I've been keeping an eye on the Yen as of late. Just a few weeks ago, the Japanese Central Bank sold U.S. treasuries to buoy up the Yen as it slid to a 20 year low against the dollar. It was later revealed that about $25 billion in treasuries were sold. This morning, in a zerohedge article titled, 'They've Totally Lost Control', showed that once again the Yen is cratering and this time has hit a 32 year low against the U.S. dollar, crashing above 151/USD.
Back around the year 1970, the Yen was very weak and traded at about 350/USD. The 1970s saw a huge manufacturing turn-around for Japan. The weak Yen gave massive support for exports to the U.S.A. and abroad. In 1995, the Yen saw parity with the Dollar for the first time. About a year later, the Yen fell below 100/USD and wouldn't see parity with the Dollar again until the Great Financial Crisis and stayed above 100 until 2014, when the Bank of Japan sent rates into negative territory. Their rates have been negative ever since and while their currency remained relatively stable for the last 8 years or so, it is finally cracking. The last 6 months have not been kind to the Yen.
During their golden years in the 70s and 80s, when exports went through the roof, Japan was buying up U.S. treasuries. As of 2019, Japan was the largest holder of U.S. Treasuries with $1.12 Trillion. By March 2022, the total surpassed $1.3 Trillion but then suddenly, Japan became a net seller of U.S. treasuries. In a Yahoo Finance article from the same month, it reported that Japan sold of $75 Billion in treasuries. The article also reported that the Yen fell 5.5% against the Dollar.
As the Yen continues to crater, expect more selling of U.S. treasuries. What happens though when they run out of treasuries to prop up the Yen?
Game over!
It's very dramatic to see the currency from the third largest economy in the world lose some 50% of its value against the USD since 2020. A couple of weeks ago, the currency of the fifth largest economy in the world, the British Pound crashed to a 36 year low. Now, the Yen is at a 32 year low. Even the Euro has fallen below parity with the Dollar. One Euro will buy you 98 American cents.
Speaking of treasuries, there is over $7 Trillion out there. What happens when those treasuries come home to roost? Inflation!!!
Gold and silver are reacting accordingly...
The only true money is gold and silver and can be had at bargain prices but I've been hearing whispers that because of high energy prices in Europe, refineries there are seriously cutting back, hence less gold and silver available on the market and a possible squeeze on supplies as we head into the new year. As you can see from the charts above, the only thing that protects against a failing fiat currency is...
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