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China Signals Switch In Reserves Away From Dollar

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http://news.ft.com/cms/s/f39fa8e4-7e25-11d...00779e2340.html

"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."

Dollar could be toast pretty soon if they follow through on that.

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implications for global financial and commodity markets.

What would the effect on commodity markets be, especially those priced in dollars?

Would gold, for example, fall in value due to the value of the dollar falling, or would China invest money into commodities keeping valuations high?

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What would the effect on commodity markets be, especially those priced in dollars?

Would gold, for example, fall in value due to the value of the dollar falling, or would China invest money into commodities keeping valuations high?

I'm no expert but wouldn't gold rise against the dollar? If gold is the one true currency then as the dollar falls then it will simply cost more to buy an ounce of gold.

This plus the Iranians starting to trade Oil in Euro's from March ...... its gonna be a very interesting year I tells ya !!

Don't forget bird flu too.

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I'm no expert but wouldn't gold rise against the dollar?

Probably, but there's no guarantee that it will rise faster than the dollar is falling.

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Probably, but there's no guarantee that it will rise faster than the dollar is falling.

but highly likely. when you have that many dollars if they come onto the market then you can expect that what ever they decide to buy will appreciate quite rapidly. sell your US treasuries and buy gold? a rapid decline of the dollar will certainly bring both inflation and rapidly higher interest rates to the US and then the inevitable housing crash followed by recession. question is what do they buy and how much do they buy of it ?

I hope it isnt too quick I was hoping to get my bonus safely invested in silver before the end of the dollar.

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http://news.ft.com/cms/s/f39fa8e4-7e25-11d...00779e2340.html

"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."

Dollar could be toast pretty soon if they follow through on that.

Perhaps the most significant part of the article is the warning from the IMF that holding US bonds while others diversify away from the dollar could lead to potentially large losses.

.....But the size of the US current account deficit, the prospect that the end of the Federal Reserve's campaign of interest rate increases is in sight, and the possibility of a slowdown in the US economy may renew pressure on the dollar, some economists forecast.

In such an event, the International Monetary Fund and the World Bank have warned that developing countries face potentially large losses on their holdings of dollar reserves. Diversification makes sense for individual countries, including China, but may cause trouble if a number of countries try to do it at once.

As with any pyramid scheme the biggest losers will be those who are the last to leave the party. Its reasuring to consider that Brown has been managing our exposure to these potential losses over the last year by almost doubling our dollar bond holdings from $100 Billion to around $180 Billion. When the dollar collapses it will take a large chunk of the UK economy with it.

Collapse of the dollar and knock on effect on sterling will require higher rates to protect the currencies on FOREX. The FED and BOE have a simple choice, incease rates to protect Dollar and Sterling or allow Sterling to fall and import inflation from overseas, the difference this time is that we now have no industry left to dig us out of the resuting recession.

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Perhaps the most significant part of the article is the warning from the IMF that holding US bonds while others diversify away from the dollar could lead to potentially large losses.

As with any pyramid scheme the biggest losers will be those who are the last to leave the party. Its reasuring to consider that Brown has been managing our exposure to these potential losses over the last year by almost doubling our dollar bond holdings from $100 Billion to around $180 Billion. When the dollar collapses it will take a large chunk of the UK economy with it.

Collapse of the dollar and knock on effect on sterling will require higher rates to protect the currencies on FOREX. The FED and BOE have a simple choice, incease rates to protect Dollar and Sterling or allow Sterling to fall and import inflation from overseas, the difference this time is that we now have no industry left to dig us out of the resuting recession.

I am utterly convinced this is the start of the shit hitting the fan. A lot of people on this site want a HPC and I believe this might just be what brings it. I reckon we're only at the bottom of rising interests rates, here, in the US and overseas. This country will be devasted if that has to happen considering the vaule of mortgages in this country.

The Chinese know that Bernanke is going to print dollars to try and devalue the US debt held by overseas CB's by inflating the amount of dollars in circulation and they're not going to stand about and watch it happen. So they are going to try and off load the dollar. They blinked first and I bet there are a few CB's around the world getting a bit nervous, thinking that they don't want to be the last man standing holding worthless paper greenbacks.

The dollar will come under serious pressure if other CB's follow suit and I think they will. I noticed that that the Uk has substantially upped its monthly purchases of US treasuries this year. I wonder why? Strangely lots are being bought also through the Carribean banks, suggesting that the US might be buying they're own treasuries as way of supporting the dollar.

The US now know that the Chinese own them and economically they can do very little about it. The US are fecked and we might be too.

Edited by Allthatglitters

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I noticed that that the Uk has substantially upped its monthly purchases of US treasuries this year. I wonder why?

I've read at least two articles that attribute increased US Debt buying from the UK as actually being middle east oil revenues flowing through London, so it's not necessarily HM Government. Note also that the US Government treasury stats also include the Channel Islands.

Pent

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Just a small question:

What happens to the Chinese economy if the USA can no longer afford to import their goods? Doesn't make too much sense for the Chinese to allow the US economy to tank does it?

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Time is running out fast.

Protect yourselves, get gold and silver.

yup,and I know some of you like mining stocks,but here's a scenario for you.

say bird flu DOES mutate,what action will this have on gold prices vs miners prices?

my guess is gold will shoot up,yet miners will plummet....the reasoning for this is that production of pretty much anything is going to be hit with workers dropping like flies.....so anything from extraction to distribution will be restricted.leaving heavy demand from a finite pot of stuff already in the system.

.....best strategy is to have both I think,but if the pandemic starts then flog the stock and keep the physical.

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yup,and I know some of you like mining stocks,but here's a scenario for you.

say bird flu DOES mutate,what action will this have on gold prices vs miners prices?

my guess is gold will shoot up,yet miners will plummet....the reasoning for this is that production of pretty much anything is going to be hit with workers dropping like flies.....so anything from extraction to distribution will be restricted.leaving heavy demand from a finite pot of stuff already in the system.

.....best strategy is to have both I think,but if the pandemic starts then flog the stock and keep the physical.

Wonder what would happen to the plysical gold owned by all the people who would have died in this scenario?

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It would make excelent sense for the Chinese to have already sold a load of dollars to hedge fund and other carribean banking center users, lets face it in the face of all those rate rises they would have known there was going to be a steady market for dollars for most of 2005. but that is evapoating rapidly in 2006 look at the USD/JPY exchange rate you can see the Hot money pouring out of the USD daily. enjoy

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yup,and I know some of you like mining stocks,but here's a scenario for you.

say bird flu DOES mutate,what action will this have on gold prices vs miners prices?

my guess is gold will shoot up,yet miners will plummet....the reasoning for this is that production of pretty much anything is going to be hit with workers dropping like flies.....so anything from extraction to distribution will be restricted.leaving heavy demand from a finite pot of stuff already in the system.

.....best strategy is to have both I think,but if the pandemic starts then flog the stock and keep the physical.

I agree. Sell the stock, keep the physical... and buy tins of food!

(actually I don't think it will be quite that bad but I do expect sudden runs on food and petrol)

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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