Black Swan Events

L

2015 has had its first black swan financial event ... the removal of the peg between the Swiss Franc and the European Euro ... an event that has traumatized currency markets causing the Swiss Franc to appreciate 30% in minutes ... and sent the Swiss stock market down over 10%  ... see: CNBC Story. (Black swan events are out-of-the-blue occurrences, like a black swan landing on a koi pond.) And I have a suspicion that this may not be the only such unexpected financial event of this new year ... already speculation is growing that the Euro may be on its last legs ... see: Breitbart Article.

If I were to guess,  another such financial shock in the new year might well center around commodities ... in particular gold. Already there are rumors that China might be hording gold with the intent of establishing its Yuan as a gold-backed currency ... see:  Money Metals Story. If this were to occur, Gresham's Law (good money drives bad money out of circulation) would change the financial landscape overnight. The U.S. Dollar, which is now on a roll, would plummet and financial markets would suffer apoplectic fits. The United States might even be forced back onto a gold-standard itself ... that is, if we have as much gold in Fort Knox as we claim ... see: U.S. News Story.

The only thing that I could imagine that would deter China from making such a bold currency move would be the large amount of dollar-denominated debt that it currently holds ... it would be cutting of its own nose to spite its face. But also note, China has been gradually paring back such lendings to America  ...see: Bloomberg Article. Perhaps China's intent might be a longer-term strategy?