Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

January 4, 2018

My next question is: What signposts we should be monitoring along the way to gauge how this dollar end game is progressing. To illustrate my point, I’ll start with a couple of my own.

First one, I will be watching the open interest when this new yuan-denominated crude oil contract starts trading. To my thinking, if this thing gets traction, and a year from now we’re talking about how the Brent contract lost a considerable part of its market share to the new yuan contract for trading oil, okay, that tells me this thing is on like Donkey Kong. It’s accelerating and it’s time to really think about the end is nigh for the dollar.

On the other hand, if this turns out to just be a purely symbolic gesture, where we say, okay, theoretically, it’s possible to trade oil in yuan, but nobody really ever does. Okay, that tells me that we’re still in the buildup phase. It’s an important symbolic gesture. But it’s just a symbolic gesture.

Another major signpost that I’m going to be watching for is a decoupling of the usual relationship between interest rate differentials and the dollar index. In other words, if Treasury yields are going up at the same time that the dollar index is going down, things are getting serious. Because that means, as long as there’s rising Treasury yields and that continues to attract international capital flows into the US, the system is basically working the way it used to.

If it breaks down to where rising relative – relative to other sovereigns around the world – the US is paying better Treasury yields than anybody else, and that’s not attracting international capital flows into the US Treasuries and into the dollar, that tells me the end game is on.

Now those are just two examples.

What are the signposts that you guys think we should be watching for to gauge how this story is unfolding? And, particularly, what signposts tell us that this thing is really on now, it’s not just a buildup, it’s really happening?

Luke, why don’t we start with yours, because I think you’ve got quite a bit of research on this point.

Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 30, 2017

Luke:   If you were moving in that direction you’d expect to see things like – you would need the new reserve asset, you would need that to move to the right people, right? A big problem a lot of gold investors make – gold bugs, however you want to call it – is everyone wants to think of gold as actually like a market asset. It is not. It is a political asset. And so –

Jeff:     And it’s concentrated in very few hands. It’s not distributed widely.

Luke:   Exactly, right? So if you were going to resolve this issue the way I described, the way the World Bank hinted at, the way the IMF talked about, you would expect to start to see things like gold flowing to those nations. If that’s going to be a new reserve asset, then the United States needs to have a lot. The Europeans need to have a lot – and when I say the Europeans, the Germans need to have a lot.

And what have the Germans been doing? They’ve been asking for their gold back, haven’t they? You would need the Chinese to have a whole lot. And how do you do that? One way to do it is you make sure the price of gold doesn’t move in dollars, because Americans don’t buy something that’s not rising – it’s cultural. Chinese buy more. Indians buy more when it falls. Americans, they won’t buy something that’s not moving in price.

In addition to these very powerful institutions, Western institutions advocating for these things, you’re seeing actual movement since they advocated for them of things that would support that. Now, again, is gold it? Is it gold going into the SDR? Is it SDRs getting revalued much higher and that filters through to gold? I don’t know. But it has to be a neutral settlement asset to fix the system.

And – to your point, Jeff, of we don’t know how big it is – that just tells you how big it’s eventually got to be. Like, you know, what we’ve been saying is gold is the credit default swap trade of this cycle.

Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 28, 2017

Erik: MacroVoices episode 97 was pre-recorded back in late November, 2017, to air on December 28th, 2017. I’m Erik Townsend; happy holidays!

This special edition of MacroVoices will not include a market wrap or postgame segment. Instead, the entire episode is dedicated to Part 3 of our 2017 year end special, Anatomy of the U.S. Dollar Endgame, featuring Alhambra Investments’ CIO Jeffrey Snider, Morgan Creek founder Mark Yusko, and Forrest for the Trees founder Luke Gromen.

You definitely want to listen to Parts 1 and 2 of this series first, so if you missed them, please go to MacroVoices.com and start with Episode 95 which aired on Dec. 24th. You also want to be sure to download both Mark Yusko and Luke Gromen’s slide decks, as they provide the outline and reference material for this entire episode. MacroVoices registered users will find the download links in your Research Roundup e-mail, or if you’re not registered yet go to MacroVoices.com and look for registration and download instructions on our home page.

