserve currency.

The Bretton Wood Agreement remained in place until it was broken by the US in 1971. US gold reserves were no longer sufficient to back the USD and President Nixon was forced to flood the market with paper money as the US struggled to meet the combined financial demands of fighting the Vietnam war and Great Society domestic program.

STANDING THE TESTS OF TIME 

The USD has been tested repeatedly over time through periods of stagflation then inflation and deflation but its position as the world’s reserve currency continues because of the underlying strength of the US economy and the dominance of US financial markets.

Confidence in the US’s ability to pay its debts maintains US Treasury securities as the safest store of money. This is despite large deficit spending, trillions of dollars in foreign debt and unrestrained printing of USD.

Countries like China and Japan own more than $5 trillion in US debt. If something was to trigger them into dumping Treasury securities then a panic would occur which could lead to a USD collapse. However, China pegs the value of the Yuan to the USD which maintains price competitiveness of its exports to the US. Japan are equally eager to keep their export prices to the US competitive.

Both Japan and China would need to see their holdings in US securities declining rapidly and find a similar sized market to replace their export trade to the US in order to justify offloading their USD reserves.

Despite Japan and China selling in greater volumes to their Asian neighbours, it is the US that remains their best market. It’s not in their best interest for a USD collapse to happen and while this is the case it makes it an unlikely scenario for now.

Only if a situation arises where the likes of China, Japan and the rest of the world are economically better off with a weak USD could it slip from being the leading reserve currency but that would still require central banks to suffer the effects of a USD freefall and not react by printing money to prop it up.