Daily Brief – De-Dollarization

De-Dollarization

A shift away from the US Dollar with Central Bank Reserves denominated in US Dollars moving down from a high of just over 70% down to 60% in the past 20 years is note worthy but the speed of that decline makes it less striking. However there are 3 factors that are changing the narrative: firstly the Russia-China-North Korea-Iran grouping that are all diversifying away from USD for differing reasons; secondly the geo-political convulsions emanating from the wide-ranging and fast moving initiatives from POTUS; thirdly the use of technology in currency management: notably Central Bank Digital Currency that will grow increasingly fast. The purchases of Gold in excess of 1000 tons by Central Banks that we have written about could be added to the case supporting de-dollarisation as could the rapid erosion of US soft power caused by the erosion of trust in the USA by the rest of the world. Does that mean that USD is no longer the world’s reserve currency? No. But there is a good argument for suggesting that 2025 marks the start of the USD becoming one of the world’s reserve currencies.

EUR/USD 1.0828.

Denmark

As Denmark is thrust into the spotlight of geo-politics due to its Greenland territory and POTUS expressing the aim of incorporating the world’s largest island as the 51st state of the USA, the question arises of what else Denmark has to offer other than Vikings, Lego, Danish Bacon, Hygge, Copenhagen’s Little Mermaid and the Tivoli Gardens. The answer is in the iconic audio visual design company of Bang and Olufsen. In 1925 Peter Bang and Svend Olufsen pioneered the Eliminator which they developed in a farmhouse and which was a redeveloped mass-produced radio that was powered from mains electricity rather than a battery. Exactly 100 years on the B&O electronics range is renowned for its sleek brushed aluminium designer look and it’s top performance.

GBP/USD 1.2940.

Frank

That was the student loan software package that JPMorgan bought from tech entrepreneur Charlie Javice who had recently graduated from the University of Pennsylvania Business School. Embarrassing though it was, the USD 175 million sunk into Frank by JPM outweighed the fact that it would emerge from a lawsuit that the bank had not done much in the way of due diligence. When Charlie Javice was asked by the bank about the number of students who had signed up she paid a college friend $18,000 to increase the actual 300,000 to a database of 4 million which was what JPM really wanted from the purchase of Frank. It all came out in court and Charlie Javice was found guilty on Friday although it is unclear how much of the USD 175 million will be recovered.

EUR/JPY 162.25.

WH Smith

Trading since 1792 on the High Streets of the UK and as at last week from 480 outlets WH Smith having been acquired by PE company Modella will disappear and be renamed TGJones with the WHSmith brand only continuing in what Modella call the travel business i.e. at railway stations and at airports. The reason is that High Street revenue has shrunk while all those travellers who abandon good sense and before boarding/embarking pay £10 for a big bar of chocolate that they do not really want or need have taken over as the main revenue generators.

GBP/EUR 1.1952.

They Don’t Care About Us

This day in 1996 the King of Pop, Michael Jackson released this number as part of the album Past, Present and Future which was at that time judged to be highly controversial due to its perceived anti-semitic stance. Difficult to discern from the lyrics 29 years later but that is the slant that is associated with this song.

All I want to say is that they don’t really care about us
Don’t worry what people say, we know the truth
All I want to say is that they don’t really care about us
Enough is enough of this garbage
All I want to say is that they don’t really care about us
Skinhead, deadhead
Everybody gone bad
Situation aggravation
Everybody, allegation
In the suite on the news
Everybody, dog food
Bang-bang, shock dead
Everybody’s gone mad
All I wanna say is that they don’t really care about us
All I wanna say is that they don’t really care about us
Beat me, hate me
You can never break me
Will me, thrill me
You can never kill me

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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