189 replies to this topic

[johngeorge]

China in the news again. From Zero Hedge:

China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

"All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?

From Xinhua:

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt."

[dharma]

49.5 for silver this am. now 46.77 you want volatility? we got volatility. was this the top, damned if i know. but, i think not. as i said a couple of posts on page 3 i dont think we see mojo in the metals until late this week. tomorrow options expiration. and wednesday folks are hoping the burnack turns into volker-aint gonna happen. fwiw, i still there is more to go on this leg. a correction to the 1460 level would not surprise me, dharma

[stubaby]

dharma: A "pause for the cause" - lot's of action percalating "under the surface"! This is the "beginning" of the mini-parabolic, not the ending phase. I don't see a meaningful correction in Gold 'till about 1,550 +-, and then it will be measured in days, not weeks. End of December moves about to be repeated in many Juniors, IMHO! stubaby

[dharma]

dharma:

A "pause for the cause" - lot's of action percalating "under the surface"! This is the "beginning" of the mini-parabolic, not the ending phase. I don't see a meaningful correction in Gold 'till about 1,550 +-, and then it will be measured in days, not weeks.

End of December moves about to be repeated in many Juniors, IMHO!

stubaby

we are, my friend on the same page, stepping back giving the market room. more unstable structure , thus the gyrations. prelude to later on. lots of folks adding shorts to silver. i am just not that smart.
waiting watching. going to war w/the troops i have. may seasonally still bullish. june historically not so much.
dharma
wrap your mind around this

Dr Helen Caldicott - Fukushima Nuclear Disaster- You won't hear this on the Main Stream News.

[dougie]

did i say stuck in the mud? I meant sinking in the mud

[cgnx]

Give it a rest already Dougie.

[senorBS]

did i say stuck in the mud? I meant sinking in the mud

Maybe quicksand is better? Muy malo gold stocks as they are "DUST in the wind". Silver's parabolic may have terminated, muy interesting

Senor

[senorBS]

Looking at SLW it looks malo and a fork may have been stuck in it, silver's parabolic may have finished - 50% chance in Senor's opinion. would not be surprised it a bueno bounce occurs soon, if si then Senor may look to short it Senor

Edited by senorBS, 26 April 2011 - 09:20 AM.

[dharma]

maintaining pp is the name of the game: this from richard russell this am In terms of gold: Assessing real estate values in terms of gold. At its peak, the housing market in March 2007, the median US home price was $262,600, which was equivalent to 340.6 ounces of gold. Today’s median income price is $186,100 or 109.2 ounces of gold. So in terms of real money, gold, the US median home price has lost 47% since 2007. what folks dont seem to get here is corrections are part of the game. mud , quick sand, muy malo are all part of the process. MARKETS DO NOT MOVE IN A STRAIGHT LINE. even silver has corrections. i am slipping into my buying hat 1495 is the support, we back tested it this morning. personally, i am waiting for hourly divergences in the mining indexes to start another buying campaign. i had taken profits on several issues and i am back on the buy, buying and selling and tucking some into the permanent portfolio is how i chose to play it. as i said above today is options expiration , the boys will let the lotto tkts expire worthless tomorrow gentle ben announces and then i believe it will be game on now , lets examine what happened after qe1 expired. stocks swooned. the stock market is the psychological indicator for how well we are doing as a country. ben did not waste much time in announcing qe2. i expect more of the same. w/o monetization where is the money going to come from to pay for the enormous deficits and also keep stocks rising. my job is to stick w/the trend. when i buy bottoms i use stops. yesterday i got stopped out of an issue that i bought friday. yes its a bull. i still have to use reason and safety in a bull . some miners go down a hole every once in a while. its not something i want to ride. imho opinion this leg is not over . in the not too distant future i expect @least $50 daily ranges on gold. try trading that. dharma

[stubaby]

Adding to existing positions in SLW & AG:

http://stockcharts.c...185408&r=44.png
http://stockcharts.c...17825&r=765.png

with stops, of course.

stubaby