China signals reserves switch away from dollar

[Borage]

"China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets."

http://news.ft.com/cms/s/f39fa8e4-7e25-11da-8ef9-0000779e2340.html

[tattatu]

Long Yen and short Euro. According to BWII, countries peg their currencies to the dollar to be competitive. Less stable since US has few reasons to protect the value of its currency. Asian countries send us stuff that we purchase from rising housing values. What allows us to borrow are low interest rates.

If countries tried to exchange dollars for their currency, their prices would be less competitive. So to keep things going there is what's known as competitive devaluation, meaning more than one country is bidding to buy large amounts of US debt, that's what FCBs prefer -- and this is what helps keep mortgage rates low.

Two things that will reverse the trade deficit will probably happen this year:
1. consumers will have to purchase less and save more 2. dollar will probably fall. (the likelihood of the Yuan appreciating 30% in one year, is not very)
=> so, interest rates will continue rising until housing prices start falling. New mortgages already fallen off this year by 25%. Property values in Australia and England both currently flat. So things wont take a spectacular tumble but standby for some serious changes. Either the yield curve inverts or the economy slows down or both.

[tattatu]

means other Asian countries will do same, since they are trying to stay competitive with China. Means maybe bonds will become a better investment. Should see good investment opportunities for gold and energy, although gold is about due for a correction.

[onenomad]

means other Asian countries will do same, since they are trying to stay competitive with China. Means maybe bonds will become a better investment. Should see good investment opportunities for gold and energy, although gold is about due for a correction.

Hello I always enjoy your informitive posts what level do you see gold correcting to?

[goldraker]

Don't get him started on gold. He's got the fever!

[tattatu]

I've built own index and do about 20 trades per day -- all mining stocks -- non-hedged (its working for me -- but about noon I just wanted it to stop!).:drunk:

PS. I'm headed for Canada ... some way. I like what I see. Signed, $8 per min

[Tyreds Tale]

The structural changes that are occurring include numerous trade agreements between members of Cabal that trade in a currency of their choice. The goal of these agreements is to develop large markets, which will ultimately equal or exceed the U.S. market thus allowing countries such as China to reduce their holding of U.S. treasuries. In many cases the market development also included arms trafficking in exchange for long-term government–to-government energy supply deals. The ultimate goal is to create the bipolar New World Order.

In a meeting at the Arab Brazilian Chamber of Commerce Jordanian Prince El Hassan Bin Talal—a Muslim and president of the Club of Rome and former Brazilian president Fernando Henrique Cardoso and with the mayor of São Paulo, José Serra on March 21, 2006, he stated that Latin America plays an important part in the strengthening of South-South cooperation. "Latin America plays an important part in bringing new dynamics to South-South dialogue. Talal believes that the countries of the so-called BRIC (Brazil, Russia, India and China) have conditions to articulate themselves to develop policies aimed at multilateralism and to influence the reform of the United Nations (UN). "The Prince was very impressed with the possibility of dialogue not only between Brazil and the Arab countries” “It is essential to fight for something,” he said, referring to a New World Order based on humanitarianism and peace.

Factors Destabilizing the Dollar

· Oil Trading in Euro and the Iran Oil Bourse
· The real-estate bubble starts collapsing
· Bank of China’s decision to allow investors to buy and sell gold using their USD
· Continued increase of U.S. public and trade deficits in 2006
· Growing doubts in the U.S. themselves on the reliability and interpretation of US economic statistics
· The Potential for Military Intervention in Iran
· Increasing risk of Conflict with China

http://americandaily.com/article/12589