Now let’s go back to the conversation with our guests. We finished the discussion over Jeff Snider’s slide deck in the last episode, but only after using up ALL of our planned two-hour time budget for this project. So I want to publically thank our guests who agreed to put in the extra time and effort to do justice to the subject matter – an undertaking that would take several more hours.

In the interest of time, Mark Yusko volunteered off-the-air to just present his slide deck with minimal group interaction. Mark told us there was plenty he wanted to discuss with the group, but he had already reviewed Luke Gromen’s slide deck, and knew every one of his hot topics would come up again there. So the first 20 minutes of this episode will be Mark presenting his slide deck. The next 20 minutes will be a group discussion with reactions to Mark’s deck. Finally, we’ll jump into the beginning of Luke Gromen’s slide deck, which we’ll finish in the next episode airing on Dec. 30th. Let’s start with Mark Yusko…

Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 24, 2017

Erik:     MacroVoices episode 96 was pre-recorded back in late November, 2017, to air on December 25th, 2017. I’m Erik Townsend; happy holidays!

This special edition of MacroVoices will not include a market wrap or postgame segment. Instead, the entire episode is dedicated to Part 2 of our 2017 year end special, Anatomy of the U.S. Dollar Endgame, featuring Alhambra Investments’ CIO Jeffrey Snider, Morgan Creek founder Mark Yusko, and Forrest for the Trees founder Luke Gromen.

You definitely want to listen to Part 1 of this series first, so if you missed it, please go to MacroVoices.com and start with Episode 95 which aired on Dec. 24th. You also want to be sure to have Jeffrey Snider’s slide deck, as it provides the outline and reference material for this entire episode. MacroVoices registered users will find the download link in your Research Roundup e-mail, or if you’re not registered yet go to MacroVoices.com and look for download instructions on our home page.

Now let’s go back to the conversation with our guests, right where we left off at the end of episode 95.

Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 24, 2017

Erik:     MacroVoices episode 95 was pre-recorded back in late November, 2017, to air on December 24, 2017. I’m Erik Townsend; happy holidays, everyone. We’re not going to have a market wrap or postgame segment for the balance of 2017. We’ll return to our usual format on January 4th, 2018. Instead, today’s entire show will be entirely dedicated to Part 1 of our Year-end special, featuring Morgan Creek founder Mark Yusko, Alhambra Investments’ CIO Jeffrey Snider, and Forrest for the Trees’ founder Luke Gromen. I think you’re really going to enjoy this 5-part series, which in my opinion is the only level headed, serious discussion you’ll find anywhere about how and why the U.S. Dollar will gradually lose its position of prominence and hegemony over the global financial system, just as the British Pound Sterling fell from that position of prominence in the early 20th century. This series was originally conceived as a 2-hour special, and the planned topic was simply a debate between the secular dollar bull vs. secular dollar bear arguments, with Jeff Snider and myself slated to represent the dollar bull argument, and Mark Yusko and Luke Gromen slated to argue the dollar bear case. Now let’s dive in to what were originally intended to be opening arguments. Keep in mind that as we were recording this first part, we still thought we were setting up a dollar bear vs. dollar bull debate. I’ll be back after these initial arguments to explain why we re-framed the rest of the series after realizing we were all in violent agreement that the Dollar’s age of hegemony over the global financial system is ending.

Joining me next on the program are Jeffrey Snider, CIO at Alhambra Partners, Luke Gromen, founder of Forest for the Trees, and Mark Yusko, founder and fund manager for Morgan Creek. I’d like to thank you guys for the time and energy you’ve put into this project. It really means a lot to us and our listeners. So thanks for joining us.

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MACRO VOICES is presented for informational and entertainment purposes only. The information presented in MACRO VOICES should NOT be construed as investment advice. Always consult a licensed investment professional before making important investment decisions. The opinions expressed on MACRO VOICES are those of the participants. MACRO VOICES, its producers, and hosts Erik Townsend and Nathan Egger shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented on MACRO VOICES.

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